Economist Jeff Rubin cemented his reputation as a maverick when he left his position as chief economist at CIBC World Markets, and a 20-year-career there, to publish a book about the end of cheap oil and the end of globalization, as we know it.
In 2000, Rubin had told Calgary's Petroleum Club that oil - then at an alarming 10-year-high of about $30 per barrel - would rise to $50 within five years. In 2005, he was among the first to correctly predict $100 oil.
Now, he says oil will break $200 as the economic recovers.
Q: The price of oil is notoriously hard to predict but your reputation has, in part, been made by your oil price predictions, right?
A: In 2000, I called for $50 oil by 2005 and in 2005 I called for $100 oil by 2007 and I'm calling now for $200 oil by 2012, maybe sooner, providing of course - and this is the whole key to my book - that we don't fall back into another recession because I believe that the true underlying cause of the recession that we are coming out of is not subprime mortgages but was triple digit oil.
Q: A U.S. government projection points to $130 a barrel by 2030, although the Energy Information Administration is quick to give it a range of between $50 to $200, citing uncertainties in projections. What makes you think you've nailed it and the U.S. government hasn't?
A: Check out what the U.S. Department of Energy was saying in 2000 about where oil prices would be in 2005 or 2010 and I'll think you will find that the answer was a fraction of today's price. so I'd go, 'What makes you think their forecast for 2030 prices is going to be any better than their forecast of oil price in 2000? ...(Also suspect) is their forecast of oil supply.
Back in 2000 the DOE believed that underwater oil from the Gulf of Mexico was going to be the huge area of supply growth. They thought that production would double from one million to two million by 2010 and then double again. The fact of the matter is that here we are, more than three years after Katrina and the Gulf of Mexico isn't even producing what it was back in 2004.
Q: What do you think skewers their vision - political imperative, wishful thinking....?
A: I think it’s this concept that I spoke to you earlier about, the upward sloping supply curve. It’s among the first principles of economics. - the higher the price, the more of a good will be supplied. I think that that underscores a lot of Cambridge Energy Research, U.S. DOE, International Energy Agency forecast. I think that up until recently, they have been very reticent to recognize depletion , at least to the extend that it occurs. I think that is beginning to change.
But the simple fact of the matter is that, I think, most people don’t appreciate that in the world of oil production, you gotta run faster to stand still. You hear all kinds of press announcements (about new fields and new finds) but what you never hear about is this field that's been producing for 50 years but now its depleted. You don't hear host companies make press announcements over that and you certainly don’t hear companies make press announcements over that. But if you were to add up what we loose from the loss of production in existing fields, i.e. depletion, that is four million barrels a day every year.
When you consider that, as a benchmark, we - the world - consume roughly 85 million, 86 million barrels a day, then that implies that by 2014, we are going to have to find 20 million barrels a day of new production just so that in 2014 we will be able to consume the same amount of oil as we did in 2009, ignoring any demand growth.
And even if we are able to do that -- and believe me that is hardly a lay-up, - even if we are able to do that what we are doing is replacing light Arab sweet crude -- that's the conventional oil that’s depleting at $3 to $5 dollars a barrel cost-of- production -- with deep water or synthetic oil from tar sands which costs upwards of $100 per barrel.
So even if we are able to replace it we are replacing it with something that costs 20, 30 times as much to produce.
http://www.montrealgazette.com/business/affordable/2079999/story.html
Jeff Rubin warns of imminent rise in oil prices to triple digits
http://intheendwerealldebt.blogspot.com/2009/10/jeff-rubin-warns-of-imminent-rise-in.html
Globalisering till döds
http://intheendwerealldebt.blogspot.com/2008/11/globaliserad-till-dds.html
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