How would one figure 200 per barrel if no one would pay that price to begin with?
He’s saying there would be a shortage, meaning that the buyers who wanted and needed the oil would have to pay the prevailing price if they really needed it.
SO ... only the ones who needed the oil would be paying that price.
I can't believe that it will be because of increased use, even with gas at two bucks, if you have zero bucks coming in your not going to buy a lot and with this economy we have more people with zero bucks coming in than ever before.
The problem is the long thruput of drilling projects.
Capex for most companies was cut by 50% due to price concerns.
This will result in dramatic undersupply.
And thus a dramatic price rise, probably a quick one as people try to buy up cheap crude before it gets too expensive.
But like cattle right now. You had cheap beef prices because the drought forced guys to sell. Breeding stock got less and price is through the roof. And people hold back heifers to breed more. Which will result in oversupply and a price drop.
Rise, repeat.
Bogus talk. Can’t happen in today’s environment. Saudis are screwed and can only hope they force price to stay at $55 a barrel for three years...killing off US fracking industry for time-being. Meanwhile....everyone makes less and grumbles. What happens when price hits $100 a barrel again? Frackers restart, and clear profit again. It’s going to be $55 or less for a decade now. Congress may tax the heck out of gas, but it has no potential to rise much above $55.
What price would you pay to drive to work before you sold your house to move or quit your job?
Oil demand tends to be very inelastic in the short term.
Which is why we saw the 2008 price spike of $145.
It won’t stay that high, no way, but he is suggesting the spike could be that high.
This guy is full of it. But as we learned during the 70s oil crisis, we’ll pay whatever we have to for petroleum, even $200 a barrel if it came to that. At least until sufficient new energy sources/supplies could be brought on line.
Bingo.