Simmons: $200 oil by 2010

[brasso]

Apparently Mat Simmons has a bet with a couple of folks that oil will hit this price by 2010. What do folks think? That's quite a leap in just three years! Is peak oil that close?

[SunnyJim]

I think it could. If word gets out that KSA has peaked then that could really put a spike into oil prices. A terrorist action could equally do the same if it targeted oil infrastructure.

I only have gut feelings to go on but 250% doesn't sound imposible if you think that wheat prices have gone up by 100% in the last year....

[mkwin]

Iran??

[Blue Peter]

But if we're looking at a big recession, won't that cut demand for a while?


Peter.

[WolfattheDoor]

Reaching $200 doesn't mean it will stay there. A US attack on Iran could force the oil price very high for a while but it would probably drop back down soon afterwards.

[mkwin]

But if we're looking at a big recession, won't that cut demand for a while?


Peter.

I doubt it would cut demand signficantly as China and India will still be growing rapidly.

[Cabrone]

If true then he's ahead of the oil drum, they haven't got $200 p.bbl till 2012, although I wonder if oil price will be like the climate and slide out of control earlier than predicted.

[skeptik]

Apparently Mat Simmons has a bet with a couple of folks that oil will hit this price by 2010. What do folks think? That's quite a leap in just three years! Is peak oil that close?

Unlikely. Popping of the housing bubbles in US/UK ( and elsewhere, inc. Spain) -> global constipation in financial markets & recession -> lower demand for energy.

I don't think theres any general going back to low oil prices, just I dont see the price going forward quite that quickly. I suppose the price could get that high in dollar terms if the FED is really dumb, starts to cut interest rates and pumps up the US money supply in an effort to avoid recession. The danger in doing that is that the US dollar could start go the same way as the Zimbabwean dollar.

In Euro terms I really doubt the price of oil will go from the current 54 to 144 Euros a barrel by 2010.

(and for the purpose of this conjecture, I'm assuming that Cheneybush doesn't start another war in the Middle East in the interim, which unfortunately seems entirely possible )

I doubt it would cut demand signficantly as China and India will still be growing rapidly.

Dont forget that it all connects. High growth rates in India and China depend largely on exports to the Eurozone and USA.

[Adam1]

I doubt it would cut demand significantly as China and India will still be growing rapidly.

Dont forget that it all connects. High growth rates in India and China depend largely on exports to the Eurozone and USA.

That's true but China and India have growing domestic markets and they export to the rest of Asia, Russia S. America and Australia. All will be affected by whatever hits the US & Europe but those other markets may mitigate the US/Euro demand fall-off to some extent.

[oilslick]

When the Fed drops interest rates in a few days and then does it several more times, combine that with OPEC not meeting demand.

The $ isn't looking very healthy right now and that's a huge part of the high oil price. Inflation adjusted we're still a long way from any records.