Timothy Stolz

A $40 Bottom in Oil?

What a mess we would find ourselves in with oil at $40 a barrel. How many oil drilling, service, tubular and transporting companies would find themselves holding worthless "future contracts for work?" There would be a shrinkage of investment dollars into new exploration that in and of itself, would create a shortage, eventually driving the price of crude right back up to where it would then become economically feasible to produce and refine.
My concern is that the opposite is likely to occur in the near term. The post above by JohnniePhenom suggests that the inflationary outcome of the influx of a hugh amount of new dollars into the worlds financial system could devalue the dollar causing the price of crude to rise. I think Johnnie is right.
And, another concern of mine comes from the words of Joe Biden...."He will be tested in his first six months" comment will likely ring true. I do not believe the Middle East is at all that stable and the Iran/Israel nuclear issue may very well come to a "head" early in Obama's Presidency. Just a hunch and I hope that I am wrong.
As wdhalgren said in his post....(this)(meaning oil) "could be the long term investment of the millenium."
I think oil will settle in the range of $62 - $72 until the market is "stressed" one way or the other.

Global Financial Crisis Makes Oil a Great Hedge

Jason....I wonder if your last sentence will still apply when the "heating season" starts?