It is NOT in Big Oil’s interest to get up before Congress and say prices “ought” to be substantially lower. That is an invitation for an excess profits tax, and a big one at that.

There could be non-economic disasters too, like a pandemic. Multi-drug resistant tuberculosis is a worry, for instance. Low odds yes, but greater than one in a million? I’d venture yes.

You may have some useful information to convey, but I for one find the presumption and arrogance annoying.

You say for instance that the odds of oil being below $140 in 2016 are “one in a million.” That shows ignorance of large numbers.

I would put the odds of deflation, a very serious global recession (not as bad as the Great Depression, but close), or protectionism leading to a significant fall in trade (and therefore growth) in emerging markets at at least 1 in 10,000, perhaps as high as 1 in 1000. Those scenarios would lead to a fall in advanced economy demand (which remember are the biggest users if not the biggest source of marginal demand) and at least a slackening of demand from emerging markets.

Even 1 in 10,000 is 100 times larger than 1 in a million.

As per the oil execs, I don’t see how you can assert you have better fundamental information than they do. And the quality of information IS lousy:

http://www.businessweek.com/bwdaily/dnflash/content/may2008/db20080513_734146.htm

Moreover, the inventories counted are primary inventories. Any end-user inventories are counted as demand. China is known to be stockpiling for the Olympics but no one knows how much. How many industrial users have decided to stockpile is also unknown, but I have to believe that is taking place too.

“Industry executives ‘have consistently underestimated price inflation with respect to oil and the sustainabilility of higher oil prices,’ said Bill Herbert, head of research at Simmons & Co. International Ltd., a Houston investment bank specializing in the energy industry.

“History drives their bearishness.

‘A lot of the folks running these companies are burdened with the accumulated scar tissue of the last 20 years when you had difficult conditions for the industry,’ driven mainly by overcapacity and a lack of discipline on behalf of OPEC, Herbert said.”

http://www.philly.com/philly/business/20080510_Oil_executives_still_see_prices_dropping.html

Simmons has also pointed out (can’t find the link at the moment, but you will understand the logic) that oil exec compensation depends up on share price, and maintaining share price means denying production limitations. How do you justify huge executive salaries and exploration budgets when almost all of your profit is coming from pumping your heritage reserves?

Moe Gamble

But IEA forecasts have been so consistently bad that no forecast from them could do it either. The oil producers are struggling with decline rates past 8%. Discoveries peaked over 40 years ago–new discoveries can only be described as dinky in comparison. And oil company reserves have been in steady decline now since 2001.

Moe Gamble

Moe

Brazil oil trapped by 500 degree heat, salt barrier, and pressures strong enough to crush a pick-up truck: http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aOspOz2AMLLU

Angola, one of the great sources of new supply in recent years, has gone flat: http://africa.reuters.com/energyandoil/news/usn521A0502-1ABB-11DD-A4F6-AC6634A97898.html?rpc=401&

A lot of traders thought it optimistic to bet on $140 in 2016. They are now getting crushed.

My entire life has been about calculating odds, and I have been extremely successful at it. I would say the odds of oil being at $140 or less in 2016 are virtually zero.

Moe Gamble

Otherwise, a very good article.

http://www.atimes.com/atimes/Middle_East/JE21Ak02.html

“The point is, the historic failure of the Iraq war is yet to be fully grasped. On a regional plane, as the Iraq war interminably rolls on, the situation is fraught with the immense consequence of the unraveling of the entire system of states that was created in the Anglo-French settlement after the fall of Ottoman Empire in 1918. The Iraq war has triggered Shi’ite empowerment and unleashed historical forces that lay chained for centuries. Its geopolitical significance is yet to sink in as winds of change sweep across the entire region.”