Posted: June 18, 2008

As the man who shook up the world when he recently told EnergyTechStocks.com that U.S. pump prices could hit $15 a gallon within a few years, (See ‘Dean of Oil Analysts’ Maxwell (Part 2 of 4): U.S. Pump Prices to Hit $12 to $15 a Gallon) “dean” of energy analysts Charles Maxwell has become a prophet of doom.

But wait. There’s worse.

A while back Maxwell told EnergyTechStocks.com’s managing editor that he believes OPEC’s oil production capability has been severely undermined by three decades’ worth of underinvestment in oilfield maintenance. According to Maxwell, back in the late 1970s a subtle but decisive change occurred in the way countries’ state-owned oil companies operate. What changed was that investment decisions became politicized. Money was diverted that should have gone into oilfield maintenance, with rulers rationalizing that such maintenance should be handled by Western oil companies even though those companies don’t own the oil.

Maxwell’s long-held fears that, no matter how much oil OPEC may have left, it doesn’t have the ability to raise production to meet rising demand, appear about to come true. No OPEC country other than Saudi Arabia has so far sought to take advantage of today’s astronomical oil prices by raising production, and now a source close to the Saudi oil industry has reportedly told CNBC that the Kingdom’s ability to significantly raise production is in question.

For such a statement to be made by the notoriously tight-lipped Saudis is extraordinary, and it suggests that Maxwell may have been right all along, that OPEC is itself tapped out, at least for the foreseeable future. No doubt this was part of the reasoning behind Goldman Sachs’ recent prediction that oil could hit $200 a barrel within the next two years – and that’s without the prospect of a major hurricane hitting the U.S. (See If a Hurricane Strikes (Part 1 of 2) Experts Say Oil Could Spike to $200, Natural Gas to $16 Mcf, and Stay Elevated for Year or More.)

The takeaway for investors here is that the closer Maxwell’s vision of the future comes to reality, the more money will flow into new technologies aimed at reducing the world’s oil exposure. As EnergyTechStocks.com indicated last week, there may be no “hotter” investment area in the coming era of “peak oil” than plug-in and all-electric vehicles. (See Investor Alert: Start Positioning Your Portfolio For The Electric Vehicle Revolution.)