'Oil will hit well over US$100 and stay high'

Gleaner Company Ltd. ^ | July 10th, 2006 | Reuters

[M. Espinola]

OIL PRICES will soar to well over US$100 a barrel and stay high as part of a sustained commodities bull run that has another 15 years to run, billionaire United States investor Jim Rogers told Reuters in an interview.

One factor that could bring down the price would be a bird flu epidemic, which would send all asset classes plummeting, he said, although oil would probably fall less than other markets.

"We're going to have high oil prices for a very long time. The surprise is going to be how high it goes," Rogers said.

Reiterating earlier comment oil prices would hit at least US$100 a barrel, he said: "It will be much more than US$100 before the bull market is over."

U.S. light sweet crude hit a new record of US$75.40 a barrel on Wednesday and was trading at close to US$75 on Thursday.

Rogers, a former investment partner of billionaire fund manager George Soros, has predicted the commodities bull run has at least 15 years to run.

"It's a major long-term bull market as far as I'm concerned," he said.

Aside from the bullish impact of tensions, described by Rogers as temporary, over Iran's nuclear ambitions and North Korea's missile tests, he said oil was drawing long-term support from the lack of large scale finds

He did not know whether the Peak Oil theory that oil supplies are either at or very near their peak was correct, but said: "If there is oil out there, you had better find it soon."

Apart from new supplies, a factor that could lower prices would be a widespread epidemic of bird flu spread between humans.

"If bird flu should break out, everything will go down and oil would go down to US$40, but I would still urge people to buy oil. It would go down less than other things and it would be the first to go back up," said Rogers.

Rogers has set up the Rogers International Commodity Index for gaining access to the commodity markets.

In the first half of this year, it outperformed its much bigger rivals the Goldman Sachs Commodity Index and the Dow Jones-AIG Commodity Index .

While the RICI gained 9.7 per cent in the first six months of this year, according to Reuters data, the GSCI rose 5.3 per cent and the DJ-AIG gained 3.6 per cent.

Rogers said he could not say exactly how much money was in the RICI, but it was at least $4 billion.

[BlackVeil]

$100 is rather high, I don't think it will go that far - but I think it will at least stay around current prices.

My view is that oil is not going back to where it was pre-2003, no matter what happens internationally.

[hunter112]

Me, too. I'm glad I live only five miles from where I work.

[durasell]

It's gonna get ugly out there. The long term eventual impact will be to decrease the price of homes in the exurbs, take a chunk out of consumer spending, and push a bunch of folks over the financial edge.

[Smokin' Joe]

The democrats need oil to be high to have any chance of winning at anything.

All their solutions to high oil prices involve additional taxes, which will inevitably be passed on to the consumer, and which will ultimately make things much worse... I would sincerely hope people are smarter than that.

[Neoliberalnot]

No question on the oil issue being used by politicians, especially the left-wing crooks, but, the book I read was written by a geologist. Hubbard's peak, as I recall, was first predicted in the 50s by an oil-field engineer, before the left-wingers decided to use it against the U.S. I don't question there are new oil reserves, but the days of geysers of oil spewing into the air are over. Heavy use of coal and nuclear energy are in our future. Energy trusts are a nice way to ride the wave of higher prices and offset the increase at the pump.

[Eagles Talon IV]

And they have made billions. More power to them. However the laws of supply and demand will never change and there is a point at which the demand for oil that is caused by surging economies will diminish as the coast of that which fuels their economy becomes something, due to its expense, that starves it. I believe that point is well before the $100.00 bbl mark. Oil is a far less important part of manufacturers profit equation then it used to be in the 70's, 80's and into the early 1990's. The pain is caused at the pump and since the consumer (spending) is about 2/3 of the economy it is the soaring gas prices that MAY cause the consumer to reign in his spending. That is what will bring the economy down and with it oil prices. The question is where is that tipping point?