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I wouldn't short oil just yet

The large Gulf discovery by the Chevron/Devon/Statoil team won't be in full production for at least five years. Second consideration, even if every drop of that oil was dedicated to domestic consumption, it would represent only about two years supply for the United States. We of course know that when that oil is pumped, it's for sale to the highest bidder and every drop of it WON'T be going to the United States. It will help to reduce global oil prices, but with China expected to pass our oil consumption of twenty-million barrels a day in 2008 and global demand outside China continuing to climb, world supplies are simply not keeping up with that demand. Also note that in the past two-years, both BP and Shell have lowered estimates on their proven reserves. A lot of old fields are getting played out. (As the price of oil rises however, it's paying for new technology that helps us pump what would have been considered unrecoverable just five years ago.) Barring a global recession to reduce demand, you will see continued volatility in the oil sector, but with an overall rising long-term trend.

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