The point of all this is not to pat myself on the back but rather to comment on how incredibly annoying the constant drum beat of “oil sets a new record high price today” stories in the media are to me. To me I have been living the reality of $100+ price of oil for a couple of years as an expected certainty. It is a feeling of déjà vu every night. Yup, that’s right the price of oil went up again today, and some sports teams won and some lost and some politician made a promise we all doubt. Yup, so what else is new? When one lives with a certainty about something happening in the future and it does happen, it feels like déjà vu, there is no other way to describe it.
James Schlesinger, the first Energy Secretary, when discussing America’s approach to energy, famously said: “We have only two modes – complacency and panic.” Schlesinger said that some 30 years ago. So now, after two decades of relative head in the sand complacency; living in McMansions and driving Hummers and pick-up trucks we are subjected to panic news reports practically every night. I hope the panic subsides and gets channeled into changing the energy equation. The good news is that sketchy reports show that gasoline consumption at the pump in America is down this year from last year and car dealerships can’t sell SUVs unless they practically give them away.
The other reason I hope it subsides is that I now think that the trading price range for oil will be between an improbable low of $95 and a not surprising $135 for the foreseeable future. There are a number of events that could happen which would, for periods of time, drive up the price beyond $135. This will be the oil reality for the next few years.