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Over the next few years, Faber sees an "oil crunch" due a mix of two factors. First of all there is the rapid decline of crude oil supplies. It should be noted that Faber has previously expressed his belief in the peak oil theory. On the demand side of the equation, Faber thinks that demand will continue to surge in emerging markets.
Faber also believes that there is potential for military conflict that would further boost energy prices.
He is of the viewpoint that "rising commodity prices lead to increased international tensions." Specifically, Faber sees a potential problem with the rise of China and the diminishing power of the U.S. Faber notes that most commonly, the transfer of world leadership involves "armed conflict."
As a way to profit on rising energy prices, Faber "recommended the accumulation of energy and energy related investments (XOM, HES, SU, U CN, CCJ, UEC, CHK) and of the stock markets of countries that would benefit from rising energy prices including Russia (TRF), Kazakhstan and Middle East (MES). Once again, I recommend individual investors to accumulate energy companies (including natural gas) and the Gulf States ETF (MES)."
It is also interesting to note that Faber is still moderately bullish about the price of natural gas. He turned bullish in Q1 of 2010 and the price languished all last year. He noted that natural gas is one of the only commodities on the planet where the price has not risen in the last decade.
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