Is $200/barrel oil around the corner?
After months of outrageous oil price spikes, we realize that the shock value of $100 to $105/barrel is fading fast, so we're going to skip ahead to $200/barrel. The finance wizards at Goldman Sachs have raised their outlook for 2008-2012 oil prices by $15 to a high end of $135 per barrel, but a major disruption could make matters much worse. How bad could it get? Goldman Sachs seems to think a spike to $150-$200/barrel is a possibility. Goldman Sachs correctly predicted in 2005 that oil prices would reach the $50-$105/barrel level, and it thinks there's a chance that prices could drop down again, but inventories would have to rise over a couple years for that to happen. We can hope, but we won't hold our breath.
[Source: MarketWatch]
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Reader Comments (Page 1 of 4)
DC 2:11PM (3/09/2008)
CIBC World Markets has a very good Occasional Report 'Delays Will Tighten Global Oil Markets'
http://research.cibcwm.com/economic_public/download/occrept65.pdf
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refugee7 2:11PM (3/09/2008)
Hopefully this weeds out idiots who can't afford gasoline and monstrous SUVs. Here's to wishing.
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Luis 11:34PM (3/09/2008)
I don't think being an idiot has anything to do with anything. When we purchased our SUV, back when gas prices were decent, we purchased it out of a need for a larger vehicle. Now that gas is getting closer to $4 a gallon, our driving has changed accordingly.We drive our smaller 4 cyl. car on weekends and walk when driving doesn't make sense. I'm sure people that HAVE to buy a larger automovile are feeling the pinch whether they can afford it or not. Oh and we all now there are idiots that drive every type of car, right?
lidave 8:26AM (3/10/2008)
refugee you are a f*cking idiot, it would weed out the SUV's and all those annoying mack trucks that deliver your food.
small minded imbecile.
Yar 2:17PM (3/09/2008)
No, its not...
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TriShield 2:22PM (3/09/2008)
Same here refugee, I hope this really causes people here to evaluate their transportation needs and reconsider purchasing fullsize trucks, SUVs and crossovers just to drive themselves to and from work every day.
Then maybe all automakers will stop producing most of the damn things en masse. Lessening our consumption and dependence on oil starts from the ground up (consumers) not the top down (government).
Sadly, the way things are it will probably kill off a lot of niche performance cars first before it kills trucks.
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Jim 2:28PM (3/09/2008)
How is a SUV any different than a Niche performance car? You mention considering your needs, who needs a niche performance car?
The gas price will regulate sales of SUVs. Once it hits the breaking point, people will leave them in masses. It's hard to tell if that is $4.00, more?
I drive a GTO and have a G8 GT on order. I'm willing to pay a bit extra. The G8 GT gets 24 on the highway. Not terrible.
refugee7 2:42PM (3/09/2008)
Don't worry, it wouldn't happen. Look at France, they paying around $8 a gallon and consumers still try to buy the largest vehicles they can (different circumstances, roads are narrower but SUVs still hold popularity.)
naggs 2:48PM (3/09/2008)
sports cars generally get pertty good mileage, being lightweight and aerodynamic
a 5000 lbs 700 hp AMG earthfkr is obviously not a very efficient vehicle but they sell in such small numbers it barely makes a difference
some people hate on SUVs because of the amount of fuel they use as a segment of the automotive landscape and most of that consumption is seen as waste
personally i think it is ridiculous to criticize someone for how they choose to use they fuel they are buying. where do you draw the line? if its 'immoral' to commute in a large vehicle then is it 'immoral' to drive to church to pray to a god that may or may not exist? or how about vacation? driving your kids to school for a few more minutes with them? what is and is not on the list of 'moral' ways to use fuel?
any change in the price of fuel will affect how people choose to use it, for 'better' or 'worse' is purely subjective in this case
psarhjinian 2:49PM (3/09/2008)
Jim,
Niche performance cars don't get the free pass from CAFE that trucks get. They're also not sold in nearly the same numbers.
A sportscar is an impractical beast by nature, and isn't bought except as a toy by comparatively few. A truck bought instead a wagon or hatch happens because:
* Fuel has been cheap. Too cheap.
* CAFE has allowed light trucks a bonus in that they don't need to meet the same standards as their car brethren.
* It's in the automakers' interest to promote heavy, powerful cars; it's cheaper to engineer inefficient, safe, big, heavy and powerful than efficient, safe and powerful.
Do you know why we have so many crossovers? It's because crossovers help a company's CAFE more than a wagon would, all the while being cheaper to make.
Whitie 3:03PM (3/09/2008)
The French are paying about 5 Euros per gallon. It's only $8/gal to US tourists.
Interesting that folks are OK with high gas prices here in the USA if it serves a purpose (weeding folks off SUVs). It's OK if the oil companies pad their profits, but God forbid if the government steps in with a (Bob Lutz recommended) gas tax. Personally, I'm all for a gas tax, but it will have to be at least $1/gal to be effective.
TwinTurbo3000GT 11:16PM (3/09/2008)
psar
you missed a key reason why people buy trucks rather than wagons/hatches.
*BECAUSE THEY NEED THEM.
I dont know where you live, but here in TX just about everyone with a large truck or SUV uses it to tow something.
Vincenzo 4:11PM (3/09/2008)
Compare, for example, what Toyota produces for France and for the USA.
Tiny 1l diesel iQ for France.
Monstrous 5.7l gasoline Tundra or Land Cruiser for the USA. Even Camry is getting bigger and bigger.
tankd0g 2:23AM (3/10/2008)
Was considering a WRX, probably won't be getting one next year unless a miracle happens. It's not just useless full sized SUVs that are hurting.
Vincenzo 2:34PM (3/09/2008)
It's strange that there is no direct correlation between the oil and gas prices.
I remember in 2004 gas cost $2.50 while oil cost $30.
Last year in March, I paid $3.40 when oil cost $60.
Now oil costs $105, but gas is nowhere near $5 or $6.
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refugee7 2:40PM (3/09/2008)
Where do you live? I pay 3.40 for premium right now.
There is no direct correlation but since gasoline is a product of crude oil, without a doubt if oil prices go up, gasoline will too. The amount varies.
naggs 2:50PM (3/09/2008)
its not a direct correlation because it is not the only factor in the price of gasoline
Vincenzo 4:15PM (3/09/2008)
So, how much will gas cost when oil reaches $200?
Between $4 and $4.50?
It's nowhere near the end of the world.
TriShield 2:36PM (3/09/2008)
It's different because trucks, SUVs and crossovers make up over half the total vehicles on our roads which is a big reason we use the incredible amount of oil we do. Performance cars make up a very tiny percentage of total vehicles on our roads.
I'm guessing that when oil gets that expensive many automakers will trim the niche vehicles first before trimming trucks, unless of course the bottom completely falls out of the new (and used) truck market from it which could happen as well.
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Gardiner Westbound 2:41PM (3/09/2008)
Rampant speculation, managed shortages and big investors doomsaying are major factors. Some say oil will drop $20 a barrel when they take their profits and leave.
The lower value of the U.S. dollar is also a major consideration. OPEC is talking about selecting a more stable currency.
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