Russia gets to pick up the chips

The unseemly begging for lower oil prices by on-air personalities at CNBC was overshadowed only by the gravity of the whole situation as T.Boone Pickens showed up again the other day to talk about the price of crude (hat tip to Khebab at The Oil Drum).

In his last appearance, the Texas oilman predicted "eighty before eighty", as in, eighty dollars before he turns eighty years old next May. And back in March, when crude oil was in the mid-$60s, it was "seventy-five before fifty-five".

With West Texas Intermediate crude at $87 when the segment was taped, the latest prognostication was for $100 crude within the next year - maybe before the end of this year.

I'm not going to say that it's going to occur in the fourth quarter but, I still believe that 85 million barrels (per day) is all the supply is and you're going to have demand of 88 million barrels and it's going to get very, very dicey here in the fourth quarter. It's already getting that way.
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We've never been where we are today at $87 a barrel and we're still whistling along. Everybody seems to be, "So what? Eighty-seven. We can handle $87". But we haven't handled it for very long of course.

But, I don't know where you choke. I don't know where the world chokes on the price, but with the value of the dollar where it is and you look at where a lot of the oil is being purchased around the world - it's probably twenty dollars under what we're paying - I don't know, maybe the world can handle $100 oil.

One hundred dollar oil doesn't sound so crazy anymore.

The CNBC staff then proceeded to whine about terrorism, the Turkish government, speculators and a host of other factors that were causing the price to run up. It was rather unseemly - like a bunch of spoiled kids who weren't getting their way.

The thought of higher energy prices causing problems for stocks - preventing them from going on to make new all-time highs every other week - is apparently just too much to bear for some. A simple search could quickly find a name to go with these words, but it's hardly worth the effort.

Because Boone, you know how many hurricane bumps that we got in the last two years in the oil market and we didn't have a hurricane in the last two years and it never gives back any of the premium that goes in for the worry about the hurricane.

Waaa! Waaa! Waaa!

When asked the rhetorical question of whether the pictures on the front page of the Financial Times, showing Russian President Vladimir Putin and Iranian President Mahmoud Ahmadinejad, would make the oil price go down, Boone replied:

No it doesn't. You know, when you look at those two guys there - the two biggest natural gas producers in the world are Russia and Iran. And when you look at the two biggest oil producers in the world it's Russia and Saudi Arabia. So Russia gets to pick up the chips on natural gas and oil, Iran on natural gas, and Saudi Arabia on oil.

Part of the reason why the energy situation will have to get much, much worse before it gets better is this sort of incessant optimism and unfounded hope on the part of the mainstream media that somehow Steve Forbes' $35 oil predictions will one day come true.