Dear Wealth Daily reader:

On the 20^th anniversary of the greatest stock market meltdown in American history, your editor was again called on by the talking heads to explain why oil is trading above $90 a barrel: http://www.cnbc.com/id/15840232?video=567548279&play=1

To my amazement, there are still those who think the current price of oil is illusionary... that it's a bubble... that there's no truth to peak oil.

After my interview on CNBC this morning, Joe Kernan was quoted as saying "Canada is the equivalent of 2 Saudi Arabias" and "I (Joe, not me) must be in denial [over dwindling oil supplies].

In other words, he doesn't believe me when I say that oil will be trading above $100 a barrel within the next 12 to 24 months.

Of course, I'm just a dumb kid from Baltimore. What do I know?!? The closest thing to an oil well I've been to is, uh, the gel I put into my hair!

But when T. Boone Pickens speaks on CNBC, everybody listens.

One of the most respected observers on peak oil, Boone is a man with over four decades of experience in the oil business and has earned his reputation by making prescient predictions about the oil market. His Dallas-based hedge fund, BP Capital, has had returns exceeding 800 percent since 2001.

In April he spoke frankly to the Petroleum Professional Development Center at Midland College in Texas:

"Yes, I believe in peak oil," he said. "Matt Simmons and I talked today and we're on the same team.

If, as Daniel Yergin believes, there's so much more oil left, why doesn't oil production move up instead of staying flat? Global demand is 85 million barrels [per day], or 31 billion barrels a year.

The world hasn't replaced the oil it's been producing since 1985. So if there's so much oil left, I don't understand why production hasn't gone up. All the big fields are declining and all the current drilling does no more than hold off the decline. So the next step is decline.

We can't hold on to 85 million barrel a day production."

Looking out through the end of 2008, he sees oil demand rising to 88 million barrels a day but production staying flat, sending prices back into record high territory.

In a March 2007 interview at the Forbes magazine CEO conference, Pickens summed up the situation like this: "The world has been looked at. There's still oil to be found, but not in the quantities we've seen in the past.

The big fields have been found and the smaller fields, well, there's not enough of them to replenish the base....If I'm right, we're already at the peak. The price will have to go up."

Profit... don't panic,

Brian Hicks

P.S. A few months ago, Boone made his infamous "$80 a barrel before I'm 80" call on the price of oil. A few days ago, he made a call for $100 oil before the end of 2007. I can honestly say that I don't know if oil will hit $100 by the end of the year... but I'll never bet against Boone.