Wednesday, February 23, 2005

They're shocked, SHOCKED to find oil prices rising!

I don't quite get the CNBC anchors. They're clearly intelligent people, they discuss and report on oil all the time, and they talk to world renowned oil experts regularly. Yet they still seem genuinely shocked to see oil prices going up. I'm not sure if it's a journalist need to remove themselves from the story, or maybe the McMansions in Bergen County and SUVs are coloring their views?

Anyway, today they interviewed Matthew Simmons. Here's a few quotes:

"I think we're basically now at the end game of this sort of battle that's been going on between the optimists and the realists about what really constitutes a fair price for oil. It's really interesting, if you go back to the summer of two years ago when oil prices were at $28 to $30, there was an enormous impression that that was a war premium, and then all of a sudden at $40, that's a fear premium, and then at $50, it's the hedge funds. And one of the things that's happening right now is demand is starting to outpace supply, and supplies are tight. So I think basically some of the realists are essentially saying maybe oil prices are actually where they should be, or maybe they're not as high as they need to be."

"We're in a tight market. Could oil go to $100? Sure it could. If demand exceeds supply, you introduce genuine scarcity and then there really isn't any sort of automatic level that prices level out."

"I think we basically ought to all observe the oil market, take a cold shower, and start watching very carefully real supply versus real demand; it could start pulling away from us - it being demand - in a pretty dramatic fashion."