This is as clear a picture as you are likely to find regarding the price of liquid energy including oil…

Right now, the world is producing as much liquid energy as it ever has before.

Part of this is due to an increase in liquid natural gas and biofuels, but the majority is from oil.

The last time the planet was producing this much oil, the price of oil was at an all time high of $147…

(You could make the argument that the price was due to hedge fund speculation driving it higher.)

OPEC’s reserve

It should also be noted that non-OPEC fuel production has made up the majority of the increase, which leaves OPEC with some room to run.

That said, it seems like a good bet that the increase in global GDP for 2011 — coupled with the destruction of all major currencies — will continue to drive up the price of oil and gasoline.

Morgan Stanley’s economists have put out a bullish analysis:

… our U.S. economists’ 2011 GDP forecast to 3.6% from 2.9%. They also see a modest uptick in inflation to 2.1%, from 1.7% in 2010. A key pillar in this improving growth outlook is exports.

In October, exports surged 3.2% over September, and should contribute 3.2% of the 4.2% GDP growth in 4Q10. Looking forward, the strong growth in EM bodes well for U.S. growth, as it accounts for an increasingly large share of U.S. export, a reflection of global rebalancing.

Head out on the highway

So-called emerging markets — those countries that are developing at a fast pace like China, Indonesia, India, Chile, Israel, and Brazil, among others — have bounced back from their global recession much more quickly than the highly indebted Europe and the United States.

And these countries need a constant expansion of energy to fuel their growth.

China, who recently took the number one slot in auto sales from the United States, is also the world’s leading energy consumer.

Chinese oil drill

I’m sure you’ve heard that China is expected to be the world’s largest auto market in 2011 with sales increasing 15 percent, usurping the United States in sales for the third year in a row…

But did you know that Brazil has eclipsed Germany in car sales? Or that Russia is the fastest growing car market in Europe?

A major investment theme of the past ten years is China’s seeking out oil and energy around the globe.

The country recently gave Venezuela $40 billion to fund oil infrastructure projects. 

In another example, the Middle Kingdom recently became the world’s fourth largest offshore energy prouder — a task that requires a high degree of technical skill.

Putting oil in the tank

But China is further adding to the demand side by building its strategic petroleum reserve as a buffer against supply disruptions. The Chinese plan to go from 103 million barrels in holding tanks to 500 million barrels over the next few years. 

If they suck up just one third of it this year, that will equal 10% of the IEA’s forecasted increase in oil consumption.

Some prognosticators have done the math and claim that this will at $6.50 to every barrel of oil sold in 2011.

The upshot of this is that oil prices are going up this year, based on high emerging market car sales, global recovery, and China buying 397 million barrels to fill its reserve.

The best way to play this is to buy junior oil companies. 

The last time oil went from $90 to $147 a barrel… these companies went up 1000%.

I’ve discovered one such company that trades under $2 and has up to 614 million barrels of oil. This is the last best oil investment out there…

Last year my readers made 957% from this company in one year!

But it’s not over yet… They just shut down operations due to the brutal Mongolian winter. 

This was something that I predicted and told my readers about. In Crisis & Opportunity, we told half profits. When the company announced the halt in operations, the stock pulled back dramatically. 

And this has created a fantastic buying opportunity for the next leg up.

As soon as the snow melts in three months, they will be up and drilling again… And next year, they will have the cash to have winter drills pumping through the winter months…

But the word on this oil company is getting out.  I am no longer the only analyst following this company.  I’ve even seen their name pop up in the mainstream press.

The confluence of a winter selloff coupled with the rising price of oil makes this the perfect time to get in. 

Next week, I’ll tell you why Obama will dance for joy over $5 gasoline. 

Not only will he let it happen… He will help it along.

Until then,

Christian DeHaemer
Editor