Arnold Kling was surprised by what he found in the energy chapter of the Economic Report of the President.
The energy chapter of the economic report makes the following statement, almost casually:
Although oil prices have risen to more than $60 a barrel in recent months, they have averaged as low as $25 per barrel within the last five years. Having experienced past volatility in oil prices, oil companies report using a working assumption of $15-$30 per barrel for the future price of oil when making long-term investment planning decisions.
The graph at the right plots quarterly data for the real price of oil since 1970, calculated by multiplying the price of West Texas Intermediate at the end of each quarter by the amount that the consumer price index has risen since that quarter. I was curious to see, considering just the time-series properties of this variable, how plausible is the idea of a return to $15 a barrel.
One way to approach such a question is to use regression analysis to try to predict, say, next quarter’s change in the natural logarithm of the real oil price on the basis of currently available information. But the regression coefficient relating next quarter’s change in the real oil price to the current quarter’s change in the real oil price is essentially zero– if you test the hypothesis that the most recent oil price change doesn’t help a bit to make that forecast, you accept the null hypothesis with a p-value of 0.59. We usually aren’t confident that we really have something on which to base a forecast unless the p-value gets below about 0.05. Nor does using the oil price changes over each of the previous 4 quarters help, nor the change over the previous two years. Looking at the recent U.S. Treasury bill rates or real GDP growth rates also seems to be of no use for purposes of predicting where oil prices are headed. Even the constant term is statistically indistinguishable from zero (p-value = 0.51), meaning one really has no basis in the historical record for anticipating a tendency for real oil prices to move in any particular direction from here. And one finds no evidence of “mean reversion” in this series– the Dickey-Fuller test easily accepts the null hypothesis of the unit root, that is, it confirms that the forecasting model should be based on the change in oil prices rather than the level (p-value = 0.70).
| Variable | 1 lag | 4 lags | 8 lags |
|---|---|---|---|
| real oil price change | 0.59 | 0.87 | 0.63 |
| U.S. nominal tbill rate | 0.64 | 0.56 | 0.84 |
| U.S. real GDP growth | 0.31 | 0.51 | 0.54 |
The conclusion I draw from such calculations is that a random walk seems to be quite a good approximation to the dynamics of real oil prices, just as it has proven to be for a good many other economic data series. One implication of the random walk model is that, if the quarterly change in the log of the real oil price has variance s2, then the variance of the change over two quarters, being the sum of two uncorrelated variables, has variance 2s2, and the variance of the change over a year would be 4s2. The quarterly value of s is estimated from the 1970-2005 experience to be around 0.16, meaning a forecast of the real oil price a year from now would have a standard deviation of 40.5 x 0.16 = 0.32– it’s not that uncommon for the oil price to change by 32% on a year-to-year basis. If we use plus or minus two standard deviations to form a 95% confidence interval and convert from logs back to levels, we arrive at the confidence ranges implied by the table on the right below.
| quarter | lower bound | upper bound |
|---|---|---|
| 2006:Q1 | 43.57 | 82.63 |
| 2006:Q2 | 38.16 | 94.34 |
| 2006:Q3 | 34.47 | 104.44 |
| 2006:Q4 | 31.64 | 113.79 |
| 2007:Q1 | 29.34 | 122.72 |
| 2007:Q2 | 27.40 | 131.39 |
| 2007:Q3 | 25.73 | 139.91 |
| 2007:Q4 | 24.27 | 148.33 |
| 2008:Q1 | 22.97 | 156.70 |
| 2008:Q2 | 21.81 | 165.05 |
| 2008:Q3 | 20.76 | 173.41 |
| 2008:Q4 | 19.80 | 181.79 |
| 2009:Q1 | 18.93 | 190.21 |
| 2009:Q2 | 18.12 | 198.68 |
| 2009:Q3 | 17.37 | 207.20 |
| 2009:Q4 | 16.68 | 215.80 |
| 2010:Q1 | 16.04 | 224.47 |
| 2010:Q2 | 15.44 | 233.22 |
| 2010:Q3 | 14.87 | 242.06 |
| 2010:Q4 | 14.34 | 250.99 |
The implication of these calculations is that, yes, $15-30 a barrel five years from now would be within the realm of what could be judged as consistent with historical experience, though so would $200-250 a barrel.
But surely professional forecasters can do better than this, one would think. Another way to judge how uncertain experts are about where oil is headed is to look at the volatility that is implicit in crude oil options prices. Using the Black-Scholes formula, one calculates an implied volatility from current values of options on NYMEX that corresponds to an annual standard deviation of 32%– the identical number as from the historical volatility above.
Well, what about going into the fundamentals of supply and demand rather than trying to extrapolate the trends? Daniel Yergin of Cambridge Energy Research Associates defends their bottom-up, field-by-field approach, which predicted a near-term glut from excess oil supply:
While questions can be raised about specific countries, this forecast is not speculative. It is based on what is already unfolding. The oil industry is governed by a “law of long lead times.” Much of the new capacity that will become available between now and 2010 is under development. Many of the projects that embody this new capacity were approved in the 2001-03 period, based on price expectations much lower than current prices.
Even if one has confidence in the ability to make these field-by-field assessments, there remains substantial uncertainty about predicting the timing and rate at which production from existing fields will decline due to depletion. For example, CERA’s projections seemed to call for roughly steady production from the United Kingdom over 2004-2006, whereas as of this point U.K. output is down about 400,000 barrels a day.
And then there’s the demand side.
Chinese oil consumption grew at a compounded annual rate of 7.4% per year between 1990 and 2004. Here it’s jolly fun to extrapolate that trend forward for another 20 years, at which point China would be guzzling over 30 million barrels a day (50% more than the U.S. consumes now) if the 7.4% trend were to continue. There are sound reasons for believing that growth rate must slow down, but even much slower rates of growth would soon produce an incredible challenge for continuing to find major new oil fields. Such growth in demand from China, not to mention the rest of the developing world, is the major reason oil prices have risen so much over the last few years, and would seem to argue for further price increases even if it proves to be the case that production can continue to be increased.
Although the $15-30 oil price strikes me as unlikely, I’m left agreeing that it’s hard to rule it out completely. Even granting this analysis, however, I’m still left with the question raised by Arnold Kling: if this is the downside risk that oil companies are contemplating, why don’t they hedge away the risk by selling more oil forward at the $64/barrel price that one can currently guarantee through the December 2010 futures contract?
Maybe the argument against hedging is based on the notion that these futures markets are so thin that if Exxon-Mobil starting selling in a bigger way, it would quickly move the futures price. I’m not convinced that such an argument is correct. The futures price is linked through arbitrage to all sorts of other prices in a very big world, and a thin market is no reason to believe the price should be anything other than the fundamental equilibrium value. Increasing sales need not bring about a big change in the price even if the market is currently thin. And even if the market thinness argument were correct, it still makes no sense to me as an explanation for not buying some degree of a hedge, if what you’re really worried about is the possibility of a precipitous price collapse. Such concern would go beyond the joke about the economist who won’t pick up a $20 bill on the sidewalk because his theory predicts it shouldn’t be there. In this case, we won’t pick up a $20 bill that we’re absolutely sure is right there on the sidewalk on the grounds that, if we took it, we don’t know how many more $20 bills will float down to take its place.
Specifically, that’s two $20 bills for every barrel the oil companies choose not to sell forward. At a few million a day, that might add up.
I have heard of these low internal gating prices for projects from a number of oil industry insiders – I don’t think the President’s report is too far off on this.
I suspect part of the problem is that the futures markets don’t go forward far enough into the future to solve the oil company’s problem. Consider making a decision in 2006 to start a project or not. A typical contemporary deepwater project might hit first oil in 2009, hit peak production in 2010, be at its plateau till say 2014, get extended to 2017 with various tiebacks and then decline until about 2024. The fact that the futures market only goes out to 2011 is thus a big limitation on its usefulness for hedging prices over the life of the project (particularly when discount rates are low so that the back end of the project can affect the net present value substantially).
Moreover, the oil industry has hired very few new people over the last couple of decades. Decision-makers are mostly in their fifties and sixties and lived through the entire industry trauma of the high prices of the late seventies and early eighties followed by the price collapse of the eighties and nineties (which caused massive layoffs, consolidation, etc in the industry). Being Homo sapiens rather than Homo neoclassicus, these experiences are burned into their limbic systems and continue to influence behavior – they don’t want to get burned in that particular way again. (It’s the same “fighting the last war” syndrome which tends to afflict military officers).
If, as I believe, we are close to peak oil now, this behavior will tend to make it sooner and at a lower level. However that’s probably a good thing in that it leaves a little more oil in the ground for offsetting declines later.
Stuart: “The fact that the futures market only goes out to 2011 is thus a big limitation on its usefulness for hedging prices over the life of the project”
I don’t buy this. You hedge to 2011 today; then in a couple of years (2008), you roll over your hedge to 2013; then a couple of years later roll over to 2015; and so on.
If the price of oil drops, you’re always covered. The only problem would occur if, for some reason, people start to anticipate an oil crash 5 years out without bidding down oil futures prices over the next 3 years. That’s a theorteical possibility, but I can’t imagine it would actually happen. (Perhpas oil companies have better imaginations than I do, but it still seems irrational not to hedge.)
The reason oil companies use $15 to vet investement returns is not because they expect oil to be $15 but because they know the OPEC nations can make oil $15 any time they please. This is why alternative energy investment is likewise insensitive to the market priceof oil but instead responds the cheapest marginal production cost of traditional energy sources. As long as the threat of OPEC rendering your multibillion dollar investment worse than worthless remains you won’t see private investment.
This is loosely related to the fatal flaw of “Peak Oil.” We ran out of $10 oil decades ago and appear to be running out of $20 sometime in the next decade. We have maybe 30 years left of $30 oil but we have an infinite supply of $90 oil because at $90 with no threat of being crushed by a cartel a lot of the things we use oil for are economical to do in other ways.
I started by thinking that surely oil companies must use more sophisticated future-profit models, with a range of future oil prices. They would, I thought, balance the minimum profit acceptable at low oil prices, against the healtier profits at higher oil prices.
Then it occurred to me that they might be doing just that, when they use a $15-30 number. That isn’t what they think is likely, it is what they think is the likely minimum. When they plan against it, and plot out their minimum profit, any higher oil price is gravy.
Assuming they are doing just as much expansion as they can (assuming $15-30), it might make sense.
They pick up at least one $20 bill, and maybe more.
BTW, you might be amused by what I am reading now.
BTW2, I’m assuming you put all a company’s projects in a big computer program, and plot forward with a minimum-likely oil price. It would not make sense to put the same dollar test on every individual project, ignoring project started earlier, with earlier minimum values.
Is it possible that oil prices are more of a monetary policy result than anything else? Jude Wanniski has made the claim that if you price oil in oz of gold that its price is relatively stable. See GOLD vs CRUDE OIL. Does anyone have a good set of nominal prices for gold/oil to check this again for more recent times? The curves for nominal prices certainly appear to have the same shape.
If oil/gold ratio is relatively stable, this could mean that monetary policy (easing/tightening the money supply) is driving nominal prices.
KNZN:
If I only commit to selling the oil I will actually produce by 2011, then my price risk from 2012-2024 is unhedged. If, in the alternative, I commit to selling the entire lifetime output of the project by 2011, when in fact most of it won’t be produced until 2012-2024, then it seems to me my risk is that if oil prices rise between now and 2011 I will have to buy higher priced oil to meet the delivery commitments I made for 2011 of oil I will not actually produce myself in that timeframe. I might or might not be able to recoup that cost with my sales of actual physical oil from 2012-2024.
It is obviously a good argument that if “an oil company” had a possible project, and if they had the opportunity to pay the costs of that project by selling a portion of the output under futures contracts, they would do so. They would cover costs, perhaps lock-in minimum profit, and leave the door open (with the unsold portion of production) for extra ROI.
So why aren’t futures prices driven down closer to a reasonable cost of production?
How about:
The independant oil companies (IOCs) don’t have the opportunities at much less than $60/bbl
The national oil companies (NOCs) don’t care, they’re rich anyway.
Robert Cote: “This is loosely related to the fatal flaw of “Peak Oil.” We ran out of $10 oil decades ago and appear to be running out of $20 sometime in the next decade. We have maybe 30 years left of $30 oil but we have an infinite supply of $90 oil because at $90 with no threat of being crushed by a cartel a lot of the things we use oil for are economical to do in other ways.”
The “fatal flaw” of economics is that its simplistic models break down in the real world. In this case, Ricardian scarcity — the ludicrous notion that there is an a infinite supply of ANYTHING as mediated by ever increasing prices — conflicts with the 2nd Law of Thermodynamics, which states that when the enegry returned on the energy invested is less than one, your supply is kaput.
Stuart is correct: PO is upon us. It is upon us because the rate of supply expansion (i.e., the derivative of the production curve) is nearing zero.
“Huge” new oil discovery in Brazil:
http://news.bbc.co.uk/1/hi/business/4563896.stm
That 700M barrels would offset the theoretical oil production “peak” by about 8 days (700M / 85M per day). Wow. Time for a new Ferrari.
* “Hurry, before this wonderful product is depleted from Nature’s
laboratory!”
–advertisement for “Kier’s Rock Oil,” 1855
* “. . . the United States [has] enough petroleum to keep its
kerosene
lamps burning for only four years . . . ”
–Pennsylvania State Geologist Wrigley, 1874
* “. . . although an estimated two-thirds of our reserve is still
in the
ground, . . . the peak of [U.S.] production will soon be
passed–possibly
within three years.”
–David White, Chief Geologist, USGS, 1919
* ” . . . it is unsafe to rest in the assurance that plenty of
petroleum
will be found in the future merely because it has been in the past.”
–L. Snider and B. Brooks, AAPG Bulletin, 1936
The latest REAL measurements can be found at:
http://www.eia.doe.gov/cabs/
Sick of oil out of the ground? Rapeseed, sunflower/safflower, algae, the
list is long before we even start fiddling with the genes. We only use oil
because it’s all over the place, cheap and easy. For instance, whale oil is
really good for lubricating the chain on my motorcycle so that it doesn’t
yank so much.
To really go over the edge:
http://www.people.cornell.edu/pages/tg21/usgs.html
What about the theory of global climate change? Surely you don’t need me to
confirm the complete discreditation of global warming. Surely you don’t
want me to list all the reasons why transit oriented development in
particular and modern urban planning theory CONTRIBUTES to the factors
identified as causing global warming. Even the IPCC won’t call it global
warming anymore. Heck, at this rate of increase the climate won’t get back to “normal”
for a 500 years. Palm trees growing again on Cape Cod and the possibility
of Glen Ellen Chardonay actually being grown again in Glen Ellen! Bring it
on!
Correction: “rate of supply expansion” should be “rate of production expansion.” I wouldn’t dream of trying to characterize the rate of supply expansion, esp around the late 1980s.
[quote] Ricardian scarcity … conflicts with the 2nd Law of Thermodynamics, which states that when the enegry returned on the energy invested is less than one, your supply is kaput. [/quote]
The output of this equation changes whenever the technology consuming the energy improves, which is of course all the time. Energy costs have been falling for 5000 years. Speculating that they will stop now is an egregious violation of the principle of neutrality, or whatever scientists call the doctrine of trying to avoid observation points that are statistically unique.
Fred, I’m sure the 5000 year trend smoothed out the 70’s and 80’s upticks … but that doesn’t mean they were easy on everybody ;-).
I’d say the flaw is in assuming that the trend over the next 5000 years will guarantee no shortfalls in “insignificant” little segments of 10 or 20 years.
Fred: “Energy costs have been falling for 5000 years. Speculating that they will stop now is an egregious violation of the principle of neutrality…”
Anyone who believes that exponential growth can continue indefinitely is either a madman or an economist.
Another limitation of the future’s markets is counterparty risk.
These projects can involve a lot of money. If you make a big bet that prices will be stable, and they crash instead, the party that is supposed to pay you the difference may go bankrupt. Maybe the Fed would rescue a big hedge fund again, like they did before, and maybe not…
It reminds me a bit of Price-Anderson: no one’s willing to insure a nuclear plant against an accident that could bankrupt not only your insurance company but anybody you line up behind you to share the risk.
The real question for me is: why is no one hedging between the future’s markets and oil company prices, which seem to be based on $40 oil? That’s what oil companies do when they buy back their stock, but why aren’t other investors doing it?
That’s a bet that would pay off in the next few years. This suggests that a lot of investors outside the oil companies agree that oil prices may drop.
So…if I’m so smart, why aren’t I rich? I guess I don’t have cash for slightly speculative investments. A question of aversion to risk, I guess.
On the other hand, T. Boone Pickens has been making this bet, and he IS getting much richer.
Stuart: “If, in the alternative, I commit to selling the entire lifetime output of the project by 2011, when in fact most of it won’t be produced until 2012-2024, then it seems to me my risk is that if oil prices rise between now and 2011 I will have to buy higher priced oil to meet the delivery commitments I made for 2011 of oil I will not actually produce myself in that timeframe.”
The thing is, you don’t have to meet the delivery commitments unless you hold the futures into the delivery month. I’m suggesting that, long (3 years, in my example) before a contract reaches the delivery month, you liquidate the old contract and sell a new one with a longer date. There is still some risk in the spread between the two contracts, but I think this risk is quite small compared to the difference between $15 oil and $60 oil. (Since I’m suggesting using standardized futures contracts, there is also some basis risk in the difference between the oil specified in the contract and the type that a particular company can produce, but again this is a small risk.) There is also the problem of meeting margin calls if the price of oil goes up, but I doubt this would be a big problem: if the price of oil goes up, oil companies should not have much trouble borrowing money against their expected future production.
> Anyone who believes that exponential growth can continue indefinitely is either a madman or an economist.
I would bet on either sooner than someone who thinks we today know the last word in energy generating and conserving technologies.
Nick – I’m curious how you figure that oil company prices are based on $40 oil. Given that futures markets are predicting $60 oil as far as the eye can see, how could it be that oil company valuations are based on a much lower number?
As far as the larger question of oil company decision making, the high end of that range, $30, is quite a bit higher than what I have heard used in the past. So this does represent an increase in aggressiveness and risk taking over earlier policies.
Even so, oil companies do seem to be excessively conservative compared to market estimates of likely prices. It’s not uncommon for there to be risk aversion at big corporations, because a failed project brings proportionately greater penalties than the rewards for a successful project. This is often compensated for by a general human tendency to overestimate the chances of success, but perhaps oil company executives have had the optimism burned out of them after 30 years of ups and downs.
I wonder whether there exist smaller, more agile companies which are adopting a more aggressive posture towards investing in energy production, based on an expectation of continued high prices. Often it’s competition from the little guys who force the dinosaurs out of their sluggish naps and into action.
From “A Thousand Barrels a Second” (buy the book!):
[…] Put another way, the increasing risk dynamics no longer support viable, free-market economics at the historic $20 a barrel. What is supportable? With so many fluid dimensions in this pressure build period, it’s hard to say what the threshold price of oil has to be now before oil companies and their workers have incentive to overcome all the risks and bring new barrels of oil to consumers. My readings, calculations, and anecdotal discussions suggest there is little incentive now below $40 per barrel, and even that may be low.
But the world’s oil industry is not all about independant, free-market, non-state-owned oil companies like ExxonMobil, Chevron, Shell and BP. In fact, the influence of the independants has waned over the decades and only one, Lukoil of Russia, makes the top-10 list of oil companies measured by reserves. The top 9, led by SaudiAramco, are all 100 percent state owned. For a sense of scale, ExxonMobil is twelfth on the list with one-twentieth the reserves of SaudiAramco. State-owned oil companies representing both producing and consuming nations are the norm around the world, annd are all getting more agressive. It’s like the post-WWI great scramble all over again
(from page 137)
I assume when he says “little incentive below $40” that means little available opportunity.
Something funny happened above. The paragraph starting “But the world’s …” is also quoted and should have been in italics.
Sudden random thought … back when OPEC could control the price of oil … how much money do you suppose OPEC ministers made, trading futures?
You couldnt hedge your 2010 oil production at $60 because 2010 oil futures arent trading there… only nearby oil futures are trading so significatly above where oil companies expect prices to be, and since energy markets are perpetually inverted the idea of selling nearby futures and rolling your sales forward every few months is a money loser. -K
I take that back…
Hal,
“how could it be that oil company valuations are based on a much lower number (than $60)?”
Well, that’s the puzzle. All the stock analysts are saying that it’s the case. Apparently a lot of investors think this price spike is just your normal random variation, which will revert to the mean. I’d like to know why they aren’t shorting oil?
You can’t effectively short a commodity without a better timeframe. Just knowing thar oil will eventually revert to the mean isn’t enough to make money on a short.
JDH’s table above is interesting but in the end not all that useful. If you ask for 95% certainty and you go out a few years, the market is saying that the price could be almost anything. Here’s some data which tries to pin it down a little more closely, showing what the market thinks is the 50% range. That is, there is a 50% chance the price will be in this range, a 25% chance the price will be lower, and a 25% chance the price will be higher. My method is much simpler; no Markov chains or imputed volatility. I just read down the option prices until I find the one where the price changes by .25 for a 1.0 change in strike price. These are all for the December contracts in the given years.
2006 55 – 75
2007 49 – 78
2008 45 – (>70)
2009 (70)
2010 ?? – ??
Unfortunately this exercise did not go as well as I had hoped. The options trading on Nymex yesterday was apparently thinner than usual. No options were shown as traded at all for the 2010 contracts, and few for the 2009. Most times I have tried this I have been able to find options pricing for a full range of prices and have been able to draw concrete 50% bounds.
At least we can see that for the next two years the market thinks there is a 50% chance oil will stay roughly in the 50-80 region.
“Just knowing thar oil will eventually revert to the mean isn’t enough to make money on a short.”
But aren’t stock prices pretty sensitive to profits in the next 4 years? Wouldn’t oil stocks would be higher if investors believed that prices would stay high? Isn’t there a discrepancy between oil futures and the stock market?
I find it very difficult to accept that oil majors actually believe there is a high probability of a $15-$30 bbl future market price over the next five years. It’s not a logical assumption based on projected global demand vs. available and projected supply.
Sure, the oil majors may use a “working assumption of $15-$30 per barrel for the future price of oil when making long-term investment planning decisions”, but that’s more of a hedge against the potential of a global recession, is it not?
The potential for mass market alternate energy sources and end product technology applications to come on line within the next five years is very limited. Ten years… maybe fifteen years, yes. Five, no. Well, maybe. But it’s not likely.
If I was responsible for making a presentation to the board of directors of an oil major regarding future multi-million dollar exploration investments or refinery update/build, I would use $24-$41 bbl as my benchmark for crude oil. And I would state that the likely expected minimum would be $37 bbl for purposes of launching new explorations.
This raises a question: What is the actual minimum that an oil major really considers when making investment decisions today?
Movie Guy – I keep quoting from “A Thousand Barrels a Day” … I’ll restrain myself this time, but there is a bit I quoted above on incentives. The part I didn’t quote here (though I think I have elsewhere) is about what incentive is set for which geograhic region in the world.
I believe the author compared Canada to Venezuela. One a stable government with long history of honoring agreements … the other not only shakey on those grouds but possibly unsafe for your workers.
Look at the news coming out of West Africa this week … is it easy to set “a value” on oil there? Would you want to sell in futures all the oil you “might” get out of there?
In my opinion it comes back to the IOCs (independants) having few good safe productive opportunities, and the NOCs (national companies) not really needing to drive down the futures price.
Ah .. “A Thousand Barrels a Second” by Peter Tertzakian, of course (pfft. “day”!)
Oil at $15-$30 a barrel?
The energy chapter of the economic report makes the following statement, almost casually:
“Although oil prices have risen to more than $60 a barrel in recent months, they have averaged as low as $25 per barrel within the last five years. Having…
Posting late on this, but via TOD I found this pointer to an excellent article discussing the oil futures market and why there is not more hedging:
http://www.bankofengland.co.uk/publications/quarterlybulletin/qb060105.pdf
One of the reasons, ironically, is that oil company investors (stockholders) *want* the companies to be exposed to oil price risk. This lets them (the stockholders) speculate on oil prices by owning oil company stocks, which they prefer over the risky-seeming futures markets.
Another issue is the incentive structure at government-run oil ministries. People accept and understand that their revenues will be based on oil prices. Hedging breaks that relationship, and although it is profitable if certain things happen, it is unprofitable in other cases. Incentives within the ministries punish unprofitable moves more than they reward profitable ones.
Definitely an eye-opening article showing the difference between market operations in theory and in practice.
Great article James,
Very thoughtful indeed. $15-30 must be the oil companies playing it safe. I’ll bet they’d jump at any investment that might yield $30 barrels. Even if prices go down They aren’t gonna stay down in the long term.
I find it quite interesting, as to why we are running out of oil now, and not, in the 1990’s when our economy was doing much better.
The reason why we have higher oil prices is because, we are at the end of economic cycle, just before the next big recession of 2007-2008.
You cannot have slower economic growth going forward, and high oil prices. It did not happen in the past, and will not occur this time. It is once again, a good story being told by the few, who will eventually steal your money and run.Does anyone remember the Internet hype of the late 1990’s?
But once again, it is a story of “fear and greed”. I agree with the oil company future predictions. By the year 2009, we will see much lower oil prices, and eventually the oil story will simply die.