Until October 19, 2004 - 5 months after oil passed the $40 mark - we didn't hear the illuminati candidates Bush and Kerry or Wall Street questioning
why they failed to forecast the evolution of oil prices nor the "official wisdom" that in the future oil prices will decrease.
Here is the first Wall Street linked article that poses both questions :
Is Oil Heading For $100? Why has Wall Street missed it so badly?
Some excerpts, that also gives some hints at the answer for the first of those two questions :
NEW YORK - Yesterday, in writing about the rise in oil prices--which have roughly doubled in a year--I noted, "No one saw it coming." (See: "Oil
Hits $55 Alarm; Greenspan Hits Snooze.")
As it turns out, a few people did see it. And now some of those seers are saying the recent "spike" is no spike at all, but the start of a long-term
trend. It may be that the price of a barrel of oil is heading for $100, if not higher, by the end of the decade.
To be sure, the conventional wisdom is that oil prices, which fell a bit yesterday to about $53 per barrel, are going no higher and will likely fall
back. That seems to be the view of Wall Street firms, most of which say as much in their research reports. Bear Stearns , for instance, last month
forecast a $25 price in 2005. Even relative "bulls" like Goldman Sachs are talking about whether prices in the high $30 range might be sustained.
"To the best of my knowledge, not once [since 1998 when oil was around $11 per barrel] has any Wall Street firm forecast oil prices to be on a yearly
uptrend," says Stephen Leeb, president of Leeb Capital Management, a New York investment manager and author of The Oil Factor (Warner Business 2004).
Why has Wall Street missed it so badly?
Leeb suggests that the answer lies not in economics, but in mass psychology, specifically studies of
Leeb himself is forecasting higher, indeed skyrocketing, prices. He is not part of a crowd, but he is not all alone either. He is joined by, among
others, Matthew Simmons, chairman of Simmons & Company International, an energy banking firm in Houston. Simmons speaks of a phenomenon called "Peak
Oil" and says it is "as inevitable as death," though, like death, predicting its precise timing is not easy. Leeb and Simmons point out that,
unlike the oil crisis of the late 1970s and early 1980s, which was a political phenomenon, the current price increases are fueled by supply and
demand, which are less transitory than politics.
Leeb says that during the last oil crisis, the world was producing at 70% capacity. Now it's at 99%.
Note that the article doesn't even try to answer the second question. I will let you think about the answer. Hint : if you can perform basic
arithmetic operations, you should have no trouble to find the key to the answer.
Start gathering data for those operations for instance at the mentioned previous day article "Oil Hits $55 Alarm; Greenspan Hits Snooze." Excerpt
Unlike in the early 1980s, when most of the oil the U.S. consumed was still domestic, now 57% of the oil consumed in the U.S. is imported
[edit on 20-10-2004 by MattMarriott]