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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: DebtBomb who wrote (100412)	1/16/2008 10:31:22 AM
From: Cal Amari	Read Replies (1) \| Respond to of 306849

"I guess we could see oil at $50 by 2013, unless something crazy happens." I want whatever you're smoking if you really believe that oil prices will drop in half in five years. With oil demand growth outstripping supply growth by a factor of 2-3, and with a dollar that is falling in value, I see no way that oil prices fall into the $50 range absent widespread adoption of full-electric cars (which will not happen in a mere 5-year time frame). China alone is projected to have more cars on the road than the U.S. within 5-7 years. India will continue growing too. Even if countries like Saudi Arabia bring more oil supply on line, domestic consumption is expected to consume all of it. Note that S.A. already has the world's highest per-capita oil consumption (with the U.S. right behind). The single largest exporter of oil to the U.S. is Mexico. With supply crashing there, Mexico is predicted to be a net IMPORTER of oil in as little as five years. Venezuela is cutting exclusive supply deals with China right now. Absent a regime change there, Venezuelan exports to the U.S. will likely be lower in five years than they are today. Supply growth in Africa is uncertain at best given huge political turmoil. But as the U.S. protests human rights violations there, China is mopping up as much long-term supply deals as they can. Deep ocean waters represent the last great frontier for significant supply growth; however, deepwater supplies will be slow to come on line due to enormous engineering and logistical challenges in not only bringing wells on line, but transporting oil to shore. Deepwater oil service suppliers are already scrambling to meet demand, and the problem will get worse with time. Don't expect deepwater oil production to keep up with worldwide demand anytime soon. $50 oil in 2013? Sounds like a pipe dream to me. -VK