Back in 2004 when I had that interview oil had a solid base at that $40 level and had not really moved from it in a ½ decade. That base still supports oil today and I expect that oil at $50.00/bbl is the absolute best that one could expect from a pullback. Indeed, a secondary base at the 70-90 level is more logical at this point and given the swiftness of the decline from the $150 area it is my estimate that a double break of $90 will likely be the end result of the decline and OPEC will move Allah and earth to keep the price at $70.
In the long-term, there is no leadership willing to do much more than talk about energy. Add to that a driving culture that will only reluctantly give up their SUV’s and gas hogs, there can be no expectation that demand from the U.S. will diminish. Now you can couple that with India ready to flood the world with cars that cost under US$2,500, the Chinese with the world’s largest driver training schools [well, YOU may think they know how to drive]. $150/bbl oil is not in the cards. Now you can try $300/bbl and I will probably be conservative again in this estimate. [for the full report and appropriate disclaimer, email: axxel@
