“Black Gold Stranglehold” author Craig R. Smith and “The Oil Factor” author Stephen Leeb both told CNBC’s “Morning Call” show that supply-demand, Mideast turmoil and a lack of commitment to exploration and conservation will send oil prices over $100 a barrel by 2007 and to $200 by 2011.
Leeb says oil has been growing 30 percent a year for the last five to seven years since 1999, when it was $10 a barrel. He sees no reason for that trajectory to change, sending prices to $200 a barrel by 2011.
Smith told CNBC that Mideast violence, Iranian and North Korean nuclear threats, and terrorist strikes on oil facilities in Nigeria are creating a severe threat to supplies while global demand keeps growing.
“How can investor’s thrive with $200 oil ahead,” asked CNBC anchor Liz Claman.
Leeb’s response: “If we get there gradually, it will look a lot like the 1970s. Investors are not going to thrive by owning the S&P 500, bonds or cash, but they can thrive by owning real assets, like gold, oil and oil services.”
Smith expects demand to remain strong.
“We need to do a number of specific things to bring relief to the markets,” he said, pointing to conservation and expanded exploration and drilling in the outer continental shelf and the Arctic National Wildlife Reserve in Alaska.
As he asserted in “Black Gold Stranglehold,” Smith said, “We are not running out of oil, but it is becoming more expensive to acquire because we are now forced to buy it from regions of the world that have wars.”