If you plot US consumption versus price in the past, we don't make big changes and we certainly don't make them very fast. I see petroleum demand fairly inelastic in the short term.
Energy entrepreneur T. Boone Pickens predicted Tuesday that Brent crude oil will be at $90 to $100 barrel in 12 to 18 months. “The world got along fine with $100 oil,” he said on CNBC.
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Growth rates of 4-5% in the US economy in the last two quarters have to be related to lower oil prices—and because higher growth in the USA sucks in more imports—that has to trigger higher growth rates overseas—therefor the poignancy of the old adage...”the cure for lower oil prices is lower oil prices.”
What’s interesting is the speed of the predicted round trip tracks the round trip speed of the round trip of 2008-2010 rather than the long period of low oil prices in the 1990’s.
There was much less demand than supply in the 90’s however by 2008-2010 demand—especially from BRICS was pushing past supply. However, supply since 2009 supply has changed radically.
So I’m not so sure that predictions for a fast turn around by 2016 to 90-100 are quite warranted. We’ll see.
If you plot US consumption versus price in the past, we don't make big changes and we certainly don't make them very fast. I see petroleum demand fairly inelastic in the short term.