Originally Posted by
Hamann
To say "gas prices shouldn't go up" is ridiculous. Demand will continue to grow, and there is only so much supply. Granted, a lot of factors made gasoline go to over $4.00 a gallon...but, it doesn't mean it won't get there again...and, that it shouldn't get there again. Hubbert's peak has value to it...and we're severely underestimating India and China whose demand grow roughly 7% a year.
I think it's recouping a little...the curve went way up, and now it's overcompensating...really believe $2.00 a gallon is a pretty reasonable price...and fair based on today's supply and demand.
thoughts?
my thought is that it's far from ridiculous. I think we'll spend more time around $1.50 a gallon than we will at $2, $3 or $4 over the next 5 years.
Oil was priced for perfection over the past 36 months...similar to the way tech company shares were priced for perfection in 1999. By this I mean the stocks were trading at levels that relied on AWESOME economic growth, amazing business plan execution and an all around perfect scenario. The stock market prices 'the future' in to a share price TODAY...unfortunately much of that 'future' never materialized for those tech companies...and thus their share prices fell precipitously.
Same thing with oil...the market prices in all available news and future speculation TODAY. Unfortunately, the oil market priced in perfection over the past 3 years...assumed massive Asian growth for the next decade, continued western economic strength, and an all around continued path of oil hungry global economics.
That has all changed. While Asia still grows at a breakneck pace (compared to us) the double digit Indo-China GDP growth that was assumed is grinding to a halt. The market recognized that under the new economic reality, oil should be comfortably back to where it was before this insanity/speculation that Indo-China would grow GDP at 12-15% for the next decade. Without this growth, oil shouldn't be in the $100s...and thus refined gasoline shouldn't and won't be in the $3, $4 or $5 range.
Oil should be (and is) in the $30-50 range for a while...and that means $1.50/gallon gasoline for you lucky pricks in the States!
Here's what some of the rest of the world deals with as of this week (in USD/gallon)...
USA - $1.57
Canada - $2.40
Japan - $5.19
United Kingdom - $5.21
Germany - $5.76
Brazil - $6.02
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