Here's Where to Find the World's Most Interesting ETF

Last month, I stood inside a shovel the size of a two-car garage.

A colleague and I flew to Alberta and drove from Edmonton to Fort McMurray to visit an area I call America's Gas Tank... the Canadian tar sands.

The drive took five and a half hours along what some people call the "world's most dangerous highway." It's a narrow road traveled constantly by heavy trucks. Near Edmonton, the landscape is rolling dairy farms, dotted with oil and gas wells among the cows. About an hour away from town, you enter a pine forest that stretches for miles and miles.

Below those trees lies the largest oil deposit outside Saudi Arabia.

North of Fort McMurray, you come across the Syncrude mine. A mile-wide break in the forest stretches out in both directions. It takes something like two years to prep a site for mining. A company has to clear the trees and carefully strip off the muskeg, which is like topsoil, to use again when it remediates the area. Then miners strip off the top layers of sand to get to the tar layer.

The air is thick with the smell of raw oil. The shovel I stood in came right out of the mine, left on the side of the road as a monument when its replacement came. Today, the region's three mines generate more than 860,000 barrels of tar-sand oil a day.

Just five years ago, these tar sands were more experiment than money machine. Those huge mining shovels are expensive, and refining the bitumen costs more than refining the light, sweet crude oil that comes through the drill pipes at work in other parts of the world. All told, mining a barrel of tar sand costs roughly $35. Back in 2003, oil traded for about $30 a barrel, and the only two companies mining here barely broke even.

Today, oil costs more than $125 a barrel, and the experiment is over. It's more of an explosion...

Forward-thinking oil companies began moving into the Alberta oil sands when oil prices climbed into the $50-a-barrel range. As oil prices moved past $60, the big oil companies started to scramble for tar-sand lands. They needed to get a slice of the world's largest safe oil deposit. It was like a giant game of musical chairs, without enough chairs.

The companies lucky enough to find a seat are investing awesome amounts of money for the long run. An estimated $159 billion has been spent on infrastructure (mines, pipelines, power lines, wells, etc.) so far. Another $80 billion will be spent over the next two years.

That's because, outside of Saudi Arabia, this is one of the only places in the world with spare production capacity. However, "turning on the taps" in an oil field takes time... even in Saudi Arabia.

In addition, many traditional oil-producing nations are generating much less than in years past. The single best example is OPEC member Indonesia. The country's oil production declined 35% over the last 10 years. It no longer exports oil... Now Indonesia must import it. The country will quit OPEC at the end of this year. Mexico is also a big oil producer. It provides 11% of U.S. oil imports. Its production is declining.

At the same time, the developing world is consuming more and more oil. China alone is importing 10%-15% more oil this year than last year. Russia, the Middle East, India, and Latin America are all consuming more oil as their economies develop. We aren't discovering nearly enough new large fields to meet this new demand.

To get started on further research, check out the natural gas and infrastructure plays I've written about in these pages. There's also an inventive oil sands ETF administered by Claymore. It's tiny (far too small for me to recommend to my S&A Oil Report readers) and trades... where else but in Canada!This is why oil costs more than $125 a barrel. It's also why the Canadian tar sands are so important... and why every commodity investor should be invested here for the long term. You shouldn't just see this area as an investment however... look at it as a hedge against soaring gasoline prices. Sure, you many spend a hundred bucks to fill up the SUV, but you'll be earning great returns on your oil money.