Update: Why Oil Prices Will Tank

William C Montgomery
by William C Montgomery
update why oil prices will tank

In response to my manifesto on The Truth About High Gas Prices, a couple of people close to me confidentially told me that they thought I was nuts for predicting sub-$80 per barrel oil “in the not too distant future.” According to an economist at the Dallas Federal Reserve, I should have gone lower with my prognostication. Stephen Brown observes that cheap Saudi Arabian oil costs just $4 a barrel to produce. The most expensive oil on the market today, and the oil that set’s the world price, known as the “final barrel” or equilibrium price, is just $50 per barrel. Shawn Tully, CNNMoney editor, concludes, “It's even possible that, a few years hence, we could see a sustained period of plentiful oil supplies and low prices, meaning $50 or below.” But that doesn’t mean that it won’t get worse before it gets better. Today, the oil futures bubble inflated to a new record high above $135 a barrel, before settling back down to $134.35.

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  • Lprocter1982 Lprocter1982 on Jun 10, 2008

    To paraphrase Lutz, peak oil is a crock of shit, just like manmade global warming (not global warming in general - it's definitely happening, it's just we're not to blame.)

  • Stein X Leikanger Stein X Leikanger on Jun 11, 2008

    A few comments here really have me wondering. Lutz never said peak oil is a crock of shit, by the way. He was referring to global warming. The head of Gazprom, one of the world's largest oil companies, sees oil at USD 250 in the foreseeable future. But what does he know, compared to the illuminati in this thread? :-) http://www.independent.co.uk/news/uk/home-news/an-ominous-warning-that-the-rapid-rise-in-oil-prices-has-only-just-begun-844217.html

  • Pch101 Pch101 on Jun 11, 2008
    The head of Gazprom, one of the world’s largest oil companies, sees oil at USD 250 in the foreseeable future. But what does he know, compared to the illuminati in this thread? The article notes that his position is not a commonly held view. And call me crazy, but the head of an publicly traded oil company might just benefit from encouraging speculators to feel bullish about his company's future prospects and its stock. On the other side, George Soros has gone on record as saying that he believes that this is a bubble. But maybe he is holding short positions and trying to help his portfolio, too.

  • Forcastglobaleconomy.com Forcastglobaleconomy.com on Aug 05, 2008

    The problem with this logic of CNN is that crude oil is not an ordinary commodity. In normal case if the price of production and the sale price has a huge gap, production will rise phenomenally, and the price of the commodity will be pulled down. In case of crude oil, as we all know, the source is limited, Saudi cannot double or triple its production even their production cost is only $4 which is sold at more than $100. Please see article 11 on our website for the actual statistics about the crude oil price.

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