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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: GREENLAW4-7 who wrote (102269)	6/7/2008 2:16:30 PM
From: Sam Citron	Read Replies (1) of 206113

Murti's analysis sounds quite sensible and conservative to me, exactly what I would have expected of a top notch Goldman analyst who has been right on the money to date with his forecasts. Not having been privy to his original $200 peak oil report a couple weeks ago, I wondered about his reasoning. [If anyone has a copy of that report, kindly PM it to me.] This interview explains the basis of his prediction -- mainly inelastic supply amid continued robust demand until the price spike destroys demand and eventually causes long-term oil price to decline to $75/bbl or less. And the peak price he sees which should bring about the demand destruction: $150-200/bbl. His forecast actually sounds somewhat optimistic to me. Suppose instead of a spike to $200, oil prices rise more gradually to this elevated level. Presumably that would cause much less demand destruction than he is predicting. Other factors which could become important that he doesn't mention are policy changes, such as reduction of petroleum subsidies in Asia, and technological change, such as the expected advent of EVs and PHEV around 2010. SC

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