• A big picture perspective of the world's depleting energy supply,
• The "slow volcano" that could power every light in San Fran,
• Is oil half price at a hundred bucks? All that and no bag of chips...

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Joel Bowman, coughing and spluttering, reports from the Dubai Air Show...

You're not likely to see Maurice Flanagan parading out front of any global warming rallies in the near future...unless he's there to throw tomatoes at them.

"Don't talk to me about global warming... I just do not buy it whatsoever," Flanagan, Executive Vice Chairman of Emirates Airline, told a conference at the recent Singapore Air Show.

"Al Gore's Inconvenient Truth is absolute rubbish," he said, adding, somewhat strangely, that he had seen the film three times.

Fast forward to this week's air show in Dubai and Emirates have again stolen the headlines with the largest ever purchase in aviation history; a $34 billion quiver of Airbus A380s, Boeing 777s and sundry smaller planes.

But rival Qatar Airways has used the comments made by Flanagan to steal a little of the spotlight for themselves.

Yesterday, Qatar Airways Chief Executive Officer Akbar Al Baker announced his company had entered into a landmark agreement with key players across the aviation, fuel and educational sectors to power its aircraft with natural gas. The move will make QA the first commercial airline operator in the world flights using gas-to-liquids kerosene fuel – a move that will no doubt appease some of the angry global warming mob.

Speaking at a press conference yesterday afternoon, Al Baker told reports, "There is a huge movement lobbying for the reduction in carbon emissions to make for a cleaner and safer environment."

"The aviation industry has been at the centre of this highly topical debate. We as industry leaders gathered here at this press conference are committed to this cause and today's move highlights how serious we take this important issue.

"Together with our partners," crooned Al Baker, "we will all work in close collaboration to study the use of synthetic jet fuels, or GTL kerosene in our drive towards a cleaner and safer world. And we at Qatar Airways look onward to becoming the first airline in the world to power commercial aircraft with natural gas."

So what's behind Qatar's switch? Forgive our cynical nature here, but corporate execs are not typically the role models for aspiring young Rainbow Warriors.

We can only guess as to his motives, but one thing's for sure, corporate execs don't simply go green to appease a few hippies in the audience. They do it for the cash. Could Mr. Al Akbar have simply been scared into action by what he sees on the horizon for oil prices?

Doug Casey has a few words from on the subject...

The depletion of the world's cheap hydrocarbons is now a foregone conclusion.

The timing of when this goes from being a nuisance to a problem to a full-blown crisis is difficult to gauge, but peak oil, as an argument, is the correct argument. The U.S. reached its peak oil production in 1971, and I have no doubt that the world will do so within a generation, more than likely encouraged by more blunders in the Middle East.

Speaking as an investor, the question at this point is not 'will there be another energy crisis?' The question is 'how can I profit from it?' Below, Chris Gilpin from our Casey Energy Speculator research team gives you a better idea of why oil prices and energy stocks are headed higher, and how you might profit.

This is an important time to stop and check your premises on oil, because getting it right can be extraordinarily profitable.

You'll catch Chris' full column below...

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Is $100 Oil Cheap?
By Chris Gilpin

Remember when most professional investors griped that $40 per barrel crude was "overpriced," and then that $60 crude was "unsustainable," and then that $80 crude would "never happen." But here we sit with oil soaring past $90 and looking like it wants to take out $100.

We think crude oil will take out $100, and then continue higher from there. Sure, crude may decline in the short term, but the destination is clear: much higher prices. That may be bad news for the U.S. economy, but need not be bad news for you, assuming your money is in the right place. So what's the right place? Let's start with the big picture…

Simply put, the Earth is running out of that magic combination of oil that is both high quality and cheap to extract.

Twenty years ago, a dozen fields produced a million or more barrels of oil per day. Now there are four, and one of them, Mexico's Cantarell in the Bay of Campeche, is collapsing. Mexico's state-owned oil company, PEMEX, projects Cantarell's output will decline 14% per year from now on. That's the best-case scenario. 2006 actual production from the aging field actually fell 27%! If PEMEX's worst-case forecast comes true, Cantarell will soon break below one million barrels a day, leaving the world with just three million-barrel-a-day fields by the end of this year.

Taking the place of these former big producing fields are deposits that are complicated and capital intensive: the tar sands of Alberta, oil shale in America, heavy oil in Venezuela and resources in the Arctic. These non-conventional resources are very expensive to operate.

For perspective, North Africa's conventional oil reserves can be pumped out of the ground for only $4 per barrel. But the average cost in the tar sands is estimated at $28 per barrel, and oil shale costs can be upward of $40 per barrel. It doesn't take a genius to see that the more we are forced to rely upon non-conventional oil, the higher the prices will have to be.

And you know already that competition to buy that barrel is only going up. China and India are elbowing their way onto the global stage, and bidding for their share of Middle Eastern oil. A supertanker of crude is as popular as a New York taxi at rush hour; everyone is trying to wave it over their way.

We've reached a turning point in terms of the supply-demand fundamentals of crude. Even Chevron's CEO David O'Reilly recently announced, "One thing is clear: the era of easy oil is over."

Your average economist will tell you that once you correct for inflation, crude prices reached their actual peak in 1980 during the energy crisis spurred by the Iran-Iraq war. From April to July of that year, a barrel of oil sold for US$39.50. Using the government consumer price index (CPI) numbers, that record-high price per barrel is estimated at between US$90 – US$102 in today's dollars.

But those CPI numbers are highly suspect.

John Williams of Shadow Government Statistics (www.shadowstats.com ) is one of several specialists who independently tracks financial data in an attempt to provide a more honest picture of the economy. Williams recalculates the CPI so that it is more of a continuum with its earlier versions – unlike the government, which fiddles the formula whenever it decides it needs to. If nothing else, undoing the many changes in the CPI formula over the years allows us to compare apples to apples on price inflation, rather than apples to genetically modified pumpkins.

Track the current CPI the way it was calculated in 1980, and today's inflation rate is about 7% higher than the current "official" CPI statistics. So, rather than inflation running at less than 3% as the government would like us to think, based on Williams' calculations it is really closer to 10%.

Casey Research's chief economist, Bud Conrad, has confirmed with his own calculations that indeed this figure is a much more truthful estimate of where inflation actually is. Using shadow stats, Bud has calculated the oil price history using the 1980 CPI method. It turns out that 1980 barrel of $39.50 crude is the equivalent of over $200 per barrel in today's anemic dollars.

In that context, crude prices are nowhere near their all-time high, and $100 oil still looks to be quite cheap. With all that is going on in the Middle East today, where the world still gets much of its oil, and combined with increasingly proof – as per Cantarell – that peak oil is upon us, the odds are better each day that oil is going much, much higher.

There are other potential shocks to the energy market lurking in the wings. For instance, faced with the depletion of Cantarell, how long do you think the Mexican government will continue to allow the unrestricted export of their country's oil to the U.S.? We could wake up as early as tomorrow to find a quota in place.

Another way to view the big picture is to examine the weighting of different sectors within the S&P500 over time. With his background in advanced mathematics, Casey Energy Speculator's chief investment strategist, Marin Katusa, has used this method successfully to assess market dislocations. By looking at the relative size of the various components of the S&P 500 vis-a-vis each other in modern times, you can readily see when certain sectors are significantly out of step with historical norms.

Viewing Marin's chart below, you can see the weighting of the energy sector grew most during the 1979-80 energy crisis, reaching a relative peak of almost 30% of the value of the S&P 500. Since that time, energy's share dropped for two decades since. Only recently, as oil prices have surged, energy stocks have also surged – becoming an even larger portion of the S&P 500. However, even though energy stocks represent a larger proportion of the S&P 500 than they did in 1999, they are still far from their former prominence.

Interestingly, the biggest run has been experienced by the financial sector, which has expanded from 5% to 20% in the last 30 years, catalyzed by the expansion of credit and lax governmental monetary policies. That trend now appears to be reversing.

It's also easy to see how the Internet bubble distorted the stock market. At that time, tech stocks rose to occupy over one third of the worth of the S&P. During the last energy crisis, the energy sector grew to a similar size. The current weighting of 9.3% demonstrates that energy stocks have yet to make their big run. The bull market has been good to all sectors, with only financials starting to take a hit, but, as the burgeoning energy crisis gains momentum, energy companies could very well regain the status that they held in 1979-80.

It's also worth noting that there is a significant negative correlation between the energy and the financial services sectors. They move in opposite directions 79% of the time: that is, as one increases, the other decreases very nearly four out of five times. Mathematically speaking, that's one robust relationship. With financials reeling from the credit crunch, this technical indicator shows that energy stocks are poised to advance.

As the petroleum age reaches a tipping point, the United States, as the world's largest oil importer, is in an unenviable position. Individual investors need not be similarly disadvantaged, however. The first step to protect your wealth is to see the prices of crude oil and energy stocks in their proper historical context. Ninety dollars per barrel is not a peak price; it is only a precursor of peak oil's influence.

The significant gains we've witnessed in certain energy stocks are nothing compared to the gains we will witness as the next energy crisis comes into full effect.

[Joel's Note: Chris Gilpin is a member of the Casey Research, LLC. energy research team and a contributing editor to the Casey Energy Speculator, a monthly newsletter dedicated to unbiased reporting on rational speculations in the shares of small-cap companies targeting oil, gas, uranium and other energy sources… companies with the very real potential to offer 100% or better returns over a short time horizon.

In the November 15th edition of the Casey Energy Speculator you'll read a comprehensive review of the best U.S. uranium plays… as well as a largely unknown rising star in the energy sector (perhaps the most prospective new solution for an energy-starved world).

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Rude Endnote: What? You don't hear that? Man, there's nothing like an air show to get your ears ringing. Better write your comments down and mail them in, we can't take calls in this state. Send emails to the address below.

Cheers,