Kevin Kerr gives CNBC his thoughts on the oil market.
Kevin makes a great point – demand destruction is overblown, as it took $140 oil for to trigger a measly 2.5% drop in US demand. A drop in the global bucket, he says.
He sees oil back up towards $150 by years end.
I agree – until we see new supply coming online, the trend of oil will be inexorably upwards. And since we’re not discovering any new elephant oil patches, that supply will have to come in the form of alternative energy – which is quite a ways off today, especially when we’re talking about transport energy.
Remember, solar and wind energy are great, but they are not going to power your car, or an airplane. That’s oil and nat gas for now and the foreseeable future.
For a great article on this subject, check out David Galland’s article on the export land model, and what it means for energy prices.
Side note – David writes for Casey Research, a publication I am a very satisfied subscriber of. In fact, local Casey Research subscribers have begun gathering recently here in the Sacramento area to discuss the global economic situation and investing on a monthly basis. Let me know if you’re in the area and would like more info about this.