"The Coming Oil Crisis" Market WrapUp by Chris Puplava

Robert Kiyosaki, author of "Rich Dad Poor Dad," which is the longest-running bestseller on all four of the lists that report to Publisher's Weekly magazine: The New York Times, The Wall Street Journal, USA Today, and BusinessWeek, published an article on Tuesday entitled, “The Coming Oil Crisis.”

Mr. Kiyosaki remembers the oil shock in 1973 and says to “get ready because those times could return with a vengeance.” He believes that we are heading towards a repeat of the 1973-1974 crises with the following similarities. During the mid-70s oil rocketed from $3 a barrel to more than $35 a barrel while presently, oil was launched from near $10 a barrel in 1998 to a new record of over $71 a barrel. Another similarity between then and now was that we were stuck in the Vietnam War and currently we are stuck in Iraq and now possible talks of war with Iran are heating up.

Mr. Kiyosaki believes that there is a difference between this time around and the 1973-1974 crises. It was a political problem back then and today it’s a problem of increasing demand with diminishing supply as well as a political crisis.

It’s no wonder oil broke over $70 a barrel to new highs amid recent headlines coming from Iran’s president. Earlier in the month speculation grew about a U.S. attack after a report in the New Yorker magazine said that Washington was mulling the option of using tactical nuclear weapons to knock out Iran's subterranean nuclear sites.

President George W. Bush dismissed reports of plans for a U.S. military strike against Iran as "wild speculation" and said he remained focused on diplomacy. As of yesterday President Bush refused to rule out nuclear strikes against Iran. Asked if options included planning for a nuclear strike, Bush replied: "All options are on the table. We want to solve this issue diplomatically and we're working hard to do so."

Iran has been defying the US as well as the international community while continuing threats against Israel. Iranian President Mahmoud Ahmadinejad warned that Iran would “cut off the hand of any aggressor" and insisted Tuesday the country's military must be prepared amid escalating tensions with the international community over its disputed nuclear program.

It’s hard to take the Iranian president’s claim that their uranium enrichment program is for peaceful purposes when he makes claims about the eradication of Israel. Last Friday President Mahmoud Ahmadinejad said that Israel was a "constant threat" and predicted that it was on the verge of "being eliminated." This comment came after his comment last year about "wiping Israel off the map."

The Iranian President further added that "The Zionist regime is an injustice and by its very nature a permanent threat. Whether you like it or not, the Zionist regime is on the road to being eliminated." He further referred to Israel as a "rotten, dried tree" that would collapse in "one storm."

He declared that the Islamic republic would not retreat “even one iota” after triumphantly announcing on Tuesday that it had mastered the art of uranium enrichment and would proceed now on an industrial scale. “Our answer to those who are angry about Iran obtaining the full nuclear cycle is one phrase: Be angry and die of this anger,” he said.

Iran appears to be preparing for a nuclear attack as satellite images show reinforcement of Iran's nuclear sites. The Institute for Science and International Security (ISIS), a U.S.-based think tank, said in an email with commercial satellite photos attached sent to news media that Iran has built a new tunnel entrance at a uranium conversion facility in Isfahan. Just two entry points existed in February, it said. (Source: Link to the article)

The ISIS satellite images taken between 2002 and January 2006 showed the fortification of two subterranean cascade halls being buried by successive layers of earth, apparent concrete slabs and more earth and other materials.

A report from the Sunday Times of London was posted below the ISIS article entitled, “Iran has 40,000 trained suicide bombers prepared to strike U.K., U.S. targets.” The Sunday Times quoted unnamed Iranian officials that Iran has 40,000 trained suicide bombers prepared to strike at British and American targets if Iranian nuclear sites are attacked.

The article quoted Dr. Hassan Abbasi, head of the Centre for Doctrinal Strategic Studies in the Iranian Revolutionary Guards, as having said in a speech that 29 western targets had been identified saying, “We are ready to attack American and British sensitive points if they attack Iran's nuclear facilities."

The newspaper said it had heard a recording in which Abbasi warned would-be bombers to "pay close attention to wily England" and vowed that "Britain's demise is on our agenda."

The political tensions with Iran are adding a political premium to oil already elevated from problems in Nigeria as well as other regions. Nigeria is the world's eighth-largest producer where attacks on pipelines have shut down an estimated 25% of production in recent months. Phil Flynn, senior market analyst and vice president of Alaron Trading said analysts who believe the current price isn't justified by fundamentals given the above-average level of inventories are missing a crucial point.

"To just focus on supply inventories, which we are constantly reminded are at an eight-year high, doesn't really take into account the complexities that face the world oil market. Eight years ago, we did not have to compete with China demand for oil. Eight years ago, the world had three times, if not more, spare production capacity than we do today."

The Energy Information Administration (EIA) released its weekly petroleum inventory data today which drove energy prices and stocks higher with a drawdown in crude and gasoline inventories. Crude oil inventories fell 0.8 million barrels last week to 345.2 million, though inventories are still above the upper end of their average range and close to a seven-year high. The real issue is the inventories of refined products.

Gasoline stocks fell 5.4 million while distillates fell 2.8 million. As the peak season for heating oil is over, their drawdown is not of great concern so much as the drawdown in gasoline stocks, despite an increase in production due to a 0.8% increase in demand relative to the same period last year. In stark contrast to crude inventories that are near a seven-year high and at its upper end of its average, gasoline stocks are just above the lower end of their average. The rise in gasoline prices at the retail level for regular unleaded gas have been driven by the drawdown in gasoline inventories with supplies of gasoline falling for seven straight weeks.

This has driven the average price per gallon up to $2.801, up almost 30 cents from a month ago, and 26% above the year-ago level, according to AAA's Daily Fuel Gauge Report. To compound the problem, the U.S. Energy Department forecasted last week that gasoline demand would rise this summer by 1.5 percent to 9.4 million barrels per day, and that prices would average $2.62 a gallon from now through September.

Rising energy prices drove the March CPI just above expectations, jumping 0.4% overall, while the core rate rose 0.3%. The consensus had expected a 0.4% rise in March for the overall index and 0.2% for the core indicator. The core rate increase was led by hotels, apparel, airfares, prescription drugs, physicians' services, tobacco, rent, and owners' equivalent rent. Some of these gains were due to pass through of energy input costs where energy prices rebounded 1.3% after declining 1.2% in February. The biggest energy increase came from a sharp 3.6% jump in gasoline prices.

The markets managed to finish on a positive note today with the DOW up 10 points to finish at 11278.77 with the S&P 500 up 2.28 points to close at 1309.93 with the biggest gain seen in the NASDAQ, which was up 14.74 points to close at 2370.88.

The markets were up in early trading, following through from yesterday's gains as well as strong earnings from Yahoo Inc. and United Technologies Corp. The markets then reversed course after digesting the CPI data, which rose the last Month at the fastest pace in over a year.

The rise in the CPI pushed up interest rates across the curve, with the 5-year treasury rising 3.4 basis points, and the ten-year and 30-year treasuries rising 5.4 and 6.5 basis points respectively.

Precious metals also responded to the inflation data with gold breaking $640 an ounce, up 3% to close at $640.20 while spot silver prices rose even sharper, up $0.64 an ounce to finish at $14.705, up 4.55%. Gold indexes followed suit with the AMEX Gold Bugs Index (HUI) up 3.88% to close at a new high of 385.30 and the Philadelphia Gold & Silver Index (XAU) finishing up 3.37% to close at 159.93, also a new high.

Energy commodities followed in suit with Henry Hub natural gas spot prices rising 2.11% to close at $7.73 per mBTU and West Texas Intermediate Crude broke $72 a barrel to close at $72.17. Energy indexes followed the commodities up with the Philadelphia Oil Service Index (OSX) rising 2.58% to close at 226.71 and the AMEX Natural Gas Index (XNG) and AMEX Oil Index (XOI) rising 1.94% and 0.89% respectively.

Index	Price	Price Change	Today's % Price Change	Week To Date % Price Change	1 Month % Price Change
Dow Jones Industrial Avg.	11,278.77	10.00	0.1%	1.3%	0.0%
S&P Dep. Receipts	130.88	0.18	0.1%	1.6%	0.4%
Nasdaq Composite Index	2,370.88	14.74	0.6%	1.9%	2.8%
Nasdaq 100 Trust	42.65	0.19	0.4%	1.3%	2.6%
Dow Jones Transportation Avg.	4,725.01	24.91	0.5%	1.7%	3.5%
Dow Jones Utility Avg.	393.29	1.21	0.3%	2.8%	-3.6%
Inter@ctive Internet Index	191.92	2.35	1.2%	1.9%	3.8%

Description	Last Price	Price Change	Today's % Price Change	Week To Date % Price Change	1 Month % Price Change
Basic Materials	1,598,081	17,916	1.1%	5.8%	12.7%
Capital Goods	842,598	8,090	1.0%	3.8%	5.7%
Conglomerates	862,442	10,778	1.3%	2.5%	1.8%
Consumer Cyclical	918,776	2,629	0.3%	2.0%	3.2%
Consumer/Non-Cyclical	1,358,973	7,046	0.5%	1.1%	-2.2%
Energy	3,139,507	45,826	1.5%	6.0%	12.2%
Financial	5,598,103	22,466	0.4%	1.9%	0.3%
Healthcare	2,358,674	4,299	0.2%	1.2%	-2.4%
Services	4,712,080	8,215	0.2%	1.3%	-0.2%
Technology	3,404,866	11,743	0.3%	1.8%	3.2%
Transportation	473,589	1,681	0.4%	2.0%	2.6%
Utilities	973,825	6,765	0.7%	3.1%	0.3%

Industry Group	Today's Mkt. Cap.	Today's Mkt. Cap. Chg.	Today's % Price Change	Week to Date % Price Change	1 Month %Price Change
Industry Groups with the Greatest Gain in Mkt. Cap. Today
Oil Well Services & Equipment	401,062	11,002	2.8%	6.5%	14.2%
Oil & Gas Operations	668,867	9,902	1.5%	6.3%	13.5%
Semiconductors	675,710	9,306	1.4%	3.5%	7.5%
Conglomerates	862,442	10,778	1.3%	2.5%	1.8%
Oil & Gas - Integrated	2,016,967	22,715	1.1%	5.6%	11.2%
Industry Groups with the Greatest Loss in Mkt. Cap Today
Computer Hardware	281,666	-3,578	-1.3%	-0.9%	-1.0%
Insurance (Accident & Health)	220,098	-2,371	-1.1%	-3.5%	-9.3%
Retail (Home Improvement)	147,413	-1,391	-0.9%	-0.5%	-4.7%
Broadcasting & Cable TV	397,698	-1,912	-0.5%	0.5%	1.4%
Communications Equipment	652,160	-2,176	-0.3%	0.9%	1.3%