I can't believe all the asinine hype about oil. Commodities always go through boom-bust cycles. BRIC, blah, blah, blah.... Everything that's up now will be far less expensive in the future. It's always been that way, and will always be that way. People thought cheap oil would never be seen again during the late 1970s, and yet there it was sitting at $10/barrel in 1998. Oil and commodity bulls have way too much street cred, barely anyone bothers to rebut their foolish proclamations with actual numbers (such as oil consumption is growing at 3% per year - prove me wrong), and it's just out of control. Escalator up, elevator down. Keep buying those grains, oil and gold. Maybe you'll luck out and catch the last gasp and sell just in time.
Gotta go with BylowsellHi on this one. Since when does a product go up forever or a tree grow to the sky?? No one even mentioned a game changer like a breakthrough in batteries or how about bio-fuels like algae, ethanol (cellulose), or some other replacement and/or a new form of power as the I.C. engine is 100 yr old technology. Aside from a a few years here and there oil has been very very cheap for us. When / if that changes we will change. There is plenty of energy and its just a matter of figuring out how to tap into it. In the mean time some of the biggest oil finds have been within the last few years (off shore Tianjin China comes to mind). a breakthrough in getting oil out of the sand could do the trick. I don't think its a matter if oil (or the equivalent ) will go to $40 (or less) but when. The whole question is like asking if there is life outside of earth. There is simply too big a chance to assume anything but yes. (even if its hard to picture it in your mind)
Optimisticaly I would say those changes would take at least a decade to happen + make an impact. The technology must arise, it needs to be accepted and funded, infrastructure must be built, new vehicles would need to become cost effective, etc... Its not a bag I wanna hold.
Although there's plenty more oil out there than Peak Oil enthusiasts like to scream about, that oil is proving more expensive to get at. If the price fell to $40 it wouldn't be cost effective to drill it. Of course I've no idea what technology could do for the cost of that and alternative energy, but taking the extreme predictions of $400 and $40 per barrel I'm guessing it will go as low as $75 sometime in the future. There's also the increasing demand from emerging economies to consider. From the World Resources Institute, the figures represent total energy consumption per capita in units of kilograms of oil equivalent (kgoe) per person. US: 7,794.8 UK: 3,918.1 UAE: 10,538.7 Qatar: 21,395.8 Kuwait: 9,076.0 Bahrain: 10,250.5 According to the IMF, Middle Eastern governments were more generous in subsidising oil products than governments anywhere else in the world during 2007.
I think there is plenty of oil out there to be found the only problem is it is not going to be productive to try to extract it below several hunderd dollars a barrell, especially given the precipitious inflation rate in the US. Minning and drilling costs are going through the roof as well. I cannot see oil falling in real terms for a long time, probably we will see at least 10 more years of increases and i reckon we may top out at about $500 a barrel. and $5000 gold.
Agree, these commodity bulls think these impressive gains will last far beyone their expectations....cant anyone see what happened with the dot com stocks in 2000 and real estate in just the last 2 years, everyone always seems to think these raging bull markets last forever, you have to be a fool to think that these commodity prices can sustain these types of moves. This will end just like every bubble does, just may take some time but there will be a great correction in commodities.....