Are we headed for a new crisis, one that's potentially a lot worse than the credit crunch? We're talking about oil.
As Scott Nyquist writes in BusinessWeek, we are looking at a second shock to the world economy as the recovery kicks in with demand expected to grow more than 2% annually between 2010 and 2015. That's much more than in the period from 2006 to 2010. It will be worse than the 1970s because the supply picture is not looking that good which means the spike in oil prices will last a lot longer.
According to a new report, summarized here, the lack of capital and a fall in investment will result in reduced supply, leading to higher prices with Iran's OPEC governor Mohammad Ali Khatibi warning that oil prices could hit $80 a barrel in January.
For investors, that means the time to buy oil stocks is now. They'll be a lot more expensive in a few months time.
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