Posted on 06/10/2009 10:14:59 PM PDT by Big_Monkey
Predictions of $250 a barrel on fears for oil reserves, hopes of economic recovery and hedging against weak dollar
The price of oil burst through the $71 a barrel mark today amid revelations that proven reserves had fallen for the first time in 10 years and predictions that the price could eventually hit $250.
The latest high – from lows of $30 only four months ago – came on the New York Mercantile Exchange, where the cost of July deliveries rose by $1.35 to $71.36.
This comes on top of a $2 rise the day before as investors rushed into the market on the back of lower stockpile figures, higher demand estimates and speculation against further falls in the dollar.
"I wouldn't be surprised if we're testing $80 in a week or two," said one analyst, while BP's chief executive, Tony Hayward, questioned whether $90 could be the "right" value.
Kuwait's oil minister, Sheikh Ahmad al-Abdullah al-Sabah, put some of the rise down to signs of recovery in Asia but warned that overall demand was still weaker than last year. Opec would not raise supply at current oil prices but did not rule it out "if it reached $100", he said.
Alexei Miller, chairman of the Russian energy group Gazprom, raised the stakes further when he reiterated last year's estimates of $250 a barrel. "This forecast has not become reality yet, given that the [credit] crisis gained momentum and exerted a powerful impact on the global energy market. But does this mean that our forecast was unrealistic? Not at all."
(Excerpt) Read more at guardian.co.uk ...
Having said that, if oil gets to $250, even $170, we really will be in a world of hurt not seen, well maybe ever.
What’s to worry about? Our economy will be completely “green” at that point according to our (moronic) President and won’t need oil at all. /sarc
Oil’s not going to get to $250 unless the economy fully recovers from the current recession. And given that the current recession (a GDP contraction of maybe a few percentage points) was able to bring it down more than 50%, I can’t imagine a return to high prices could do more than a few percentage points worth of damage.
In other news, as oil rose 2% today, the dollar slid another 2% against the EUR, the GBP, and the CAD indicating that the rise in the price of oil is not from the cost of oil, but the declining purchase power of the dollar...
And the Dems will still refuse to consider any further domestic exploration/extraction.
Oil at $140 is a large part of what tanked the auto industry.
True, but the auto industry as a whole can adapt if that becomes a long-term reality, even if some companies can’t.
I would agree with you 100%, if not for the rebound that oil has enjoyed the last 8(ish) weeks, for no good reason. There isn't any fundamental good news about the US economy, or even the world economy. You could maybe argue the case that the decline as slowed and were at or near the bottom. But, I think that would be a big maybe.
At the risk of using a terribly cliche phrase, we truly are in a new paradigm. I still don't think that a full and complete accounting why the energy prices spiked with such sharpness last year has been given. It had to be an artificial spike, which makes me question if the lows we were at recently, and perhaps even the price were at now is artificial as well.
If the decline in the world's economy has slowed because of artificially low energy prices, what happens when market realities eventually set in? Will the slowdown re-accelerate?
I think (and I could be way wrong as commodity trading isn't my strong suit) that the dollar devaluation is only exacerbating our problem. But, the rise in oil price is Global, not just regional or national.
It’s also what helped to burst the real estate market when a bunch of folks in over their heads now couldn’t afford to drive to work.
How long was oil at $140.00 ? a year? maybe a bit more?
That factor may have played a very small factor in what destroyed a 75 year old industry. But, a large part, I would disagree.
The auto industry, in the USA, has been destroyed due to poor management and their inability to react to or predict market trends.
BTW, why did high oil prices only destroy the US auto industry and not that of Europe or Japan?
The US auto industry had a bad business model of not fully funding the retirement pay and benefits of the workers. As production volumes shrank, the overhead killed them. That and a severe worldwide industry overcapacity with the big 3 being the high cost producers. And a history of poor design quality evidenced by relatively poor durability of many of their vehicles.
Sounds like a good time for a large gas tax. We’ll all be driving our ‘green’ cars getting a 200 miles a gallon built by Government Motors. No worry here.
Mass trasnit.
And, I would say it did have a terribly corrosive effect on the European economy. I don't know enough about the Asian or Japanese economies to comment. But, as someone with many Italian relatives, I can promise you that the truckers were dying (and striking) because of the effects of the oil and subsequent petrol rises.
The impact of high priced oil on the rest of the economy is going to be a major kick in the shins. We survive/thrive on cheap oil. Raise the price and our economy tanks. What a very different economy we have since the days of $10/bbl oil before Clinton sent Bill Richardson to the Middle East to screw things up. It couldn't have worked better for Clinton as oil prices rose rapidly in early 1999. Just in time to screw up the economy for the next President. The RATS seized control of both House and Senate in 2006. That set the stage for more manipulation to drive up oil prices. Killing the options to drill for our own oil while world demand rose made it easy to tilt the elections against the Republicans in 2008. Bush was blamed for the rotten policies of the RATS controlling Congress.
$250? Sorry, time for the horse-n-carriage. Forget Obsmobiles.
Written like a man who doesn't have any kids left at home. For the rest of us poor saps, we're screwed.
Typical BS from the UK papers.
Americans changed their behavior when the price spikes.
Actually, I believe this is possible, especially if big oil is taxed to pay for an 0bamathing.
I can imagine $5 or $10 per gallon gas.
To know that off Florida in billions of barrels and off the artic in billions of barrels & cubic feet of natural gas, as well as the shale in PA and the ND/MN oil (shale? sands?) we have so many riches. Oh yes, mustn’t forget the Utah natural gas riches either. Then there’s whatever is off CA. To think that we’d stall these 30-40 years after a big spill....when there are those nations who would willingly slant drill into our territory to get at our wealth without the slightest sense of responsibility, really tells us about the actual political will that now runs counter to the best interests of the American people, their families, their welfare, and, their wallets. Jobs will be lost. So will homes. But we’ll be ‘green.’
The U.S. had cheap gas prices. The European prices have always been jacked up by huge taxes. The frugal use of gasoline was already factored into the European market. It was forced on the U.S. market. The knee jerk reaction was to stop buying the most popular, most profitable products from Detroit to avoid the high gas consumption inherent in the pickup and SUV models. Detroit was hammered by their own crappy products in the more fuel efficient classes. Car sales plummeted while the bills for exorbitant union labor and benefits remained. The economic death of the U.S. auto companies was unavoidable with the asinine energy policies of the environmentalist/socialist/Democrats in play.
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