Note: Parts of this article originally appeared on Wealth Daily. 

"Energy stocks....the only way a human is going to make any money" — Matt Simmons.

Claims that the world has "plenty of oil left are bunk," says Sadad Al-Husseini, a former executive at Saudi Aramco, in recent articles. "Oil-producing countries are inflating the size of their oil reserves by as much as 300 billion barrels by padding supposedly proven reserves with ‘probable' reserves and tar and oil sands."

Oil production, he continues, has peaked and will begin dropping in 15 years or less. Companies mix "proven finds with probable reserves that may have only a 50 percent chance of getting out of the ground."

Even the International Energy Agency is concerned with world oil supplies, studying depletion rates at about 400 oil fields. We'll talk more about the IEA study below.

Regardless of the studies, the global economy wants a solution now.

After paying $4 a gallon, we were told that gas prices fell 2% last month.

But that's what happens when gas prices rise 5.6% in April, and economists are allowed to statistically readjust for seasonal oddities.

You see, historically, gas prices rise in April as we near warmer weather months and summer driving season. Taking that into consideration, the government adjusts its data to reflect the expected rise in gas prices, underscoring trend variations.

And since gas prices did not rise as much as they've historically risen in April, the adjustment showed that prices fell in April.

But flawed stats aside, energy costs are skyrocketing.

Americans want a solution... and they want it now. $4+ at the pump, $127 a barrel oil, $11.50 natural gas, skyrocketing electricity costs... America and the global economy want a solution now.

Domestically, there's the Bakken solution. There's even oil sitting under the Rockies.

And what makes these domestic oil production companies even more attractive as long-term investments are the oil and gas discoveries, and the fact that these explorations are more appealing, given geopolitical tension.

You know as well as we do that prices would come down sharply if we started producing on our own. And it'd be a strong global signal that we're not willing to be hostages of oil rich companies.

Even the President agrees.

"Our problem in America gets solved when we aggressively go for domestic exploration," Bush said.

And we need all the oil we can get.

We've all heard the $200 oil forecasts.

Goldman just raised its oil price outlook to $141 from $107, citing supply issues.

Arjun Murti believes that we could see $150 to $200 oil over the next six to 24 months.

OPEC President Chakib Khelil won't rule out $200.

And, while the International Energy Agency's oil supply forecast won't be released until November 2008, there's growing fear of a sharp downward revision in supplies. That means supply could be much tighter than previously thought, a nightmare scenario if proven true.

Any pessimistic IEA view will shock the market, spawning oil super spikes. We've already seen prices rocket to $130, doubling year over year. And it'll only get worse on a dismal IEA forecast.

For years, the IEA has said that crude supplies and other liquid fuels would keep up with rising demand, topping 116 million barrels a day by 2030. But now there's fear that the IEA, basing findings on aging oil fields, could revise sharply lower and warn of a struggle to keep up with 100 million barrel a day demand over the next 20 years.

But IEA pessimism is nothing new. Just last summer, the IEA warned that spare OPEC capacity could fall to "minimal levels by 2012."

Even the U.S. Energy Department is embarking on its own supply studies, which could be finished by summer. But they, too, may have nothing positive to say. They already suggest that daily 73 million barrel daily output will level off at 84 million barrels. To then reach 100 million barrels a day by 2030, we'll need a sizeable boost from other fuel sources.

Natural Gas Squeeze

Natural gas prices are rising just as fast as oil, and could be subjected to the same supply and demand issues that drove crude oil well above $130 a barrel.

That's as liquefied natural gas (LNG) shipments to the U.S. slow, and as companies like Cheniere and other companies drop plans to build more terminals.

Tankers full of gas from Africa and the Middle East are going to other countries instead, pushing up the price of gas and choking our stockpiles ahead of U.S. hurricane season.

Truth told natural gas prices are going a lot higher if a solution isn't found.

Global natural gas demand has grown about 2.6% a year over the last 10 years. But in Asia, the Mid East and in Africa, demand has been more like 7% over the same time frame. And demand growth will only rocket further refinery and power growth in the developing world.

Not only are we still bullish on our Bakken trades, we've got our eye on several new domestic oil stocks. The editors of Pure Energy Trader are currently doing their due diligence and are looking to issue buys shortly.

Good investing,

Ian L. Cooper

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In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of May 26, 2008.

Energy Efficient Transportation: How Peak Oil is Transforming Air Travel
These days, energy costs figure in to make a vacation seem anything but glamorous or carefree, and energy-intensive tourism companies have gotten hit hard. But with new energy efficient technologies being employed almost daily, we see a niche where smart investors can make serious money.

Biofuel Energy: Why There May Still Be A Future In Biofuel Investing
I'll be the first to admit it. I'm not a huge fan of corn-based ethanol. There are just too many better solutions out there. Things like Plug-In Hybrid Electric Vehicles (PHEVs) or, dare I say it - mass transit systems like those which are operating successfully and profitably throughout Europe.

The Tipping Point in the Peak Oil Debate: The Game Is Afoot
Those of us who have watched for the inevitable arrival of the peak oil crisis have been waiting for years for the day when we no longer had to fight for the acceptance of the idea, and could start getting on with the hard business of what to do about it. And then, just like that, it happened.

How to Profit from Beijing Pollution: Pollution and the Olympics
It was January 2004 when the World Health Organization warned of bird flu outbreaks, fearing that the disease could latch on to normal human influenza virus, and spread among the human population. One stock jumped from about $1.50 to about $3.

Renewable Energy IPO: Uncorking New Energy Profits
In the Alentejo Forest, money really does grow on trees. Located in Portugal, inland of the southwestern coast of the Iberian Peninsula, the Alentejo Forest is home to a remarkable crop: the cork tree. In fact, the area is so laden with the trees that it's responsible for about half of the world's total cork supply.

Nuclear Energy Investments: Nuclear Energy Lines up for a Piece of the $22 Trillion Pie
As the markets get all giddy about the prospect of a ten dollar pullback in the price of crude, it is easy to be conned into thinking that "this too shall pass." But the larger truth is that in less than two weeks we have gone from an "oil is a bubble" theme to having "America's Oil Crisis" splashed all over the screens on CNBC. It was as if crossing the $130 mark on oil was akin to crossing the Rubicon.

The Future of Air Travel: No Airline Can Make Money on $123+ Oil
Short the airlines. "No airline can make money at $123-a-barrel oil," says Southwest CEO Gary Kelly.Last summer, before the fuel price run, we were okay with flight ticket prices. Airfare, at the time, was compatible with budgets. And all was okay for airlines, showing signs of life with profitable quarters.Then the price of fuel went nuts, running to $132+.

Richard W. Fisher Nails It: Tough Talk From the Dallas Fed Chief
Long before the sound bite ever became the equivalent of news, there were great speeches. Here's one of them by Richard W. Fisher, a man who would be my immediate choice to replace Ben Bernanke. It's long by blog standards but its well worth the read.

Barry Diller Chatter Ups EXPE: The Options Pit Blog
As we said earlier this week, keep an eye on Expedia (EXPE). It's rocketing higher on chatter that Barry Diller is looking to take the company private. The June 25 calls are seeing heavy interest with 9,467 contracts trading hands, as compared to open interest of 6,467. The June 22.50s are seeing interest, too, with 3,260 contracts traded, as compared to open interest of 1,531.

Reiterating a Buy at New Highs
As we said last week, continue buying it. It looks as if the momentum crowd is catching up after the company had its credit facility increased from $13 million to $20 million. Sources tell us the increase was due to improvements in the company's reserves and financial conditions, as of December 31, 2007.