The problem?We have so much oil right now, more than we've had in 27 years. Why is it 27 years? Because that's how far our records go back. It's probably the most in 50 or 100 years. ... We've got 50 million barrels of crude more than we had two years ago. We have 176 million of distillate. When I started in the business back in 1980 we used to think to ourselves: "Gee, we would love it if we had 140 million barrels of distillates to start the winter."
For the record, a barrel is currently valued/traded at around $74.I honestly think that if there were no investors using oil as an asset that the price of oil right now would be $10 or $15 or $18, but it wouldn't be anywhere near where it is.
Now, it appears Beutel is looking at this from a purely economic perspective. If there is excess supply, why aren't prices dropping? He notes that expectations that the economy will recover are helping elevate the price – more global economic activity means more oil used and thus more demand, it's as simple as that – but those of us who favor reducing oil use see other reasons for the price to continue to climb. Now, if only alternative energy prices could decline as quickly as oil prices rise. Thanks to Evan for the tip!