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As if there were not plenty to worry about, Goldman Sachs (NYSE:GS) is forecasting oil prices to hit $150 to $200 in the next six months to two years. According to Bloomberg, a note from one the of the bank's analysts said:``The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty."'
Observers do not need help from Goldman to make the case. Recent problems with production in Nigeria and political unrest in the Middle East have already moved oil above $120. That situations could continue and move into other unstable countries such as Venezuela.
The theory that a slowdown in the global economy would drop oil prices has not borne out. China, India, and other major developing nations continue to push demand higher. Even in the US where gas prices are now over $3.50, consumers have not cut back use enough to move pricing down.
Some new fields will come online. Brazil just made a major discovery off its Atlantic coast, but production will not be up and running there for several years. During that time, exports from large producers like Mexico and Russia will continue to fall due to aging of their fields.
Nuclear power looks better every day.
Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.
Reader Comments (Page 1 of 1)
1. Looks like Iran is in the picture to either blow the world up,or ready to suply the worlds nuclear needs.Maybe the Bush gas buddies don't want a change.The spinn that any mid east nuclear work is for terror, is to protect stasius quo. Go figure?
Posted at 8:36AM on May 6th 2008 by John brennan
2. Doug,
One word: Chernyobl.
Waht happened to solar & wind options?
Posted at 8:47AM on May 6th 2008 by Dan Barnett
3. Some experts are predicting that China will have around 200 million cars on the road by 2020 ! That's close to what we have now in the US. Add in growing demand in India, Eastern Europe, the Middle East, etc. and it becomes clear there will not be enough oil for everybody, and lots of economies will be in serious danger. Not hard to guess what future wars will be all about.
Posted at 9:40AM on May 6th 2008 by silverfox