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$65 oil is coming

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.

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.

He says his data on open interest of noncommercial positions in crude trading, as well as conversations with professional traders at big oil companies, clearly show that speculators, and not rising demand from Asia, pushed the market to extremes.

http://articles.moneycentral.msn.com/Investing/SuperModels/CouldOilPlungeTo65ABarrel.aspx
 

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conservation, new drilling, efficient new vehicles, alternative energy sources
In other words, if everyone hops into traditional SUVs again with short term thinking, we'll be back where we started when the prices started getting out of control.
 

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Wishful thinking.


Anyway, there are incredible environmental down-sides to our rapacious over-use of oil. Regardless of its price, we all need to use a hell of alot less of the stuff.

When sudden, sharp increases in commodity prices stun US consumers, they always over react as we have seen. The reaction has been swift and our use of gas has fallen sharply and quickly. That's good.

BUT, when conservation is so quick and extreme, it produces a back-lash of pent-up demand. I don't think oil will ever get quite that low again. And that too, is good. Cheap oil is simply too expensive.
 

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Probably the same guy who said oil would be $200 a barrel by the end of the year.......I just LOVE these "experts" who throw out these theories that aren't besed in reality.
 

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Something else I find funny: It was not at all long ago when the headline "$ 65 Oil Is Coming" would have sparked fear and panic here and in the world at large. Now, it's a relief.


...The world we live in.


.
 
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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.
Bush lifting the moratorium on the OCS (Outer Continental Shelf) and political pressure now on Congress to go along, played no role. Sure. (Pelosi actually shut off power in the House so Repubs could not debate it a few weeks back.) The simple threat of adding additional supply years down the road forced the speculators out. They'll lose money in oil now that there may be more supply in the future. Our environmental policies of the past 30 years has been a major factor in this recent run-up. That was factored into the speculators decisions to purchase oil futures. "Well if we can't drill, and there is demand ...?".
 

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Like I've repeated ad nauseum in here....

Expect the best, prepare for the worst.

An ounce of prevention is worth a pound of cure.

A bird in the hand is worth two in the bush....

If there's a 50/50 chance of oil hitting 200 bucks, and a 50/50 chance of it dropping to 9 bucks... I'm gonna prepare for the 200 buck scenario, and if it doesn't happen, use the saved up money to treat myself to a little luxury.
 

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Like I've repeated ad nauseum in here....

Expect the best, prepare for the worst.

An ounce of prevention is worth a pound of cure.

A bird in the hand is worth two in the bush....

If there's a 50/50 chance of oil hitting 200 bucks, and a 50/50 chance of it dropping to 9 bucks... I'm gonna prepare for the 200 buck scenario, and if it doesn't happen, use the saved up money to treat myself to a little luxury.

I like the way you think. :)
 

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I already got me my "what a great time to buy a gas guzzler" gift. If the price of oil continues to go down, maybe I'll go on a few more road trips. If it goes up, I'm perfectly happy driving my 300-500 miles a month.

Hey, I get to fill-er-up tomorrow............. cross your fingers that she got over 10mpg on this tank. :)
 

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$65-85 sounds a lot more reasonable to me than $30- 50 in the other thread. Expensive enough to still encourage development of alternative sources of energy and fuel- efficient vehicles, but not so high that it puts working folks into the poor house everytime they have to buy gas or groceries.

Seems to be as close to win- win as we're gonna get.
 

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Key words here "leading energy analyst." These leading analysts are so often wrong it's a joke. Three months ago it was $200 oil and $2000 gold. Stockbroker experts always preach buy and hold until the day after a company goes bankrupt, then it's "underperform." No real surplus on the world oil market in the near future, prices above $110/bbl for the rest of the year, then higher once again.
 

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Key words here "leading energy analyst." These leading analysts are so often wrong it's a joke. Three months ago it was $200 oil and $2000 gold. Stockbroker experts always preach buy and hold until the day after a company goes bankrupt, then it's "underperform." No real surplus on the world oil market in the near future, prices above $110/bbl for the rest of the year, then higher once again.
Agreed. $120 for now, (depending on the performance of the US economy in quarters 3 and 4) and then a slow rise in 2009.
 
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