MEGADOOM, I am calling you out! $150/barrel oil by MAY 2010?!

[MooreTime]

...in a kind way that is.
Peacefully, I wanted to get your attention

What is your basis for $150/barrel oil by May 2010?

You mentioned it back in one thread but I would love, and appreciate it, if you expanded.

Thank You

[everyman44]

War escalation in the middle east I would presume. That's why I concur with Megy. It could conceivably climb to $200.00 a barrell if we get into something with lil kim jong illin. OWG's watchin lil bit like a hawk.

[Megadoom]

We have excess capacity, no doubt, but global production is in a steady decline (see oildrum.com) and yes, I am in camp that says Israel will attack Iran before 2010 is over. Four months ago Israel publically stated that if "crippling" sanctions are not in place by the end of this year (here we are and no sanctions), Israel would be "forced" to unilaterally act. Now I know several posters have given valid reasons why Israel would not do this without US sanctions; however, I would like to point to the fact that Israel is moving ahead with expansion in hotly disputed regions - a core issue with US peace proposals (we've publically condemned as much) that Israel halt any and all new construction. Yet they do want they want anyway. Iran cannot be allowed to become a nuclear power, not my thoughts but the IDF and inter party ministers, and Iran will be dealt with. I really believe the US is behind the Iranian riots and covertly sanctioning revolution, and I believe Obama has asked for time to see if they can manifest a pro-democracy revolution that could act as another ME puppet state.

Between now and this Summer, the die will be cast and the world will be gripped by fears of another world war. I'm not a soothsayer or prophet, that's what I see happening. I hope I'm wrong, or at the very least this issue of attacking Iran will be pushed back into 2011 or even 2012, but by then the order magnitude that this fragile civilization finds itself in is most certainly going to be frightening.

So why do I believe oil will spike this year, and around this time - in a nutshell it's because of declining production, and contrary to several recently published articles, we are not at peak demand, and the certainty that I feel we will be cut off from ME oil - to the extent I don't know, but it will panic oil speculators.

We can't also ignore the dollar play. When it begins its inevitable crash is anyone's guess, but it might be this year as well. A worse case situation would be all of these happening at once.

[ArmaGoof]

I wouldn't be surprised if you were correct Megadoom.  God knows this could all play out in an infinite variety of ways.  One part of me HOPES you're right - the part that wants the crash to happen, so we can get over it.  But with all the effort having been made to sustain and even extend our dependency on oil, via car company bailouts and road projects, not to mention the fact that most people would lose their jobs without fuel for their cars, gasoline prices MUST stay within reach of the average consumer, or it all goes down quickly.

You can bet there are deals of such convolution and conspiracy being discussed right now to stave off that circumstance until God/Aliens/Teleportation arrives to save all our asses.

Makes one wonder at what low level on the IQ scale our leaders reside.

[pamela]

found this at zero hedge.

http://www.zerohedge.com/article/why-next-spike-oil-prices-will-dwarf-last-one

World GDP will grow an average 3.1%/year through 2030, driving oil demand from the current 84 million barrels/day to 103 million b/d. That means we will have to find the equivalent of six Saudi Arabia’s to fill the gap or prices are going up a lot. His ultra conservative target has crude at $190/barrel in twenty years, and his high priced scenario would send you rushing for a change of fresh underwear.

[Not Sure]

I doubt USD will fall much (if any) further.  Right now its a race to the bottom with all fiat currencies.

The currency market cracks me up.  One worthless piece of paper defines the value of the other worthless currency. lol.

[cjr]

I doubt USD will fall much (if any) further.  Right now its a race to the bottom with all fiat currencies.

The currency market cracks me up.  One worthless piece of paper defines the value of the other worthless currency. lol.

Why worthless ? You can buy gas at a price a little higher  than  bottled water.
Tomorrow - I dont know - but today you can purchase a lot of value with your paper notes.

[Megadoom]

I doubt USD will fall much (if any) further.  Right now its a race to the bottom with all fiat currencies.

The currency market cracks me up.  One worthless piece of paper defines the value of the other worthless currency. lol.

Why worthless ? You can buy gas at a price a little higher  than  bottled water.
Tomorrow - I dont know - but today you can purchase a lot of value with your paper notes.

Interesting perspective but have you considered the "real" cost of that bottle of water? That bottle didn't magically appear on the store shelf, but rather traveled perhaps hundreds of miles (via oil distillates), bottled in plastic (derived from oil), and stocked, packadged and placed by human labor (oil supported system).

[EWHM]

Oil production decline is in a race with the disintegration of the global economy and the decline of the US dollar.  That said, I believe that one of 2 things
will certainly be true by the middle of the summer.  Either
Megadoom will get his $150/barrel oil or
U3 unemployment will be up around 12%, U6 around 20%, shadowstats over 25%
I suppose it is also possible that we'll see both.

[damoil]

my views fall in the following angles;

- if conflict breaks out with IRAN then we will see a spike, but IRAN still needs to sell its oil for cash, so i dont think it will be hard on real supply and will be more overeaction.
- unless the conflict includes a nuclear detentation, then all bets are off.

- production will catch demand, but it will be suttle. we might see a new high in crude spot price but it will flutter under speculation as it takes a long time for physical shortages to blow through from well to bowser. and not all reserves will decline the same as only particular wells will suffer which will only effect certain reserves and contracts. the highs will hang at a ceiling price like it usually does, and prolly do this for 6 months. in this time the new highs will eat away at business margins and economies will suffer as buyers pull back. the US might see stagflation, but at first the unemployment might be drive by the (1st)GFC and inflation by petrol prices, then next stagflation could snowball itself along.

- or the gfc and lower production/employment globally may have bought us another year. the world was still putting projects online 5-10years ago that will be just coming online now, or finally building pace to full production (which i have no idea). if you look at how long the world handled flat supply in the biggest boom the world ever saw, then the biggest GFC ever might have given us more time than we thought. (recall that the 80s oil shock in the US pulled back demand so heavily that it changed huberts forecast by a decade, thought markets are very different now).

- or the GFC isnt finished, with the steady $80/barrel, bailouts waning and businesses fragile. we could see another drive in the markets sparked by big business failures or collective failure of small business. likely caused by weak buying power or defaulting debt by the consumers.