Remember last July? A shy Goldman analyst predicted that oil was going to $200 and immediately became the next Meredith Whitney. The mine’s-bigger-than-yours game drove other targets to $500. T. Boone Pickens announced plans to become a wind mogul. Detroit announced a permanent “new era” and pulled the plug on its guzzlers. Peak oil became “a fact.” How was it possible that, once again, so many smart people had been so stupid?
Six months later, oil has crashed back into the low $40s. And now Merrill’s analyst is predicting that it could go to $25:
FT: Francisco Blanch, head of commodities research at Merrill Lynch, said his main scenario was for oil prices to average $50 a barrel next year, but warned: “A temporary drop below $25 is possible if the global recession extends to China.”…
Yes, yes, we know: When the economy comes back, oil is shooting right back to $100+. Everyone agrees on that, so it’s obviously true.
Meanwhile, how are things in the Middle East about now? Are folks still building indoor ski mountains in the desert? What about that rotating skyscraper?