Oil price boom: 'It's different this time'

Sir John Templeton, the recently deceased super-investor, thought that those who argue 'this time it is different' in relation to the soaring price of almost any asset are fools who are bound to be proven wrong.

In the end, the price will correct and the market will rectify.

Oil bears who think the cost of a barrel of the black stuff is unsustainable have had a few good days.

Friday was the fifth day in a row where the oil price fell, tumbling from a high of above $147 to sit down as low at $130 at one point.

At that rate it will be back below $50 in no time — global energy crisis over. Climb back into your 4x4.

I bet that doesn't happen. Oil industry figures show that non-Opec nations are producing less every year. Opec might be able to pump a little more than it does now, but it certainly isn't minded to. And any dip in the price just encourages fresh buying.

The oil shocks of 1973, 1980 and 1990 were connected to specific threats to supply rather than a wider inability of supply to keep pace with demand. It is different this time.

- Simon English, Evening Standard

Comments

[peter]

Actually it looks very similar in practice but you are right that supply issues look serious, even the UAE will cut output this autumn for planned maintenance! But I would buy gold and silver as the best play on the oil price set-back.