THEME: OIL PRODUCERS
Here is an interesting piece from Stephen Leeb:

In Russia the story is a little different. In the wake of their defeat in the Cold War both oil consumption and production fell off a cliff. Oil production has come back quicker than consumption. But recently oil revenues have started to generate real growth in Russia and consumption has started increasing at a rapid rate. The Russian auto population is growing at a double-digit rate.

The obvious point is that the world's major oil exporters are backward economies with great political risks. To the extent the risks remain, their incremental oil -- to the extent it even exists -- will not be developed. But if the risks lessen then their growth will strengthen and with stronger growth will come much greater internal need for oil.

If Tom Clancy were writing a conspiratorial novel his premise might very well be that the U.S. has been secretly trying to thwart peace in the Middle East for fear that a politically stable Middle East would be coincident with vibrant economies that in the end would need all the incremental oil they produced for their own internal consumption. As a side bar, note that Iran -- OPEC's second largest oil exporter -- has publicly stated that it will likely be an oil importer within a decade, hence their need for a nuclear program. And if you look at the data, the Iranians may have a point. Since the country began growing at a fairly rapid clip, oil consumption has been rising fast enough to eat up all the exported oil within the next decade.

COMMENT: It is certainly worth noting that of the various world equity markets this year, some of the best performance have come from the Middle East stock markets. Higher oil prices certainly aren't bad for their economies, but given their extremely young population, can it be translated into jobs for them?

News out of China continues to illustrate the unquenchable thirst for oil over there. I read in the news that several men had been condemned to death for stealing oil from a pipeline. Now that's what I call an Energy Crunch!