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Global oil addiction to boost coal
Commentary: Energy opportunity lies underfoot

By Kevin Kerr, MarketWatch

BALTIMORE, Md. (MarketWatch) -- Opportunities abound for investors in the energy market right now if we just look at what is being set in motion globally.

The end of the age of oil will not be a disaster if we are prepared for it as investors and consumers. Acceptance is the first step.

Oil is the life blood that moves things, that keeps the whole world functioning and growing. In the last 100 years we have become very spoiled. We have become used to the easily obtained, easily moved and easily processed petroleum, crude oil, and natural gas. We have simply come to expect it will always be there, or at least for our lifetime.

Oil, among other things, helped to develop internal-combustion engines which do the work of a thousand men. Oil is in essence is providing a major workforce throughout the world.

This essentially invisible workforce has allowed the world's population to grow to over six billion people. Not only that, it has allowed us to plow millions of acres of land, to produce fertilizers, to transport people and goods, even to wage global wars and to set up global communication systems. Our dependence on oil and energy as we know it is similar to an addict's powerful affliction. The world's craving and need for oil is just as debilitating.

There is no 'Twelve Step' program

One can argue about the exact moment oil production will peak, but not about its causes -- geological inevitability (there is after all only so much oil) and increased global demand.

At the moment, oil consumption is at record levels and is showing no signs of slowing. The growth is mainly supported by China with its 10% annual growth in oil consumption. The argument that more big "fields" are still to be found on the planet are of little solace. For example the Arctic National Wildlife Refuge, if drilled under perfect conditions could only satisfy the world's consumption needs for a few months, if even that long.

Oil reserve data is another flawed concept. The data is at best inaccurate and at worst, completely false. For example, the official oil reserves of the OPEC countries in the mid 1980's grew by billions of barrels almost overnight seemingly like magic. The reason for this was simple. Back then OPEC's internal production quotas were allotted according to the declared reserves of these countries.

Examples of oil addiction are all around us and the results of increased prices are too. Layoffs across all sectors due to fuel costs -- transit companies need subsidies or must increase ticket prices, ambulance and fire stations must decrease the coverage due to fuel costs, farmers cannot afford to purchase fuel for tractors or the nitrogen based fertilizer that is created using natural gas. Politicians are feeling the heat and moving fast to partner up with other countries that can help.

The New World of Energy

In the ever changing energy scene in Eastern Europe and Russia, leaders are scrambling to develop sources of energy as well as partnerships that will continue to provide profits for their respective countries. For example, Russia's Vladimir Putin is looking for someone to head up the Rosneft energy company, preferably a Westerner. He clearly wants a Republican with ties to the White House and toward that end he recently met with Donald Evans. Evans is the former chairman of the Bush 2000 campaign and also a Texas oilman. Evans cold play a key role in Russia's efforts to help Western investors feel safer about investing in the country especially after the Yukos affair. Putin is pulling out all the stops to get Rosneft more positive visibility before its upcoming IPO.

At this moment the United States does not have an energy source that would be as easy to produce and transport as oil. Nuclear power can produce electricity, but the remaining rich uranium ore will last for decades, not for centuries. Renewable energy can probably never cover the current levels of global energy consumption or even U.S. consumption. Projects like the nuclear fusion plant in France that will cost 10 billion euros and hydrogen fuel cells are great concepts but of little practical value. Even if the fusion plant does produce electricity, it won't turn on any light bulbs. Supposedly though it could heat all the oceans, even that's only a theory. So what is a practical solution right now?

Coal -- the perfect stocking stuffer

Santa may be scratching his head about what to give this year. But with coal prices soaring all year long it's not such a bad present. Coal is cheap and reliable and nowadays cleaner burning. As the world goes through painful withdrawal on dependence on oil, coal may help. Coal companies like Consol Energy (CNX) and Foundation Coal Holdings (FCL are two examples of outstanding coal companies that have surged in 2005 and should continue to in 2006. Canadian resource companies are also exploding too, and one coal company there is Western Canadian Coal (CA:WTN: news, chart, profile) .

The rapid depletion of oil will drive demand to other areas like coal, these shares stand to benefit from a rising coal price. Recovery from oil addiction is possible and the long-term easy to reach answer may be in a fuel source that is right under our feet, coal.

***Rogue comment....check out this one, great speculative coal play. There's also been some heavy institutional(a firm recently bought over 10% of the outstanding shares) buying of this one (HLB.to) recently.

http://stockcharts.com/def/servlet/SC.web?c=HLB.TO,uu[h,a]daolyyay[dd][pb50!b200!f][vc60][iut!Uc20!L...

Hesperian Capital Management Ltd. Makes a Significant Investment in Hillsborough Resources Limited
12/19/05

CALGARY, Dec. 19, 2005 (Canada NewsWire via COMTEX) --
Hesperian Capital Management Ltd., which manages a strategically focused group of public and private investment funds, announced today that it has acquired control or direction over 5,078,200 common shares (or 10.48%) of Hillsborough Resources Limited.

The Hillsborough Resources Limited shares are held by Hesperian for investment purposes, and will be reviewed by Hesperian's management on a regular basis. Management may increase or decrease its share ownership of this investment in the future. A copy of the report filed by Hesperian in connection with the acquisition, as required under applicable securities legislation, may be obtained by contacting the office of Hesperian at 1-877-531-9355.

Hesperian Capital Management Ltd. is a Calgary-based investment manager that manages the Norrep Group of Funds. They have approximately $500 million in combined assets.

Visit www.hesperiancapital.com for more details about Hesperian and the Norrep Group of Funds.

%SEDAR: 00017183E

SOURCE: Norrep

SOURCE: Hesperian

Randal L. Oliver, CFA, President, Hesperian Capital Management Ltd., [phone], [e-mail]






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