Peak Oil and a call for Crude Oil CW in Bursa

I like this article because of the balance that it provides. Short, simple, for future reference - http://gas2.org/2008/12/15/iea-chief-economist-says-peak-oil-will-come-in-11-years/

The thing for me to take out of this is that "peak oil" is a concept where many people have many strong and yet different views about it, ranging from "it's going to happen in 10 years time" to "it might never happen because the world will find new sources of energy through improvements in technology" ...

Even the IEA (International Energy Agency) chief changed his mind, that peak oil might hit in 2030, and brought that down to 2020, which makes it much sooner.

Obviously, "peak oil" is a highly important and highly critical concept simply because our world is so energy dependent, and if the world fails to address our long term future energy needs, then, some says "human civilization as we know it today" could come to "an end".

I tend to agree with the author that it is too important to NOT plan for it.

Even if it's going to happen in 30 years time or 50 years time, the possibility that it could happen in 10 years time means it's too important to do nothing.

So, I strongly lean towards the idea of taking out an "insurance policy". And like all insurance policy, only a small % of assets needs to be committed, not the entire portfolio.

And when crude oil prices is so low and potentially volatile, it would only makes sense to trade a significant portion of it. Note that the recent Nymex crude oil price is not across the board, but only to the expiring January contract on Dec 19. The February contract did not behave in the same manner.

Unfortunately, there isn't a really decent crude oil counter in Bursa that provides direct exposure, nor is there sufficiently large volume and liquidity that a single or a small group of players does not control the prices on a regular basis ... In my chatbox, I have expressed strongly ideas for Bursa and brokers to consider creating products that are linked to crude oil prices, such as a relatively simple, straightforward, call warrant based on crude oil prices. When crude oil prices are in a "lowish range" like it is now, it should be a relatively straightforward matter for the professionals to hedge their exposures, and to write such Call Warrants and introduce these to Bursa. The call warrant can be so designed so that it could be in the money, even if Crude Oil falls to USD20, thereby, making it a very low odds of having a zero value at expiry. At current price of $35-$40, if it goes back to $50-$60, the instrument will have doubled one's money, and $50-$60 might not be an unreasonable target over the next year or 2. An expiry date of 9 to 12 months would be excellent. If the introduction of such call warrant can be timed when crude oil is around $35, then, I believe such Call Warrant will be HIGHLY popular, especially when crude oil price starts to run back to above $40. Many traders would flock back to Bursa just from this CW alone.

If you support the introduction of such call warrants, don't be shy to drop a note in the comments section.

Let's hear your views!