Wednesday, August 31, 2005
Steve Forbes said oil prices are ready to crash
Forbes.com:'I'll make a bold prediction... in 12 months, you're going to see oil down to 35-40 usd a barrel,' he said, according to Agence France-Presse.
'It's a huge bubble, I don't know what's going to pop it but eventually it will pop -- you cannot go against supply and demand, you cannot go against the fundamentals forever.'
The billionaire magazine publisher's comments came as the price of crude eased following US government comments that it could release some of its Strategic Petroleum Reserve (SPR).
The SPR, a 700-mln-barrel stockpile set aside for emergency use, could be used to counter oil shortages caused by Hurricane Katrina's devastation of the Gulf oil industry, which accounts for about a quarter of US output.
Forbes, who unsuccessfully sought Republican nomination in the 1996 and 2000 US Presidential elections, said the US government's constant topping up of the SPR had helped drive up oil prices.
'The speculators know now that no matter what happens to the price of oil, Uncle Sam is there buying almost every day,' he said.
'Stop the buying and in fact throw some of that oil on the open market, boy that would throw it in turmoil and send the price down.'
He said factors such as inflation and increased demand for oil from China and India only accounted for a small part of the price hike from 25-30 usd a barrel three years ago.