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Even experts cannot predict price of oil
Commentary Simon English, City Correspondent11 Jun 2008
Russian oil giant Gazprom says $250. Goldman Sachs reckons $150. And Citigroup predicts $100.
Why is there such a divergence among supposedly informed parties about the price of a barrel of oil?
Firstly, the headline-grabbing predictions tend to be worst case scenarios, or in Gazprom's case a gleeful hope driven by dreams of fabulous profits.
If oil keeps rising, those who control it and sell it will stop being merely incredibly wealthy and move on to a new plane altogether.
But it is increasingly clear that the supposed experts just don't know what will happen - they have been caught on the hop by an oil market that is running wild on a mixture of speculation, fear and greed.
Citigroup moved its "long-term price forecast" up from $75 to $100 yesterday, which looked like an embarrassed attempt to catch up with reality as much as anything.
Oil analysts brought up on the notion that there were decades worth of the black stuff left have been scrambling to cope with the ever higher prices.
The rises don't mean we are running out any time soon, just that there is increasing panic that demand is booming so strongly that the amount produced each year will struggle to keep up.
Proponents call this "peak oil" - a theory beloved of oil bears and other doomsayers.
Some blame speculators for driving prices. But if that was all there was to it, the price would fall once the speculators were proven wrong. So far there is little sign of that, and few analysts are predicting prices going below $100 any time soon, or possibly ever again.
