predictions for 2009.
I think they are all pretty
good, predicting that oil
will go to $10 to $15 is
probably right, we're in a
race right now to see
if production will slow
down enough to prevent
all storage and tankers
filling up. When that happens
the oil industry will crash
one more time. It hasn't
crashed yet, it's sort of
limping along with the hope
that things will pop up above
$50 again. Because the rig
rates have gone up so high
over the past 3 years, a deepwater
rig is above $500k per day now. It's not unusual for a deepwater well to
cost $50 million now, so we need $50 oil at a bare minimum or else all that
work will shut down this year.
The question is what will happen after this crash, will things bounce back quickly
or will things drift along like the 2nd half of the 80's.
here's what I wrote back in May:
If the price of oil can stay high for another 5 years, then the US will be radically
different at the end of that time power-wise. The more likely outcome will be
that the economy will continue to slow, we'll stop buying plastic chinese crap, then
they'll slow down, and the price of oil will head back to 12 dollars, resetting the
system again at 1980.