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Forbes warns of oil bubble James McCullough and Mandi Zonneveldt 31aug05
PUBLISHING billionaire Steve Forbes has predicted that soaring oil prices will lead to a crash that could make the hi-tech bust of 2000 "look like a picnic".
Mr Forbes, publisher of Forbes magazine, said the price of oil, which peaked at more than $US70 a barrel on Monday as Hurricane Katrina headed for the US Gulf Coast, was unsustainable. He said factors such as inflation and increased demand for oil from China and India accounted for only a small part of the price hike from $US25-30 a barrel three years ago.
"The rest of it is sheer bubble speculation," he said.
Mr Forbes, who was speaking at the opening of the Forbes Global CEO Conference in Sydney yesterday, said the higher the oil price rose, the harder it would eventually crash, creating more pain for hedge fund managers and their clients.
"I don't think it's going to go to $US100 but if it does the crash is going to be even more spectacular," he said.
"It will make the hi-tech bubble look like a picnic -- this thing is not going to last."
He predicted that oil would fall to $US30-35 a barrel within a year.
Mr Forbes's comments came as the price of oil eased following US Government comments that it could release some of its Strategic Petroleum Reserve.
The 700 million barrel stockpile is set aside for emergency use and could be used to counter oil shortages caused by Katrina's impact on the Gulf of Mexico, which accounts for about a quarter of US output.
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So far, it isn't shortages of oil supply, but deficiencies in refining capacities that are the danger. Pulling stored oil out of storage can remedy that. Still, for over half a century, every recession in the US followed soon after a spike in oil prices.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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so your saying that instead of developing alternative sources of energy we should completly exploit every place that has oil and turn it into a refinery. im not a hippy or treehugging liberal but i dont think that every place should be an oil well. i personally like beautiful places like alaska just as they are. on the other hand i understand the importance of energy but we cant completly destroy the world just so we can live in it, whats the point? After all the oil will run out eventually, so the choices are start developing an alternative energy plan, or get into increasingly bloody battles for the energy control and letting it explode in our face with nothing to fall back on. Common human knowledge tells me that people dont tend to notice a problem until its too late. (Victims of heart attack come to mind, they change thier habits pretty quickly AFTER they almost DIE! instead of spending years eating healthy.)
-------------------- "Gentleman, you have come sixty days too late. The depression is over." Herbert Hoover 1930 Posts: 678 | From: currently in hiding due to investigation | Registered: Oct 2004
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I agree that we have not aggressively pursued a switch to alternative energies; but I believe because of this, current necessity will win out and more refineries will have to be built (decreed by Presidential executive order, if necessary) or we could potentially be paying $10/gal for gas. This would cause substantial damage to our national economy. I would rather have a few more refineries, until alternative energies are implemented, than live in a third world country caused by $10/gal fuel.
In 1982, we had 263 refineries verus 159 today. http://www.eia.doe.gov/emeu/finance/mergers/refcap_tab2.html Clearly, we need to build more refineries to meet the needs of a growing population (now 285 mil) which owns 230 mil cars, not to mention commercial vehicles and airlines.
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Ive talked to a couple people about why we havnt changed to another fuel source. We do have the technology and there have been cars made that use alternative fuel sources that are good cars that can go about 80mph. Im not sure why they wont switch. I think it could be because so much of our economy is built on the present day automotive industry. Many thousands of workers would loose there jobs. Gas stations and oil companies would go out of buisness and people like there fast cars. I do hope they switch soon. Hopefully an increase in the prices of oil will motivate someone to market some cars that run of alternative fuel. If gas prices get high enough people will look for another way. I also dont like the fact that the US has to deal with and pretend to be friends with these countries that hate us so we can get oil. This should be motivation enough.
Posts: 205 | From: ca | Registered: Aug 2005
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