February 24, 2011
Makes no sense, does it, that Saudi Arabia would prefer lower oil prices? Sure would seem like $120-per-barrel oil would be an extra big payday for them and other OPEC members. But it's not true. The Saudis have even indicated a willingness to pump more oil to make up for production losses due to Libyan turmoil.
But the Saudis have learned over many years to take a long view of energy consumption issues. If gas prices go to $4 and $5, you might start thinking seriously about wanting a more fuel-efficient car. You might turn down your thermostat, insulate, buy new windows. Higher airfares would mean you travel less. The net effect: less oil consumption. And more incentive to develop hybrid or electric cars, wind & solar, nuclear, and other power sources that in small but cumulative ways reduce oil consumption over the long term.
The long view is typically the best view when it comes to business.
GTC
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).