New 'super-spike' might mean $200 a barrel oil(so says Goldman Sachs)

NEW YORK (MarketWatch) -- With $100-a-barrel here for now, Goldman Sachs says $200 a barrel could be a reality in the not-too-distant future in the case of a "major disruption." Goldman on Friday also boosted by $10 the low end of its 2008-2012 projected range for crude to $60 a barrel -- significantly lower than current prices, to be sure, but a possible mark for oil if "normalized" trends return to the marketplace.

With the dollar's fall continuing and financial markets roiled by the credit crunch, commodities like oil have been drawing the fancy of increasing numbers of investors. Accordingly, Wall Street firms have been eager to adjust forecasts to incorporate fresh data on the global economy and energy supplies.

Goldman analysts Arjun Murti, Kevin Koh and Michele della Vigna said prices have advanced more quickly than Goldman had forecast back in 2005, when it predicted a range of $50 to $105 a barrel as part of its "super-spike" oil theory.

"We characterized the upper end of the band as more likely to be driven by geopolitical turmoil and that recession was a key risk to our view," the analysts said. "In fact, oil prices have reached $100 a barrel without extraordinary turmoil, and the U.S. currently appears to be in recession."

“In politics, nothing happens by accident. If it happens, you can bet it was planned that way.” FDR

NextEnergyNews.com
http://www.nextenergynews.com/

Massive Oil Deposit Could Increase US reserves by 10x
http://www.nextenergynews.com/news1/next-energy-news2.13s.html

2008-02-16

America is sitting on top of a super massive 200 billion barrel Oil Field that could potentially make America Energy Independent and until now has largely gone unnoticed. Thanks to new technology the Bakken Formation in North Dakota could boost America’s Oil reserves by an incredible 10 times, giving western economies the trump card against OPEC’s short squeeze on oil supply and making Iranian and
Venezuelan threats of disrupted supply irrelevant.

In the next 30 days the USGS (U.S. Geological Survey) will release a new report giving an accurate resource assessment of the Bakken Oil Formation that covers North Dakota and portions of South Dakota and Montana. With new horizontal
drilling technology it is believed that from 175 to 500 billion barrels of recoverable oil are held in this 200,000 square mile reserve that was initially discovered in 1951. The USGS did an initial study back in 1999 that estimated
400 billion recoverable barrels were present but with prices bottoming out at $10 a barrel back then the report was dismissed because of the higher cost of horizontal drilling techniques that would be needed, estimated at $20-$40 a barrel.

It was not until 2007, when EOG Resources of Texas started a frenzy when they drilled a single well in Parshal N.D. that is expected to yield 700,000 barrels of oil that real excitement and money started to flow in North Dakota. Marathon Oil is investing $1.5 billion and drilling 300 new wells in what is expected to be one of the greatest booms in Oil discovery since Oil was discovered in Saudi Arabia in 1938.

The US imported about 14 million barrels of Oil per day in 2007 , which means US consumers sent about $340 Billion Dollars over seas building palaces in Dubai and propping up unfriendly regimes around the World, if 200 billion barrels of oil at $90 a barrel are recovered in the high plains the added wealth to the US economy would be $18 Trillion Dollars which would go a long way in stabilizing the US trade deficit and could cut the cost of oil in half in the long run.

Does the FTC even regulate financial instruments? I can’t imagine they have the power to actually ban futures, and even if they did it would never stop them from being traded—all trading would just move overseas.

I'm not totally clear on the process.
I remember reading somewhere that trading oil futures is a relatively recent practice, and that it was not "allowed" in the past.
As to who it is that "allowed" oil to be traded on the market, I can't recall, and am unsure if the article even explained that part.
It may be the Stock Market itself that determines what is traded, may be the FTC, but "somebody" is in charge of those decisions, and could take action to curb this speculation.

It often takes time to get a new instrument approved, but once something has been approved and has become as widespread as oil futures there’s no way an administrative agency could ban it. Even if Congress itself attempted a ban (which would never happen), it would be ineffective since trading could just move overseas.

But I don’t see any reason to regulate oil futures. Speculation may be pushing prices above what they otherwise would be now, but this same speculation (assuming it is based on reasonable assumptions about future supply and demand) would then help stabilize prices over the long term, as higher prices now mean somewhat higher supply in the future, when prices would otherwise be still higher.

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