The utterly remarkable John Tierney wrote:
Economic Optimism? Yes, I’ll Take That Bet: [T]he overall energy situation today looks a lot like a Cornucopian feast.... Giant new oil fields have been discovered off the coasts of Africa and Brazil. The new oil sands projects in Canada now supply more oil to the United States than Saudi Arabia does. Oil production in the United States increased last year, and the Department of Energy projects further increases over the next two decades...
The professionals, of course, do not think that the overall energy situation looks like a "cornucopian feast." If they did, then they would be selling their oil in the ground right now at an "energy cornucopia" price. What is an "energy cornucopia" price be? Well we had an energy cornucopia in the first post-World War II generation--and, adjusted for inflation, the price then corresponds right now to a price of $20/barrel. If the professionals saw an energy cornucopia coming, they would be pumping more oil out of the ground right now and selling it for a lot less than $80/barrel in order to make money before the price of oil falls to its cornucopia price.
Instead, the professionals think that keeping oil in the ground rather than selling it at $80/barrel is a reasonable bet.
I don't think I know better than the professionals on this one. But I now have a bunch of vitriolic emails from people saying that they think Tierney is right--that the overall energy situation today does look a lot like a Cornucopian feast, like the one we had in the first post-WWII generation.
Maybe I should see if I can find any takers on the internet who would pay me for a put option for oil at $20/barrel?
(Let me say that I would be very surprised if the spot price of West Texas Intermediate crude oil were to ever again average $20/barrel for any substantial period of time in my lifetime or my children's lifetime. China is HUNGRY. And I don't see new mega-cheap extraction technologies on the horizon--and neither do the professionals. Others who disagree should be shorting oil massively right now.)