IS THIS THE “HARD FLOOR” IN CRUDE OIL?

IS THIS THE “HARD FLOOR” IN CRUDE OIL?

Is oil going below $50 a barrel in 2007? Or above $100? And what should I do with the answer?

Frankly, nobody knows for sure where the price of oil is going. We can only say crude oil remains above the “hard floor” provided by the $57-$61 a barrel range.

And here’s our guess for why that floor exists: Most of the world’s cheap oil has already been found... and we’re left searching for petroleum in places where communist idiocy and guerilla warfare rule the day. Venezuela, Sudan, and Nigeria come to mind.

Also coming to mind is the extraordinary profitability of the world’s supermajor oil companies. When oil is at $40 a barrel, companies like Chevron make fortunes. When oil is at $60 a barrel, the profits are so large John Rockefeller himself would be astounded.