Posted on 08/15/2008 12:49:17 AM PDT by TigerLikesRooster
$65 oil is coming (maybe)
A top analyst expects crude prices to start plummeting. If you don't believe it, you're not the only one, and a few stocks look good if you're in the skeptics' camp.
By Jon Markman
If you're frustrated over the high cost of gasoline at the pump, don't trade in your Hummer for a Vespa just yet: A leading energy analyst is telling clients these days to prepare for crude oil to retreat back below $65 per barrel over the next three years.
How could it happen? He says conservation, new drilling, efficient new vehicles, alternative energy sources, a rising dollar and a global recession will combine to blast prices back to the Stone Age -- or at least to last year's levels.
"The match has struck, the fuse has been lit, and four or five years from now OPEC producers are going to be drinking their own oil and choking on it," says Tony Kolton, the founder and president of Logical Information Machines, a provider of research to most of the world's major energy-trading companies for two decades.
Plenty of smart analysts disagree with this point of view, figuring that emerging-market demand will pump up fossil-fuel prices and that Americans will blithely forget all about conservation if gasoline prices trend lower. But since Kolton's view is deeply out of consensus and at least minimally plausible, it does deserve our attention.
Speculators unmasked
Kolton, a specialist in the history, composition and psychology of the energy market, believes that speculators were without question behind the run-up of prices to $147 per barrel in July and that government threats to expose and punish their behavior spooked them out of their positions in a hurry.
(Excerpt) Read more at articles.moneycentral.msn.com ...
Ping!
We can only hope.
Of course, if oil prices do come down, taxes will be raised to prevent the pump prices from coming down.
That’s great, but the REAL goal MUST be energy independence - for the economic health of the nation. We’ve been held hostage for 35 years. Enough is enough.
when oil was 65 dollars a barrel wasn’t fuel prices above 2.70?
No.
Hopefully the alternative energy train has already left the station and has enough momentum that it won’t be stopped, because we will eventually need something besides oil.
"You think so, comrade?"
I saw gas for $3.49 a gallon yesterday. It’s been falling, and I hope that continues.
Just looking at the chart in #8, $65 oil should put gas in the $2.50/gal range.
Dang,I just bartered my Hummer for a Mini-Cooper.
I suspect you are kidding, but during the oil crisis I was scratching my head at all the people dumping their SUVs for pennies on the dollar and buying fuel efficient cars.
I ran the numbers and found that for most SUV buyers, the step up in mileage to a miser was worth $5,000 to $7000 over 100,000 mile service life. The total cost of gas is much higher, but the premium paid to drive the SUV over the miser was some $6,000 on average. Yet most of these people were trading or selling SUVs for as much as $10,000 below former street value.
Except for those with say 2 hour commutes, all those fools lost their asses by selling low. And all the while I knew oil prices were unsustainable, so while they were down $2,000 or $3,000 selling the SUV at $4/gallon gas, it would be even worse after a return to $3/gallon gas. Fools.
I can understand replacing a 10 year old SUV with a miser, or promising to buy a fuel miser in the future, but very foolish to sell a paid for, comfy, safe big SUV for a loss when for most, the loss is higher than the premium paid for bad mileage over the remaining service life of the SUVs.
And just yesterday I wrote on another post that most people, despite knowing to buy low and sell high, generally do the opposite because greed, fear and other emotions push out logic. The SUV owners who dumped their SUVs for $10,000 below value to save $6,000 over the remaining life of their nearly new SUVs bought high and sold low. Not very bright...
I don’t like SUVs. I tend to like smaller, sporty cars that handle better. I hate the handling of trucks and SUVs and their ride is often inferior to cars as well. But if I did love SUVs I would have LEAPT at the bargains being offered during the oil crisis. They were selling SUVs for $12,000 and $15,000 below MSRP on the bigger loaded models. What a bargain. Get $12,000 off regular price and the gas hit is only $8,000 over the lifetime of the vehicle compared to a gas miser at $4/gallon. Instant saving of $4,000 to drive a safer, more comfortable vehicle. When gas drops back to $3/gallon the savings will be more like $7,000.
For a while there I REALLY wished I was the SUV type. Oh well...
We have an oil bubble and what do we do. We layoff tens
of thousand of workers.We destroy the only part of the U.S.
auto industry that was profitable.Also,we further destroyed
the aviation industry,if that’s even possible.
Agreed!!
Dropping? We had a $0.21/gal jump in prices yesterday to $4.09/gal of regular unleaded. NW Indiana (about 6 miles from BP’s Whiting refinery)
Interesting chart. I have often thought of constructing an oil price/gas at my local Valero graph but never mustered the will. I didn’t remember oil spiking to $100+ back in 2005.
Given the supply situation the $65 Oil would be another way of saying “World-wide Recession” — and a deep, long one at that.
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