A friendly wager

[ music | XTC Vs. Adam Ant – They Might Be Giants ]

So, I bet tom that within 5 years oil will hit $60-$70 a barrel. He thinks I’m nuts. While he’s not wrong, this isn’t the reason. This article at Portfolio.com is a good read, as is an article Tom found over at The Telegraph stating some very sound reasoning. Namely, the economics of $120/barrel oil is unsustainable in the short term. No, it won’t drop to $70 and stay there, not at current use levels, but right now supply is up, demand is down, and some Middle Eastern countries like Saudi Arabia are about to open the spigot even wider. In short, what’s good for us is good for them, and cheaper oil is good for us. They’ve made it clear they don’t want it at $20/barrel again, but we can live with it at $70/barrel much easier than two or three times that amount.

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