A peak oil warning from the IEA

What does it mean when a usually conservative International Energy Agency (IEA) issues a gloomy report?

It means that recent cheap oil isn't going to last - and that $100 oil will soon be a part of our daily lives ... again.

The IEA is warning that crude oil will average about $100 between 2008 and 2015 because of an unavoidable energy crunch. And that the biggest cause of that crunch is "under-investment" in new and existing fields, which are needed to make sure oil production can keep pace with growing demand and slowing supply.

The agency also believes that the world needs to invest some $350 billion a year through 2030 to keep up with oil depletion rates. They're claiming that current oil reserves are falling 9 percent a year, as compared to the 3 percent to 5 percent forecasts from analysts.

So, consider this.

If the world is using about 86 million barrels of oil everyday, a depletion rate of 9 percent would mean that we'd need to find and produce another 7.7 million barrels a day just to remain at breakeven.

That's like saying we need another Saudi Arabia, which is delivering a little more than nine million barrels a day after recent cutbacks.

Worse, the International Energy Agency outlook report, being released today, says that the world will eventually need to increase its production by "64 million barrels a day, or the equivalent of six times the current production of Saudi Arabia."

Even the Energy Watch Group believes oil production peaked - back in 2006.

And King Abdullah of Saudi Arabia has said, "The oil boom is over and will not return. All of us must get used to a different lifestyle."

And, say others, production will start to fall at a rate of "several percent a year" and is expected to create a supply gap that won't be easily closed by growing contributions from other energy sources.

Peak oil debates have raged for years. Some believe that crude oil production will meet rising demand for years to come. But others, including experts in the oil industry, claim that peak oil is imminent - if not already upon us, with which we agree.

As for the governmental agencies that believe the Peak Oil theory is misguided, recall that many of those agencies failed to see the credit crunch coming.

Listen, whether you believe peak oil or not, you should seriously be thinking about quality, beaten-down energy stocks, as early as today. I'm talking about the energy plays unfairly walloped by recent massive hedge fund redemptions, such as Chesapeake Energy (CHK) and Joy Global (JOYG), which we've been recommending in Pure Energy Trader. Those who get back into our energy plays right now stand to realize the biggest gains. 

Good Investing, and for more tips, check out WealthDaily.com.