Just when everyone thought “cheap oil” was back….
Think about this:
– Oil production numbers are down sharply.
– China-India demand will only increase
– And of course……(drum-roll) the ever-present wild-card of Iran. Looks like everyone has forgotten that Iran is busy at work on a nuclear weapon, and will probably bring one to market within 12-18 months. Israel will certainly attack Iran to prevent this. How will Iran react? Why not shut off world oil supply by closing off the Persian Gulf?
– Who else has incentive to see higher oil prices? The Russians. Russia has built up an economy more dependent on higher oil prices than Saudi Arabia. Putin (The Godfather of the Kremlin) will do ANYTHING to avoid social instability caused by a economic hard times. The Russians are experts at stirring up trouble and “tensions” which lead to higher oil prices. Keep in mind: a breakout of “peace” in the middle east is not in anyones best interests.
-Finally: History repeats. Obama is an appeaser like Jimmy Carter. Remember what happened with oil during Carter era?
Julie Crawshaw writes about the production decline:
The study, performed by Cambridge Energy Research Associates, described the capacity reduction as a “a potentially powerful and long-lasting aftershock” of a price slide that took oil from $147 in 2008 to about $53 a barrel today.
“A price collapse of this magnitude really registers on the Richter scale, and its impact on levels of future investment will be felt for years,” CERA chairman Daniel Yergin told The Wall Street Journal.
Prior to the global economic crisis, Yergin’s company foresaw world oil production capacity rising to 109 million barrels a day by 2014 from the current 94.5 million barrels a day.
The group now says 7.6 million barrels a day — or slightly more than half of that increase — is “at risk” due to project deferrals or cancellations.