SmartMoney has an interview of Stephen Leeb, whose book "The Oil Factor" predicts a gas price of $100 per barrel in three to six years.
The article devoted most of its length to the discussion of the ramifications of the predicted expensive oil but didn't give much clue about how Stephen made this bold claim. Actually, when asked about the $100-per-barrel prediction, Stephen barely says:
"If you go back to the end of 1998, oil was trading near single digits. So we've had a threefold increase in oil prices in a relatively short period of time, and I'm basically just projecting an ongoing trend. I think we'll get another threefold increase, and it may happen in five or six years, or three or four years. The overall point I'm trying to make is that oil prices are in a dramatic uptrend and are likely to remain in an uptrend for the foreseeable future."
What a rear-mirror-view logic! Yes, I agree that it is important that people should have some awareness and understanding (and probably some small investment exposure) of commodities like oil and gold, but this kind of poor reasoning just make me sick. Why oil price should follow the chart from 1998, not from 1980? Compared to 1980, the current oil price is actually lower when inflation-adjusted, and can we conclude that oil price will level out in the next two decades?
I can hardly believe we will see oil trading at $100 per barrel at today's dollar (i.e. inflation-adjusted) in the next decade or two. I bet before we see $100, numerous replacement solutions will be developed to replace oil as our primary energy resource.
Maybe SmartMoney didn't bother to document the logic of this outrageous claim. Maybe not. But I will not buy the book "The Oil Factor" anyway. I don't think it is worth my time.