At least part of the long standing interest on the part of the US in Iran may stem from Iran’s position as containing vast oil and gas reserves. Dick Cheney would be a good man to ask about that issue.

Iran is a founding member of the Organization of the Petroleum Exporting Countries (OPEC), and ranks among the world’s top three holders of proven oil and natural gas reserves. Iran is OPEC’s second-largest exporter after Saudi Arabia, and is the fourth-largest exporter of crude oil globally after Saudi Arabia, Russia, and Norway. Natural gas accounts for half of Iran’s total domestic energy consumption, while the remaining half is predominately oil consumption. The continued exploration and production of the offshore South Pars natural gas field in the Persian Gulf is a key part of in Iran’s energy sector development plan.

According to Oil and Gas Journal, Iran has 136 billion barrels of proven oil reserves, or roughly 10 percent of the world’s total proven petroleum reserves as of January 1, 2007. Iran has 40 producing fields, 27 onshore and 13 offshore, with the majority of crude oil reserves located in the southwestern Khuzestan region near the Iraqi border. Iran’s crude oil is generally medium in sulfur content and in the 28°-35° API range.

According to Oil and Gas Journal, Iran has an estimated 974 trillion cubic feet (Tcf) in proven natural gas reserves. Iran holds the world’s second largest reserves after Russia. Around 62 percent of Iranian natural gas reserves are located in non-associated fields, and have not been developed. Major natural gas fields include: South and North Pars, Tabnak, and Kangan-Nar. In 2005, Iran produced and consumed 3.6 Tcf of natural gas. Natural gas consumption is expected to grow around 7 percent annually for the next decade.

Both production and consumption have grown rapidly over the past 20 years, and natural gas is often used for re-injection into mature oilfields in Iran. According to FACTS Global Energy, Iran’s natural gas exports will be minimal due to rising domestic demand even with future expansion and production from the massive South Pars project. In 2005, 65 percent of Iranian natural gas was marketed production, while 18 percent was for EOR gas re-injection, and 17 percent was lost due to flaring and the reduction of wet natural gas from hydrocarbon extraction. Like the oil industry, natural gas prices in Iran are heavily subsidized by the government.

While Iran is critizized by the United States for its efforts in developing a nuclear energy program Iranian planners cite the growth in the internal demand for oil and gas products and that that demand reduces the amount of petroleum products for export. Iran feels that it should have the right to develop nuclear energy in order to reduce its reliance upon its own oil and gas production for domestic use rather than for generating much needed income from export.

The careful attention that crude oil prices receive is understandable given that the products derived from crude oil are the life blood of the modern world’s industrial economy. Crude oil is the raw material material input to products, such as gasoline, jet fuel, and plastics, that are essential to a modern way of life. The price of crude oil is quickly reflected in the price of these many products. It’s no secret that the availability and price of crude oil is something that one way or the other affects nearly every human being on planet earth.

Crude oil is a finite natural resource with current supply and demand factors closely balanced. The future prospect for both the availability and pricing for crude oil looks to be ominous indeed. As countries like the United States continue with wasteful energy habits, and rapidly developing nations like China and India add more automobiles, larger houses, aircraft, and oil dependent uses of all kinds to their development mix, the pressure of increased demand against declining oil production around the world will cause a huge permanent increase in crude oil prices.

We have probably already entered a situation known as peak oil. Peak oil does not mean that we are completely running out of oil but it does mean that the “easy to get” oil has already been discovered and placed into production and that the oil that is left will be increasingly expensive to find, drill for, and bring into production. Production from the major oil fields in the world, like Cantarell in Mexico and Ghawar in Saudi Arabia, are now in irreversible decline.

The discovery of new large oil fields that offer the prospect of producing oil at low prices per barrel is remote. It is now just a matter of time before the imbalance between supply and demand factors lead to extraordinarily high prices for crude oil. That time is probably closer than we care to think.

The current relatively low prices for crude oil is more a reflection of the deleveraging of financial assets around the world than of supply and demand considerations. Any minor disruption in oil supplies, especially if coupled with even a modest increase in demand, could quickly send crude oil prices to new all time highs above $147 a barrel.

The following chart tracks crude oil prices live as they trade on world markets. The chart can be quickly changed from a one month chart, to one quarter, to one year, to five years, just by clicking on the indicator at the bottom of the crude oil chart.

While not suitable for in depth research the crude oil chart will give you a good quick idea as to the direction of the crude oil market. Since crude oil prices provide so much input into the functioning of the world economy no other commodity price level is as closely watched and no commodity is as vital to economic activity.

The very volatility of the current crude oil price is a strong indicator that the world economy is not functioning well and that the world economy as we have know it is at serious risk.

For example, a hurricane in the Gulf of Mexico may not cause much damage to oil rigs operating in the Gulf but strike a serious blow to refiners located in Louisiana. While ample supplies of crude oil may be available for refining operations if the refineries are damaged crude oil will not be refined into useful products, like gasoline. Until the oil refineries are repaired there could be shortages in the supplies of gasoline and other refined products, like jet fuel, and price spikes could occur.

After soaring in 2008 the current crude oil price is again at a relative moderate level at around $40 a barrel. This is good news for the consumer for now but will be bad news long term. At current prices all alternative energy solutions will have a very hard time competing against oil in price. That will slow down development of renewable energy sector worldwide. Public interest for those alternative energy sources is already falling.

Current low prices for crude oil sets the stage for another severe price run up within the next year or two. Current oil production is about 85 million barrels a day. Even with reduced oil demand due to the global recession oil demand matches up very closely with supply. As crude oil production is falling in all of the world’s major oil fields, and the prospect for increases in future demand is great, the prospect of much higher prices in the near future are certain. Current low oil prices are reducing oil drilling and exploration activity along with the development of alternative energy resources.

No oil user, whether industrial, commercial or personal is immune from the impact of higher prices, neither do we have much if any influence over international factors that influence world oil prices. The outlook for a world economy based largely upon cheap energy prices is grim. The current crude oil price will not stay at relatively low levels for long.

The media has made much of the oil price decline from $147 to a current level below $40.00 a barrel. The emphasis has been placed on worldwide demand destruction due to the slowing world economy and the outright financial meltdown in the United States. Actually, much of the tremendous drop in oil prices is due not to supply and demand considerations but to the forced liquidation of crude oil futures contracts as margin calls over powered hedge funds and large investors who had used excessive leverage to position crude oil contracts on the way up in price.

As oil prices fell along with almost all asset classes forced liquidations by large investors caused a death spiral that was self reinforcing. The unrelenting feedback loop caused by deleveraging was impossible for many over leveraged operators to pull out of. They had to sell good positions along with the bad.

While under present demand conditions some demand destruction has surely occurred the current crude oil price has likely overshot the mark on the downside. At current oil prices exploration projects are being shelved and alternative energy projects are being abandoned. The current crude oil price is probably not going to last long. While demand has declined in fast growing economies like China, India, Russia, and Brazil the sheer numbers of their people moving up the economic ladder into middle class status will drive oil demand as they purchase automobiles and use a lot of energy produced from crude oil resources.

The current crude oil price could be a relic of the past very quickly. With oil production declining in every major oil field in the world there could be oil shortages within two years or less, even with soft economies in the developed countries. $147 for a barrel of crude oil could seem cheap within five years or so. Current low crude oil prices are laying the foundation for a super spike in prices.

There is little hope of near term price stability. The worldwide financial market meltdown, the slow down in crude oil demand as world economic activity decreases , the continued rapid decline of crude oil production at the world’s major oil fields, and the rapid long term growth in oil products demand, even if it is at a slower pace than last year, in countries like China, India, and Brazil, will keep crude oil markets active and extremely volatile.

The ebb and flow of supply and demand factors along with the cancellation of oil exploration and production projects due to current relatively low prices are setting the stage for another price explosion within the next couple of years.

There is little hope that any combination of alternative fuels will replace the dependence of the developed world on oil as the prime energy resource at any time in the foreseeable future. Crude oil prices today will continue to be closely watched by investors across the globe.

We are all incredibly reliant on the power that comes through our sockets and light switches. But what would we do if there was a problem with that power, even temporarily?

What if, rather than having to rely on the electricity from your sockets, there was an alternative? And what if that alternative could be relied upon whenever you needed it, and could also save you money? A solar powered charger has the ability to charge anything from the smallest battery to powering the heating for your home.

Once the initial purchase of your solar panel, or solar charger is made, there should be no further cost. The electricity you recieve is then “free”. It may take some time to recoup your initial investment, several months perhaps, but at least you know that your standard electricity charges should start to drop.

You can talk to the installation contractor about just setting up a power grid large enough for emergency use only. This will save you some money now, and later when you can afford it better, you can then finish installing the rest of the solar panels, because you will already have some of the installation already.

For the ultimate in solar power for your home, you could start with a wind turbine that will hook up to a generator; the generator will then transfer power to an inverter, which will store power in at least 4 batteries or power cells. Regular house electricity is powered by Alternating current (AC) and the solar power that you are saving used direct current (DC), so you need to have an inverter to transform the DC current into AC current. You will also need a component called a charge controller. The charge controller disconnects the electric current once the batteries have been fully charged; this is a necessity for long battery life. Batteries still have to be maintained, even the batteries that you are storing energy in.

If you do decide to use solar power to provide electricity for you home, then the list of hardware you need may seem quite daunting. Remember though, this is a one off cost that should end up providing you with a lifetime of energy.

Once the system you want is installed, it has little maintenance other than checking the batteries once a month. And the system will provide emergency electricity for more than 20 years.

Everybody is interested in conserving energy and going green. Harnessing the power of wind provides a renewable source of energy and is a perfect way to conserve energy with the use of natural power. A wind turbine will generate power for years and years.

Wind power using a wind turbine is a good supplement or alternative to solar power. Dark, overcast days are frequently windy. If you build the wind turbine on your own, you can even save money.

It is a great family project. You can use recycled materials to build one for $100-$200, and recoup that investment in only a month or two. You can find everything you need at a local hardware store.

Blades can be made of wood, cardboard or PVC piping. The blades need to be the correct weight for the size of turbine you’re making. The base can be made of a wooden or metal pole.

Before you begin, find a good manual that will explain how to build a solid structure. The manual should give you detailed building instructions in a format that is easy to follow. Step by step instructions are the easiest to follow. The manual should include a list of all the materials you’ll need to build your wind turbine. Some manuals will offer you alternatives that you can use for building materials. The book should give suggestions on where you may find the needed materials, but you should be able to find most at your local hardware or home improvement store.

Building a wind turbine can be done with some basic knowledge and familiarity with simple power tools. It is a great way to make use of some open space around your home. A wind turbine can be constructed anywhere that the wind will blow. It is a great way to become an active participant in the green movement.

If you have a lot of land, you can build several wind turbines. This could be enough to power your entire house.

It is a smart way to save money on energy costs, and with the right instructions it is also very easy. It will make you feel good knowing that you’ve done your part for the environment and saved a lot of cash at the same time.

Jim Rogers, renowned commodities investor that he is, said on Thursday that he bought oil last week as crude prices collapsed to near four-year lows and that in his opinion the world is running out of known oil reserves.
==============================
From Reuters:

Rogers told the Reuters Investment Outlook Summit in New York that he also closed his bets against the U.S. stock market in October, and plans to use the dollar’s rally as an opportunity to exit dollar-denominated assets.

Rogers, who spoke via a conference call from Miami, said he is the world’s worst market timer and a horrible short-term trader, but a sharp sell-off in oil prices suggested a bottom.

“Oil collapsed last week. Whenever you’ve had that sort of selling climax throughout any period in history, you are usually well-rewarded to buy it. It may not be the final bottom, but a bottom, so I’m buying oil again,” he said.

Rogers, who remains bullish on commodities, estimated known world oil reserves at today’s consumption rate are about 16 years, which indicates crude prices will again trend higher.

“We’re going to see $200 oil at some point, it may be by 2013. It’s a sad fact but the world is running out of known oil,” he said.

Many of Rogers’s investments reflect a bearish view of the U.S. economy, which he said is poised to enter a period of stagnation, just as Japan suffered during its “lost decade” in the 1990s.

Rogers rose to fame in the investment world as co-founder with George Soros the Quantum Fund in 1970. The fund returned 4,200 percent over the next decade, compared with a 50 percent gain in the S&P 500 index.

“We have unbelievable mistakes every week coming out of Washington, just as Japan did in the 1990s, just as America did in the 1930s,” he said. “This could turn into a gigantic mess.”

Rogers attributed his grim outlook to worries about the size of the U.S. government’s growing deficit and the unwillingness on the part of authorities to let banks fail. He said he expected the U.S. economy to be in bad shape for a considerable time.

“I am most worried about the United States and what’s going on,” said Rogers, who said he is proud to be American but he has serious doubts about the country’s future.

Rogers also said he covered most of his bets that the U.S. stock market would decline in October, when “that too felt like a selling climax,” he said.

He also said he plans to get out of U.S. securities he’s owned for more than two decades if there is a rally soon.

“The market will probably rally for a while into January or March, and then we’ll have more problems next year and perhaps into 2010,” he said.

“I plan to get out of all of my U.S. dollars at some time throughout this rally. The dollar is a terribly flawed currency, and perhaps a doomed currency,” he said.
==============================
For the remainder of this Jim Rogers and crude oil article visit Reuters.

In addition, many alternative energy projects are being delayed as they would make little economic sense at current pricing. While all of this gives the world, especially the US, some short term relief, the fact is that world oil production has probably peaked and that any future upturn in demand will cause a huge price uptrend to re-establish itself.

The following is from the US government’s Energy Information Agency website. For addition energy information (and a lot of it) go to EIA.

=====================================
Overview. The increasing likelihood of a prolonged global economic downturn continues to dominate market perceptions, putting downward pressure on oil prices. World real gross domestic product (GDP) growth is projected to slow from about 4 percent in 2006 and 2007 to about 2.7 percent this year and 0.5 percent in 2009. Last month’s Outlook assumed world GDP would increase by 1.8 percent in 2009. The condition of the global economy and production decisions by members of the Organization of Petroleum Exporting Countries (OPEC) are expected to remain the crucial factors driving world oil prices.

Consumption. The status of the global economy has become the most important driver of oil consumption growth and EIA’s oil consumption projections continue to be revised downward in response to lower forecasts for global economic growth. As a result, global oil consumption is expected to decline by 50,000 bbl/d in 2008 and by 450,000 bbl/d in 2009, which would mark the first time in 3 decades that world consumption would decline in 2 consecutive years. In both years, growth is concentrated in countries outside of the Organization for Economic Cooperation and Development (OECD), especially China, the Middle East, and Latin America. However, projected sharp declines in oil consumption in OECD countries more than offset any non-OECD oil consumption growth (World Oil Consumption). If the world economy recovers sooner or is stronger than EIA now anticipates, oil consumption could decline at a slower rate or potentially increase instead, putting upward pressure on oil prices.

Non-OPEC Supply. Non-OPEC supply is expected to decline by 310,000 bbl/d in 2008, reflecting a combination of factors that include large supply disruptions in Central Asia and the Gulf of Mexico and project delays. Although declines in many non-OPEC basins, especially Mexico, the North Sea and Russia, are expected to continue in 2009, EIA projects that total non-OPEC supply will grow by 410,000 bbl/d in 2009, with the largest sources of growth coming from Azerbaijan, Brazil and the United States.
The global economic slowdown and falling oil prices bring additional risk to the usual uncertainties (unexpected disruptions, project delays, underestimation of decline rates) concerning non-OPEC supply growth. Lower oil prices bring into doubt the viability of some high-cost non-OPEC projects, especially those utilizing unconventional technology or those seeking to exploit frontier oil basins. The credit crunch associated with the global economic crisis can also make it difficult for oil companies to acquire financing for new projects. If problems in global financial markets lead to delayed investment in existing and new oil fields, then even a short-lived economic downturn could have longer-term ramifications for world oil supply. This would heighten the risk of a return to a tight supply situation once the world economy and oil demand growth recover.

OPEC Supply. OPEC is scheduled to meet on December 17 to evaluate the effectiveness of its earlier decisions to cut production targets by 1.5 million bbl/d and to weigh the need for additional production cuts. Although the extent of OPEC members’ compliance with the last production cut is still uncertain, EIA believes that the continued weak market conditions will prompt higher-than-usual compliance among OPEC members. It remains unclear whether production cuts so far are enough to avoid a counter-seasonal inventory build in the fourth quarter of 2008, a build that would add to downward price pressure over the winter. The position of some OPEC members at the upcoming meeting may be influenced by a desire to avoid excessive production cuts that might further tighten the market and trigger a sharp price rebound that could hurt the world economy.

EIA projects that OPEC crude production will fall from 32.6 million bbl/d in the third quarter of 2008 to 30.6 million bbl/d in the first quarter of 2009. OPEC crude production is expected to average 30.6 million bbl/d in 2009, about 1.6 million bbl/d below 2008 levels. The combination of lower demand for OPEC oil and capacity expansions expected in several OPEC countries would lead to a rise of surplus production capacity to an average of 4 million bbl/d in 2009 (OPEC Surplus Oil Production Capacity). In addition, EIA expects that OPEC production of non-crude liquids will rise substantially next year, growing by 770,000 bbl/d in 2009. Our price forecast for 2009 reflects both of these factors.

Inventories. Revised data indicate that OECD commercial inventories rose by 568,000 bbl/d in the third quarter of 2008, somewhat higher than historic rates for inventory builds during this time of year. OECD commercial inventories stood at 2.65 billion barrels at the end of the third quarter, equivalent to 57 days of forward consumption cover. On the basis of days of forward cover, OECD commercial inventories are well above historic levels, and EIA projects that they will remain there through the end of 2009 (Days of Supply of OECD Commercial Stocks).
====================================
Do not be fooled by the short term severe break in oil and petroleum product prices. The decline in prices is caused more by the financial meltdown and the forced sell of all asset classes by large speculators, including hedge funds, than by supply and demand factors.