Economist and author Jeff Rubin predicted in this week’s Newsweek that within a year, oil would once again be $100 per barrel or more, pushed up by the initial stages of economic recovery. “It is inevitable,” he stated. Happily, this prediction fits into his general skepticism of globalization, as does his solution to his predicted oil boom.
Of course, this prediction flies in the face of most economic pundits I’ve read (one of whom flatly stated something along the lines of, “predicting $100/barrel oil means you’re predicting the Dow Jones 10K+ again”), most of whom tie such a price to a much bigger recovery in fundamentals.
What do you all think? Does the answer of who’s right depend on whether or not, as many claimed a year ago, that speculation played a major role in oil getting that high?
I wonder if he’s speculating in the market and putting his money where his mouth is.
Well, FWIW from my non-commodities speculation perspective I think he’s wrong. In order to get back to $100 a barrel I think we’d need a much stronger dollar, as well as a much stronger economy. Additionally we’d need another series of crisis situations in the ME…and things SEEM to be calming down there (relatively). I suppose the Iranian’s could get another bug up their ass and start back up rattling their sabers at Israel, and there is always the potential for problems in the Northern African oil fields, etc etc.
But I doubt it. Time will tell though. Myself, I’m not going to speculate with MY money on that particular proposition. Personally I think the price and demand for oil will be pretty flat, over all, this year. Next year though…
Making any prediction about where oil will be a year from now is a fool’s game.
I would agree with the general statement that as the economy picks up, demand for oil will rise, and that should cause upward pressure on oil prices. But there are so many variables it’s really impossible to predict. And I’m not sure the economy is going to pick up. I think there’s a better than 50/50 chance of a double-dip recession next year, and that we could still be at zero growth or close to it five years from now.
Clearly, the biggest pressure on oil will come from the 200 million Chinese people who were supposed to be buying cars in the next few years. That was the prediction before the crash, anyway. Will they still buy those cars? Will the Chinese government change its policy from one of saving money to one that’s more stimulative?
Then there are all the unknowns around production, and the politics of OPEC. Will Iraq hang together? Will the Iran situation calm down? Who knows?
I’ve been around long enough to see oil take its random walk right through the predictions of a lot of smart people. In 1980, I remember people predicting that oil would never, ever go below $50 again, and would shortly be over $100/bbl - just before it collapsed to $20 and stayed below $30 for the next 20 years.
:smack: I knew that. That’s what I get for posting tongue in cheek from my iPod. But, no worries…I DON’T actually invest in petroleum (or any commodities actually).
