Drudge Retort: The Other Side of the News
Monday, July 23, 2018

A new analysis shows oil prices could rise to $200 per barrel, and even higher, in the next 12 to 18 months. Philip K. Verleger, senior adviser to the global consulting firm the Brattle Group and adviser to Congress on commodity prices, released a report from his independent firm PKVerleger LLC this week that included this bold claim.

He predicted a 2020 economic collapse based on the oil commodity market and the lack of diesel fuel. "Catastrophically high oil prices will cause the impending recession," said Verleger. "The world oil market will see prices at least double." And from there, the sky is the limit, according to his analysis.

Other analysts and oil market observers have noted that global oil reserves are thin and anticipate oil prices surging to $90-$100 per barrel after Iran sanctions kick in, while also pointing out the coming diesel crunch that Verlenger is watching.


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Investment bank Morgan Stanley made a similar prediction as the world transitions from low-sulfur diesel, a cleaner-burning fuel, to lower emissions. "The stricter regulation on the fuels used by the shipping industry will result in booming demand for middle distillates that would boost crude oil demand by additional 1.5 million [barrels per day], potentially sending oil prices to as high as $90 a barrel in 2020," Morgan Stanley said this year.

Verleger says the global demand for low-sulfur diesel, which the U.S. transitioned to for trucks in 2010, will increase global demand for more expensive, less-heavy forms of crude oil to make the cleaner-burning fuel. This will place an enormous demand on the fuel, and because of the lack of refineries equipped to produce the fuel, will constrain supply and drive up prices.

And since most of the world relies on diesel fuel for commerce, it's something that directly impacts the economy, according to Verlenger.

"If nothing changes, the 2020 diesel and gasoil crisis will occur because as many as half of world refineries cannot produce fuel that meets the new regulation," the analysis read. "The owners of these units will face harsh choices," including closing down their facilities.


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It always comes down to energy prices, I was talking to one of the senior bond traders for a large financial company this weekend and he was less concerned about the yield curve flattening and more concerned about middle distillates and a shortage causing economic slowdown.

#1 | Posted by Rightocenter at 2018-07-23 12:32 PM | Reply

remember when President Obama wanted gas prices to rise to $4 per gallon

$5 Gas Predicted Under Obama!

Posted: Dec 30, 2010 12:01 AM, Townhall

#2 | Posted by ChiefTutMoses at 2018-07-23 01:09 PM | Reply

remember this hysteria

"When the cost of Obama GAS reaches $5:00 dollars a gallon, will you be walking instead of driving to the polls
There is no end in sight for escalating Gas Prices"

#3 | Posted by ChiefTutMoses at 2018-07-23 01:10 PM | Reply

Looks like my ankle biter is "on the job"...too bad for him that he is one of my plonks.

#4 | Posted by Rightocenter at 2018-07-23 01:12 PM | Reply

Gingrich said "Obama wants gasoline prices to get to the European levels of $9 or $10 a gallon"

#5 | Posted by ChiefTutMoses at 2018-07-23 01:26 PM | Reply

Don't worry, Elon will save the day with ETs.

#6 | Posted by bored at 2018-07-23 02:38 PM | Reply

We'll see. 400bbl is a bit of an outlier 2yr estimate.

#7 | Posted by GOnoles92 at 2018-07-23 05:18 PM | Reply

It's okay, we stopped protecting endangered species. I repeat, it will be okay now that the wetlands aren't in the way.

#8 | Posted by BruceBanner at 2018-07-23 06:16 PM | Reply

It's all cool as long as the machines aren't in my backyard or off our shores 🤓

#9 | Posted by GOnoles92 at 2018-07-23 10:14 PM | Reply

But hey, if Trump could start a war with Iran and end their ability to export oil that would be great for Putin. His oil would gain in value. American oil producers too.

#10 | Posted by danni at 2018-07-24 11:08 AM | Reply

Oh, come on. How much do you really spend on gas per month anyway, compared to say your frigging electric bill? And that isn't affected by oil prices, it's affected by global warming.

I mean, yeah, it means a lot to farmers and the non-rail transportation industry, so it does have an impact on inflation, but let me lay down the law: oil prices are cyclical. The President of Exxon said that, and I believe him.

Also, I think I read somewhere that oil demand has stabilized due to increased efficiency and the increased use of alternatives. And supply is no longer really an issue for at least fifty years or so thanks to fracking, which pretty much caps oil at about maybe $70 a barrel when it makes sense to start fracking.

#11 | Posted by HeliumRat at 2018-07-24 06:12 PM | Reply

And some people say you can start fracking at about $50 a barrel. YMMV.

#12 | Posted by HeliumRat at 2018-07-24 06:14 PM | Reply

This is really weird article. The worlds' economy will collapse because of a single pollution regulation, and if that actually starts to happen, no one will change the regulation? Also, how is demand not met in reality? How do you spell profit?

This is awesome. Thanks for posting, rightocenter, you made my day.

#13 | Posted by HeliumRat at 2018-07-24 06:26 PM | Reply

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