Historic Oil Prices
Why He's Predicting $200 Oil
2008-04-26
By Ian Cooper
What happens when U.S. oil consumers are forced to pay $7 a gallon? Ask them over the next five years.
If you thought T. Boone Pickens' $125 oil prediction was a shock, CIBC World Markets' chief economist Jeff Rubin is predicting $200 oil in the next five years.
Oil production, says Rubin, will "barely grow over the next five years, edging up barely more than 1-million barrels a day over the next three years, and only half a million barrels a day between 2010 and 2012." And those increases could fall short of demand, leading to $150 barrel oil by 2010, and $200 a barrel by 2012.
Imagine what you'll be paying at the pump when that happens. I know I'll be taking a bike to work.
And it isn't so far-fetched given higher demand form developing countries like India. "However, surging prices would cause demand to ease in the United States, with gasoline prices, already averaging US$3.60 a gallon, climbing to well over US$4 a gallon this summer and as much as US$7 a gallon by 2012," he said.
Sure, the forecast goes against conventional thinking that slower global and U.S. economic growth will drag oil below $100, but anything's possible these days. Who'd have thought we would have seen $119 oil back in 2000?
And it's not as if we don't have solutions to the problem.
One of the solutions is to dig for oil here in the United States. We've told you about Bakken.
We've told you that:
- Up to 4.3 billion barrels of oil could be recovered from the Bakken shale formation - a 25-fold increase compared to its initial assessment in 1995.
- And that the Bakken is the largest "continuous" oil accumulation ever assessed by the USGS.
One of the "must own" stocks is Kodiak Oil (KOG:NYSE).
The other three can be found in the Bakken report issued by "The $20 Trillion Report." Those plays are reportedly up 54%, 31% and 30% as we speak with further upside potential.
But to understand the full potential of Bakken-related stocks, take a look at what happened to stock associated with the Canadian Oil Sands. The same potential is hidden in Bakken-related stocks.
- Since late 2003, for example, Western Oil Sands (bought by Marathon Oil) ran more than 1,500%.
- Since April 2003, Suncor Energy (SU:NYSE) ran from $15 to more than $110 - a 633% move.
- And from its lowest point of 1998 to 2000, the Canadian Oil Sands Trust returned as much as 19,900%. These days, it trades at $45, a still impressive gain of 1,025% from its 1998 lows.
http://www.energyandcapital.com
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