Recognition, Revaluation, & Reallocation – Jim Puplava

Energy demand in the United States and China has been relentless. The appetite for more oil in the two fastest growing economies in the world goes on unabated. Instead of a slowdown in energy use this year, demand will be up again. Worldwide demand will grow by 2.2 percent. The relief that everyone was expecting isn’t there. The IEA just raised its forecast for demand to 84.3 million barrels per day. Oil demand in China is slowing down, but it is still growing. The IEA estimates that Chinese oil demand will grow by 100,000 barrels to 500,000 a day.

Wall Street has been forecasting $20 oil for the last 3 years. A few investment houses have raised their oil projections to $30 a barrel. Instead of $20 oil, we should be thinking about the consequences of $80 and $100 oil. We are more likely to experience $80 oil than we are ever to see $20 oil and that price may not be too far off.