No one wants to talk about $100 oil when oil is at $70 or $80 a barrel. Most experts want to say it is too high on speculation and will be back at $60 before anyone knows what happened.
But, with oil above $90, a survey of oil experts and potentates yielded nothing other than comments about how high oil would go now. As a matter of fact, much of the discussion is now about oil being above $100 for good.
According to The Wall Street Journal "Sadad I. Al-Husseini, an oil consultant and former executive at Aramco, Saudi Arabia’s national oil company, gave a particularly chilling assessment of the world’s oil outlook. The major oil-producing nations, he said, are inflating their oil reserves by as much as 300 billion barrels" The oil may be there, but it is too hard to get to.
The head of Schlumberger (SLB) put a point on it by saying that 70% of the world’s major oil fields are now over 30 years old. Other sources expressed concern that "investment, skilled workers and technology" may not be available to help avert an oil price crisis.
The media is awash with economists saying the the US and other major nations have adjusted to high oil prices and that increasing costs for crude are not likely to drive down GDP growth in this country or other major economies like China. The comments are naive. If the cost of a commodity as widely used as oil makes a 100% price move over less than two years, global growth will pay a price, and a dear one.
If there is a global recession, oil will almost certainly be the cause.
Douglas A. McIntyre
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