"Once we get through the crisis, we will find that support is higher than US$40 a barrel," said Sarah Emerson in late 2008. As managing director of Energy Security Analysis Inc. in Wakefield, Massachusetts, she says, "The decline in demand has already occurred. A lot of analysts were late coming to realize that. By next summer this market should be turning around."

The IEA, the oil watchdog, forecasts that China, India and other developing countries' demands will require investments of $360B each year until 2030. The agency says even with investment, the annual rate of output decline is 6.4 per cent.

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As we enter 2009, the oil landscape has reversed dramatically from a year ago. The price of oil is lower than production costs and new exploration projects are being cancelled. China, flush with cash, is currently buying all the oil it can get its hands on to pump into its strategic reserves. Once arrogant OPEC countries are willing to sell oil at any price to fund government programs and prevent political instability.

One constant however is the depletion of major oil fields, worse than predicted at 9.1% year over year as we close 2008. It's a matter of when not if the economy recovers and when it does, expect a strong bounce back in the price of oil.

Investing in oil right now is one of the smartest moves you make this year. The International Energy Agency predicts that oil will rebound to $85 per barrel this year. That's a 70% gain on where it is now.

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