Business Week: Oil Headed for $80 a Barrel?
“Oil at $80 a barrel?” asks BusinessWeek.com. Surely that’s not possible. After all, the world’s running out of oil, isn’t it? China and India have pushed global demand to untenable levels. Wells in Russia, Mexico and Saudi Arabia are running dry. High fuel prices are here to stay! We must have alternative energy… Bring on the EVs stat… Need more hybrids… Must have wind energy now… Ahhhhh!!! Yet Joel Fingerman, a Chicago-based energy consultant, has the nerve to forecast that “This is start of a fall to $80 crude by the end of the year, maybe as early as September.” And Oppenheimer senior energy analyst Fadel Gheit explains, “Oil prices are dropping because they are inflated. You cannot sustain an artificial price forever.” Hrumph! So did ya trade in your favorite SUV for an itsy bitsy gas miser? That’s too bad. Stephen Schork, editor of a daily energy newsletter says, “A lot of the strength [in oil’s price] was hype and hot air.” Gee, where have I heard that before?
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SD 328I Yes...they will become fashionable again. Exactly why I will then take this advantage. Sell them the SUV. Don't really use it much nowadays. And when and if I do, I will rent. And gas will once again be high...but I will be truck free. I think this is a wonderful opportunity.
Speculation provides price liquidity. It's a beneficial market fuction. Any time you see someone blaming specuation on high (or low) commodity prices, you know they are ignorant of basic market economics. It's popular to lambast the Evil Speculators when prices rise. It's not so popular to cry for the Poor Speculator when they misjudge and loose money on a market move. Speculators help find natural market prices faster.
Americans have a NOTORIOUSLY short memory. If gas stays cheap long enough for them to forget (and that's not too long!) they'll be lining up for Expeditions again by spring.... Detroit will get another case of tail-wagging-dog whiplash when SUV demand skyrockets and they all scramble to switch their factories BACK to truck production, and they'll whine "OK, there's REALLY no way we could have seen THIS coming!" The myopic follies will just go on and on....