Oil prices are making headlines as consumers are paying around $2 per gallon of gasoline, something that hasn’t been seen in a very long time. Due to the shale oil revolution and technological advancements in the industry, it’s projected a barrel of crude oil will stay at these current levels, and lower, heading into the new year.
T. Boone Pickens, the iconic oil investor and CEO of BP Capital Management, isn’t holding out for too long that oil prices will continue to dip in years to come. In fact, according to Pickens, oil prices will reverse its current trend and rise back to $100 within the next 12 to 18 months.
At the time of this writing, oil prices are trading at around $67, and the collapse transpired when OPEC decided to refuse to take any action in order to increase prices at its meeting last week. Pickens argued that OPEC may have initially refrained from cutting production, but he believes they will eventually cut.
“The Saudis are the ones that make the cut. They can take $70 oil out 10 years. They have the cash reserves that allow them to do that, but they can’t do that to the rest of OPEC,” said Pickens in an interview with CNBC. “Are they trying to teach the shale oil producers in the United States a lesson? No, they’re not trying to do that. OPEC likes to be liked, just like we like to be liked and they will make the cut.”
Pickens isn’t the only investor to present the case that oil prices will go back up.
We reported Wednesday that Peter Schiff, president of Euro Pacific Capital, thinks the decline of oil prices is fantastic since price inflation has been ubiquitous. However, this will have a significant impact on the U.S. energy industry.
“It [energy] has been one of the lone bright spots in an otherwise a dismal economic landscape, and oil prices at $60 a barrel, even where they are now, is not good news for the U.S. oil industry,” Schiff said. “You would have to look for some cutbacks in production and some layoffs in those sectors, which would provide some downward pressure on the economy as well.”
In the meantime, consumers better take advantage of these lower gas prices.
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