Double or Nothing: Oil Prices Heading for $200 a Barrel?
Wow, that's some kind of price jump. You might even file it under scarcely credible alarmist prognostications. But there it is. "Options to buy oil for $US200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5533 contracts, a record increase on any similar period." The Sydney Morning Herald casts its journalistic net to find experts who say you ain't seen nothin' yet. "One hundred dollars a barrel is actually 14.9 cents a cup, so we're still talking about oil being remarkably cheap," said investment banker Matthew Simmons. Inventories "are tight as a drum and I don't see how we get out of this box." It's all about rising demand chasing static supply. "We haven't got to $US100 on just a whim," said Paul Horsnell, the head of commodities research at Barclays Capital in London. "This is at heart also about longer-term concerns that supply capacity investment needs higher prices to keep up with demand growth." Needless to say, if U.S. oil prices spike to $200 a barrel (29.8 a cup), truck-heavy U.S. automakers will go to the wall, double-quick. Detroit is a city of crossed fingers… [thanks to David Holzman for the link]