[Peakoil] What an oversight!

[Keith Thomas]

What an oversight! See what's missing in the Barrons article below?

1. Oil is to rise in price to $150 - 200 a barrel

2. This will "permanently shrink demand"

3. Oil price will fall to $75 a barrel.

What's missing is hidden by the euphemistic wording of step 2: what  
happens to permanently shrink demand? Would this be because we all  
switch to Priuses - or a 3-4 billion dieoff - or (use your  
imagination)?
==============

Goldman Oil Bull Speaks: Yes, Oil Still Going to $150-$200 A Barrel,  
Gas to $4-$6
Henry Blodget, ClusterStock
http://online.barrons.com/article/SB121279317214553377.html? 
mod=9_0031_b_this_weeks_magazine_main&page=sp


The man who predicted the current oil "super-spike," Goldman's Arjun  
Murti, is smart enough not to let himself get photographed (in some  
idiot circles, Arjun is blamed for today's $138 a barrel), but he did  
consent to a long interview with Barron's this week. Bottom line,  
Murti's thesis that oil will spike to $150-$200 a barrel is perfectly  
reasonable. As is his belief that prices will thereafter crash.

Key points:

     * Unlike the 1970's oil spike, which was the result of a supply  
crunch (oil taken off the market), this move is demand driven: demand  
is increasing, supply isn't. Economics 101.
     * This is a spike, not a permanent move to $150-$200. At some  
point, probably soon, oil will reach a level that will severely crimp  
demand (translation: economies will collapse). At that point, prices  
will fall.
     * US demand is falling, but, so far, emerging market and other  
international demand has remained strong.
     * Oil will keep going up until demand shrinks. Increased supply  
won't save us.
     * $150-$200 oil means $4-$6 gas.
     * As long as $150-$200 oil permanently shrinks demand, oil prices  
will then drop to $75 a barrel

... [Murti] On the supply side, we don't subscribe to the peak-oil  
view. We don't think the world has run out of oil. We do think that the  
places that have large quantities of recoverable oil, notably Saudi  
Arabia, Iraq, Iran, Venezuela and Russia, aren't on track to grow their  
supply aggressively. It is growing at a very moderate rate, and so the  
remaining oil resources are concentrated. And, to some degree, high  
prices are disincentivizing some of these countries to either open up  
their industry or spend the money themselves.
--------------------------------------------
Keith Thomas
www.evfit.com
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