Its video Saturday!
Since oil is the talk of the markets I figured today would be a perfect time to hear T. Boone Pickens most recent take on oil. This guy is the most respected man in the oil markets, and he puts his money where his mouth is.
Mr. Pickens is now predicting oil is going to $150 a barrel. The reason? Supply and demand. Take a listen to this whole video. Higher oil sounds like its going to be around awhile.
Enjoy!
3 comments:
Jeff, your blog is one of the few that doesn't engender pissing contests between the reader faction that believes high oil is due to Peak Oil and/or fundamental supply/demand issues, and the contra faction that believes it's primarily greedy speculators and/or a geopolitical conspiracy by some cabal.
I had two local experiences this week that convince me we are all low-balling the immense task of adjusting to high energy prices. 1) I actually drove a small 25’ bridge spanning a local stream that banned foot traffic! 2)After dropping off a rental car locally, I failed to foot it back home because a full 1/4 of our city is cut-off from the rest by the I-40 & I-26 interchange w/ no shoulders and impassable to pedestrians who desire not to share a lane w/cars going 65 mph.
So here's my [lengthy] take on high oil prices and whether/how we will adjust:
Deffeyes examines oil economics and includes the oft-overlooked wildcard of human psychology that periodically/sporadically defies all treasured 'supply-demand' notions of economics. Add to that the very real missing transparency on OPEC & other supply sources, plus dubious consumption data from some nations, plus a lack of transparency on actual oil storage...and you have the pricing conundrum of 07, 08 & beyond. The varying degrees of opacity & transparency gives free rein to theories & beliefs that allow for lots of online venting & posturing.
As much as people love to cite their historical knowledge of oil prices, past consumption models matter less because of the wildcard presented by China & India, whose growing demand will not be linearly immune to pricing, but will not so easily abate either.
My bet is that prices will stay high and will only be significantly dented if a deep & cascading recession circles the globe’s major economies. And that will only delay the inevitable re-rising of oil prices. Only an enduring “L”-shaped recession of up to 10 years will materially change our long-term circumstances, because we need ten years for the solutions re-stated below to kick in. If a global recession depresses oil consumption for only a year or two, it will be back to business as usual for reasons cited below.
As alluring as the green-fantasy is of people returning to walking/bicycling en masse in 2008, it is not just years away due to the inertia of human psychology; it is perhaps decades away due to the reality of our urban & suburban land-use patterns. We’re not Western Europe: access to medical services, our high-wage service jobs, retail, and preferred entertainment, is beyond reasonable walking & biking distances thanks to the auto-oriented pattern of development in the US, AND the dubious level of vigor of the American workforce, and the ongoing declining health of the aging boomers and also the aging Generation Xers now entering their 40s and late 30s, an age when bad knees, bad feet, etc, really make their presence felt. These folks remain the bulk of voters and taxpayers and they aint gonna be consistently biking 5 miles or walking 2 miles any time soon....not for a very long time. And will do even less in the northeast & Midwest due to horrid winters, and in the south due to horrid summers.
The current credit crunch and deleveraging will keep the brakes on any significant mass relocation of retail, jobs, medical centers, etc, off of interstate interchanges (as only one example) and back to within walking/biking distances of suburban cul-de-sacs and the residential neighborhoods of most mid-size cities. There isn't enuff capital to relocate enuff WalMarts, Targets, mega-malls, and office glass-n-steel office megaplexes back to the cities. The infrastructure cost of implementing any decent scale of mass transit rail & light rail remains politically unpalatable, and the timelines involved are counted in decades, not years (see LA, Portland, Charlotte's, much-delayed efforts).
And the current housing crisis continues to prevent 10s of millions from selling their ‘isolated’ homes and buying ones closer to existing mass transit or closer to their jobs. More energy efficient bus fleets and autos are still aways off, at least 5-7 years.
Our generation of over-scheduled (30 errands per weekend?) lard-asses will be stuck with prohibitively-high energy & transportation costs while we slowly stumble-adapt over 10+ years; the next generation, at best, will be the one in a position to use new smarter transit systems, wiser energy sources, and wiser and greener urban development and land-use patterns. Hopefully by circa 2018 and beyond.
avl
Couldn't have said it better myself!!
We are in for a major lifestyle change. The days the the SUV in this country are over.
Its going to take years for us to find alternative energy and in the meantime we will just have to gut it out like you just described.
Its time to buy a smart car!!
J
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