Don’t Believe the Hype Regarding Oil Pricesby Bill Nygren
We still don’t believe long-term, market clearing oil prices have moved to a level substantially higher than $40. I know it sounds silly because that’s barely half of what prices are today. But if the oil companies themselves believed the long-term price was much above $40, they would be investing more in trying to find new sources of oil and gas. On the industrial side, companies are not making energy saving investments that require $50-60 oil to pay off. If these investments on both sides were being made, we believe you’d see tremendous oversupply – demand would fall sharply and supply would go up significantly.