Michael
Dec 4th 2009, 10:46 AM
Why cheap oil is here to stay
With oil supplies rising and the economy becoming ever more efficient, a super-spike in prices is looking increasingly unlikely.
NEW YORK (CNNMoney.com) -- Because oil prices have always been directly related to the strength of the economy, a recovery might have seen headlines like these:
• The recession ends: Get ready for $100 oil
• The economy roars: $140 oil, is there an end in sight?
• Everyone in China buys a Cadillac: World tapped out
But a growing number of experts are saying that you can forget all that. For the next couple of years, they say, oil prices will remain well below $100 a barrel as the economy remains fragile and efficiency measures kick in.
"The world will never run out of oil," Deutsche Bank analysts wrote in a recent research note, echoing the old logic that the Stone Age didn't end because the world ran out of stone. "If the oil age does end, it likely will be because we become more efficient and simply use less petroleum."
It's this "becoming more efficient" idea that the Deutsche Bank analysts use to predict even lower oil prices in 2010 than now - an average of $65 a barrel next year compared to nearly $80 currently.
Source (http://money.cnn.com/2009/12/03/news/economy/cheap_oil/index.htm)
Hmmm... CNN Money predicts oil to keep falling in price and Deutsche Bank saying the world will never run out of oil?
Why does this make me think that makes it almost certain that we're going to see $100 per barrel next year?
CNN Money has a well established reputation for being a big cheerleader of asset bubbles and giving really bad investment advice.
(they were talking up US housing even as the US housing bubble was bursting)
With oil supplies rising and the economy becoming ever more efficient, a super-spike in prices is looking increasingly unlikely.
NEW YORK (CNNMoney.com) -- Because oil prices have always been directly related to the strength of the economy, a recovery might have seen headlines like these:
• The recession ends: Get ready for $100 oil
• The economy roars: $140 oil, is there an end in sight?
• Everyone in China buys a Cadillac: World tapped out
But a growing number of experts are saying that you can forget all that. For the next couple of years, they say, oil prices will remain well below $100 a barrel as the economy remains fragile and efficiency measures kick in.
"The world will never run out of oil," Deutsche Bank analysts wrote in a recent research note, echoing the old logic that the Stone Age didn't end because the world ran out of stone. "If the oil age does end, it likely will be because we become more efficient and simply use less petroleum."
It's this "becoming more efficient" idea that the Deutsche Bank analysts use to predict even lower oil prices in 2010 than now - an average of $65 a barrel next year compared to nearly $80 currently.
Source (http://money.cnn.com/2009/12/03/news/economy/cheap_oil/index.htm)
Hmmm... CNN Money predicts oil to keep falling in price and Deutsche Bank saying the world will never run out of oil?
Why does this make me think that makes it almost certain that we're going to see $100 per barrel next year?
CNN Money has a well established reputation for being a big cheerleader of asset bubbles and giving really bad investment advice.
(they were talking up US housing even as the US housing bubble was bursting)