$250 Oil isn’t Impossible: Supply and demand are now on different playing fields

Last week, when I heard an oil analyst (“Tastes like 10W40 to me, Bob”) say that oil could hit $250 per barrel “possibly by as early as next year” I said the following:

“What? Almost double the price in 6 - 8 months? Get outta here.”

And I meant it. I wanted all thoughts of $250 oil to leave the room.

Though I went on to say nothing is impossible and I agree that IF it happens our lives will significantly change on many levels I also said, “It just strikes me very funny that we wouldn’t change and live sustainably until almost every process and product is priced to the sky.”

Yesterday I received this comment from a Toronto realtor:

“Nice post Gord. I am also very skeptical about 250 dollars per barrel. I listened to some prestigious US economist on Econ Talk and according to his opinion it is just a result of supply and demand. And I think it is impossible that demand could be so much higher in 8 months.

And also supply is still higher. Producers are still introducing new places with huge resources of crude oil...” July 3, 5:18 a.m.

Four follow-up thoughts came to mind:

- Supply and demand is a tricky business. E.g., is Saudi Arabia et al willing to bump up supply when they can now charge the sky for what's under the ground?



- Will demand (not just in North America) steadily climb, even faster than supply, as China and India produce and then sell millions of cars at under $3,000 each to their new middle class?




- $250 oil? Nothing is impossible, unless we're talking getting back into my size 30 jeans now that I've stopped marathoning.


- Are people allowed to send comments at 5:18 in the morning? Shouldn’t people be sleeping?

[If you’re awake, with nothing to do, read more about $250 oil below]

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