[lbo-talk] up, up and away

metaldark at insightbb.com metaldark at insightbb.com
Mon Oct 25 13:45:16 PDT 2004


Doom and gloom questions: $75 ppb will be catastrophic globally, but extra bad in the United States because of our disgusting per capita energy usage, design of our cities, cars, etc...does that sound right?

Rumor has it the oil companies are slowing the rise at the pump to help Bush's re-election. So I wonder...if gas at $28 ppb was $1.73 why am I paying $2.18 when the ppb is at $55?


> I remain agnostic on the 'oil bubble' question, but there are some real
> supply constraints, and demand has run well ahead of projections (not
> least from China, although I don't want to over-egg the 'China is
> behind everything' point).
>
> Part of the reason for supply shortage has been that the oil majors
> have used a very conservative oil price in their financial models to
> assess investments, so investment has been curtailed. There has been
> a bit of a cartel in oil price prediction, too. Most of the major
> banks were forecasting prices in the mid-$20s not long ago - all using
> very similar models. For summary, see:
> http://www.rbs.co.uk/Group_Information/RBS_and_the_Economy/Surveys/downloads/oil
> price.pdf
>
> Problem is, there's not enough of a cartel, so no one can make long
> term plans based on supplying aggregate future demand. Instead,
> everyone uses the same financial models, which work just fine for as
> long as the future behaves like the past...
>
> James Greenstein
>
>



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