As you can see from the graph, Townsville's fuel prices are nowhere near the dollar mark that I had predicted two years ago. Although oil is well down on its peak, and looks bearish overall, my thought that oil would be back down to around $70/brl and the Aus$ at around $0.85 US seem to be incompatible with the forces of doom holding financial markets.
4 comments:
Bravo! Has NASA climate change guru Hansen done likewise for the predictions in his 1986 paper? I think, not.
Maybe you aren't so far off.
A few thoughts, probably trite and unoriginal.
*Since 'what goes up must come down', the proper place for government intervention is on the upswing, to put the boot into irrational exuberance. (So our reserve bank did an excellent job by cranking up interest rates.)
*I notice that benchmark steel prices have fallen even more than oil. The predictions from no more than a few weeks ago that the Chinese internal market, etc., was big enough to sustain their growth look like irrational exuberance to me.
*The Club-of-Rome-style environmental doom-and-gloom rhetoric that has become de rigeur in the past few years must share some of the responsibility for 'bidding up' the commodities bubble. "We have entered a new phase, where prices will stay high," is what those who should know better *always* say, whether it is housing, IT stocks, tulips, or base metals.
I'm still gung ho about my overshoot/undershoot theories. I'm fully certain that $147/barrel in July was the end of the overshoot. I feel in my bones that the undershoot will be "implausibly" low, my latest guess was $40/ per barrel todays dollars within a few years.
It was a decade ago that the Economist recommended *Asset* values also to be taken into account in inflation targets. Asset appreciation well above CPI for too long is indicative of a risky asset.
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