I boldly predicted that oil prices would fall below $50 per barrel in 2007. (Admittedly I predicted the same thing for 2006 and I was wrong. However, prices did drop to around $55 which was considerably lower than a lot of "smart" people forecasted.) Regarding my 2007 prophecy, it seems to be on track. Prices fell to $51.88 per barrel yesterday but are rebounding a bit today.
But what about $20 per barrel oil by 2011? Oil analyst Peter Beutel of the energy consultancy Cameron Hanover thinks it could happen. Beutel told MSNBC:
"I believe we have that a lot more oil on this planet than people believe. And we are going to find it over the next few years."
Beutel thinks oil prices could fall as low as $20 a barrel in the next 4 to 8 years before beginning to rise again.
And why not? All other things being equal, higher prices encourage more exploration and more technical improvements which leads to more production. If Beutel's right, New York Times reporter John Tierney's $5,000 bet with peak oil alarmist Matthew Simmons is looking pretty good.
Disclosure: Hmmm. Maybe I should dump those 50 shares of ExxonMobil I keep disclosing. Hey, then I wouldn't have to disclose them anymore. Bonus!