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Oil and Gas Headed Higher Says Larry Edelson in Latest Issue of Money...

Larry Edelson takes a closer look at five reasons he believes oil and gas prices could be headed even higher. Mr. Edelson also gives his update on inflation and why real inflation could reach 20%.

First, the price of oil is holding firm near record highs despite news that China raised its retail energy prices and Saudi Arabia would increase its oil production. Moreover, the price of oil is now higher than it was when home prices peaked and the mortgage crisis started. Plus, the price of oil, even if it dips, will probably find strong support at the $110 level.

Second, nothing has changed to alter the exploding demand that underlies rising oil and gas prices. It's certainly true that in the U.S. everyone is talking about high energy prices. And $4-plus gas at the pumps is causing many people to make some driving and behavioral changes to reduce energy consumption. Over the past two years, demand for oil has grown at twice the average annual pace of the last decade. According to the International Energy Agency (IEA), demand continues to rise faster than in any year since 1976. Moreover, the IEA says developing countries could push demand up more than 40% from 86 million to 121 million barrels a day by 2030. In China, oil consumption is expected to double over the next 15 years to more than 10 million barrels a day. India's oil consumption is expected to rise by nearly 30% over the next five years.

Third, there simply isn't enough oil on the planet to meet demand.

-    90% of all known reserves in the world are now already in production.

-    Among these reserves, 80% are in their depletion phase.

-    10% of all oil production comes from just four large oil fields while 80% comes from older fields discovered before 1970.

Fourth, underinvestment in refineries has not changed in the last few years. In fact, not one new refinery has been built since 1976. Moreover, in the last quarter-century the number of refineries has plummeted by more than 50%.

These four factors alone provide all of the ingredients needed for an ongoing, massive, long-term boom in energy prices. However the fifth factor which Edelson calls The Fifth Dimension is possible supply disruptions caused by:

-    War in the Persian Gulf, the largest source of oil reserves on the planet;

-    Terrorist attacks, which may very well target mission-critical oil facilities;

-    Hurricanes; and

-    Other man-made and natural disasters that no one can possibly predict.

Investors should never bet on the Fifth Dimension, but that doesn't mean these events can't happen. As such, they are a very real possibility and need to be considered.

Furthermore, Edelson estimates that the true rate of consumer inflation in the U.S. is currently running between 8% and 10%. When there is no gold standard backing the monetary system, central bankers are free to print money at will and stir up inflation by deflating the value of money.

"Understand this one fact of today's monetary system and you will be several giant steps ahead of the majority of investors, protecting your money and profiting from the actions of those in charge of the monetary system. My forecast is that real inflation, not to be confused with the government's CPI figures, will likely climb to at least 20% before central bankers get serious about it," Edelson states.

To read this issue online, please visit:

http://www.moneyandmarkets.com/Issues.aspxOil-and-Gas-Prices-Peaking-1911

About Larry Edelson and Money and Markets

With nearly three decades of experience in precious metals and natural resources markets, Larry Edelson has played a pivotal role in training Weiss Research staff and in guiding Weiss Research's customers to prudent investments in the sector. His Real Wealth Report, Gold Trader Hotline and Energy Options Alert provide a continuing education on natural resource investments, with recommendations aiming for both profit and risk management. His team of technical analysts helps enhance the timing of investment recommendations with the aim of continually improving the performance results for investors.

Mr. Edelson is also a regular contributor to the daily e-letter, Money and Markets. Recognized as an expert in precious metals and natural resources, he is often called upon by the media for his investing views. Mr. Edelson has been featured on Bloomberg, Reuters, and CNBC as well as The New York Times, New York Sun, and Marketwatch.com

Mr. Edelson holds a B.A. degree from Columbia University.

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.

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