$100/BARREL OIL?….A Wall Street analyst says oil prices are going to go way up:
Oil and gasoline prices surged Thursday after a Wall Street analyst warned of a coming “super spike” that could send crude to $105 a barrel.
….In a report to investors, Goldman Sachs Group Inc. analyst Arjun Murti said surprisingly high demand in the U.S. and China combined with a lack of infrastructure to get oil out of the ground had created a supply imbalance that could be corrected only by dramatically higher prices ? which in turn would depress demand.
The only curious thing here is why it’s taken so long for someone to say this. Granted, exact demand is hard to predict, but the general slope of oil demand has been pretty steady for quite a while: every year the world uses an additional 2 million barrels per day. And infrastructure is even easier to predict. It takes years to build new infrastructure in the energy biz, so the current limitations on our pumping capacity shouldn’t come as much of a surprise to anyone.
I don’t think we’re at our absolute peak pumping capacity yet ? although there are some who think we are ? but we’re getting there pretty quickly. And when we do get there, higher prices won’t stimulate more exploration, they’ll work solely to depress demand. If that happens too quickly, it means a global recession. If we plan for it, though, it might not.
Too bad we’re not planning for it.