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Tuesday, June 17, 2008
Bloomberg: $250 Per Barrel of Oil?
After another day of record-setting oil on Wall Street, Alexei Miller, chief executive officer of OAO Gazprom, the world's biggest natural- gas company, predicted crude oil will climb to $250 a barrel in the "foreseeable future.'' If the "foreseeable future" includes $250 a barrel for crude oil, food prices double, plunging the U.S., Japan and Europe into deep recession. Companies go bankrupt. Airlines are nationalized. Sport-utility vehicle sales dry up as gasoline tops $7 a gallon.
Yet as these remarks touched off a storm of investing and options contract negotiations for fuel, criticism over Miller's prediction also grew. Tom Kloza, chief oil analyst for the Oil Price Information Service in Wall, New Jersey, is skeptical about Miller's prediction because it may benefit Gazprom. "It's silly to take people with incredibly vested interests as having an unfettered, unbiased opinion,'' Kloza says. Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, says the firm's economic models break down if the price of oil goes over $200 a barrel. "The U.S. goes into deep recession, as does most of Europe and Japan, and that takes much of the developing economies with it,'' he says. "I don't see how we get to $250 because the economy is broken long before that, and demand falls and that causes prices to fall.''
To read more of this article, click here.
Yet as these remarks touched off a storm of investing and options contract negotiations for fuel, criticism over Miller's prediction also grew. Tom Kloza, chief oil analyst for the Oil Price Information Service in Wall, New Jersey, is skeptical about Miller's prediction because it may benefit Gazprom. "It's silly to take people with incredibly vested interests as having an unfettered, unbiased opinion,'' Kloza says. Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, says the firm's economic models break down if the price of oil goes over $200 a barrel. "The U.S. goes into deep recession, as does most of Europe and Japan, and that takes much of the developing economies with it,'' he says. "I don't see how we get to $250 because the economy is broken long before that, and demand falls and that causes prices to fall.''
To read more of this article, click here.
Labels: economy, oil prices, oil supply/demand
posted by Amanda Voss at 11:07 AM
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