When $100/bbl. oil is "pretty cheap"
As oil prices stay within record territory, Peak Oil guru Matt Simmons says $100 oil looks "pretty cheap" in light of relentless demand and limited supply. And he doesn't buy in to the notion that a recession in the U.S. will bring oil back to $70/bbl.
"Demand is far more durable than anyone ever thought," Simmons told
Reuters in an interview. "We're on an insatiable growth curve."
Simmons, one of the most outspoken proponents of the "peak oil"
theory that world oil production is declining irreversibly, noted that
thinning inventories, soaring demand from China, geopolitical turmoil
and a weak dollar have pushed crude prices up more than 70 percent from
a little over a year ago.
He declined to predict where crude oil prices will top out this
year, but dismissed the U.S. Energy Information Administration's view
that crude oil prices could drop below $90 a barrel this year.
And, in his understated way, he points out that conventional analysts' calls for an oil market top have consistently been blown out of the water:
"At $30, oil was going to cause a recession. At $40, it was an
aberration because of the fear factor and the war premium; $50 oil was
hedge funds," he said.
The EIA has forecast that a surge of new production from non-OPEC
suppliers such as Brazil, Russia, and new deepwater finds in the U.S.
Gulf of Mexico could depress U.S. crude oil futures to near $80 a
barrel in 2009.
"That's preposterous," Simmons said. He said production from many U.S. deepwater fields was "coming down like a rock."
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