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Oil: $20 a Barrel? Or $200?

Mr. Smith is naive. Quote: ".... oil in the $20s would not surprise me over the next 1-5 years, especially if we see another deflationary scare and stock market crash and economic collapse in China-Asia." What he missed is that oil companies around the world will stop pumping oil and do no exploration at all. Oil companies will not spend more Dollars per barrel of oil to produce than it sells in the market. Or does Mr. Smith think these companies are directed by Mother Theresa? Soon oil will become scares and prices will rise.

Oil Supply: As Russian Production Tops Out, World Supply Will Continue to Slip

Many comments on oil forecasts use a number of conflicting references. It is best to read detailed and independent research such as: dss.ucsd.edu/~jhamilto/understand_... with the title "Understanding crude oil prices" from a number of researchers of the Departments of Economics, University of California at San Diego.
You can skip the math and read the sections on oil field depletion and forecasts. The graphs are most telling the future of oil.

Five Reasons the Market Could Crash This Fall

Over and over the blogs say that the market is up too much too soon. Yes, from the March level where those smart experts declared that the investment world is coming to an end. Sell, sell, sell. The Dow will hit 3000 and crude oil will be as low as $20. Did people mean that those mighty companies such as Microsoft, will just shut the doors and produce no computers anymore? Will the Potash Corp stop providing fertilizer because people do not eat anymore?

The March low did not make sense and the run-up of market indexes is in large part a correction of the stupidity.

Why Are Oil and Gasoline Prices on the Rise?

An excellent study on peak oil is:
dss.ucsd.edu/~jhamilto/understand...
You can ignore the math part but the graphs are very convincing since they are based on real data over the years. They show how one oil field after another produce less and less oil and others need extra rigs and more and more water injection to stem the decline.

The forecasting math is weak and from the wealth of data could be much improved. For example the price forecast for 2010 is: $48-$273. To come up with such a range one does not need any math.

Gas Prices Not Expected to Come Down Before Year's End

People often use unsubstantiated phrases like the above: "...but will fall like a rock back to low 50's after summer. Why? Often there is no explanation. But the so-called experts are no better. About 14 years ago when crude oil was below $11 a well-known oil guru said that oil will fall to $3-5 and I sold my stocks with tremendous losses. Now, I smartened up and if a guru (maybe the sun of the first ones because of the same stupidity) said recently that he believes that oil will fall to $30 or below this summer. Why? Another said that gasoline will be 25Cents/liter this fall. Why? Either they are fools or they have a play in mind and need a large crowed to fall into their trick. If OPEC wants $75 for crude they will get it sooner or later. New explorations are on halt and if the economy improves there will be a shortage on new discovery since the lead time is about 18-24month for a new source to be tapped. Consequently oil will spike. It is also false when experts say that the US has a 72 day supply and this has to be worked down. A strategic supply of 45 days must be kept at all times. When the economy recovers the Fed has to introduce inflation to eliminate the money they printed. The Dollar weakens and oil will go up since it is quoted in Dollar. There will be hedging against inflation and this is done by getting into oil instruments. Some other gurus predict that oil will be $200 by 2012 and $300 by 2015. True or not but they give the reasons just mentioned.also