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CNBC's Kilduff: $100 Oil in Next Six Months; Rips 'Hubris' of Purveyors of the Peak Oil Theory
By Jeff Poor
Created 2010-01-12 11:36
It hasn't been in the limelight recently, but it is coming. According to CNBC contributor John Kilduff of Round Earth Capital, we will soon see the price of reach $100 per barrel.
On CNBC's Jan. 11 "The Kudlow Report," [1] host Larry Kudlow asked Kilduff what it would take for the Obama's administration to change its energy policy to allow for more oil exploration and drilling.
"Oil is hitting a 15-month high at $83 a barrel and it was $30 about a year ago," Kudlow said. "So, Interior Secretary Ken Salazar rules drilling of oil and gas out of bounds for federal lands. No drilling. So, how high does it go before we go back to drill, drill, drill?"
Kilduff confirmed he had forecasted a $100-a-barrel oil earlier this year and said that a vibrant Chinese economy will help prove him right.
"It's making my $100-barrel oil on the first half of the year a lot easier to sit with Larry because we're clearly on course for that for a variety of reasons, not the least of which is the China economic numbers which you discussed in your last segment with Mr. Holland." Kilduff said.
Kilduff urged preparation for higher oil to be more aggressive.
"The good news is oil prices are up because there's an absolute recovery under way," Kilduff said. "The China story, as far as I can see it, is as real as a heart attack. And we better prepare for that."
Kudlow asked if we needed to rely on "windmills on Nantucket" as a new power source and Kilduff told Kudlow that wasn't a good idea. But he also refuted the theory of peak oil.
"Well if we do it will be very expensive, Larry," Kilduff said. "And I have been opponent of the peak oil theory my entire career, not for the least of which reasons was that this morning's announcement from McMoRan Exploration and several other companies who might have made the oil find of a decade in shallow Gulf waters. And it's a real game-changer for the companies involved and it's in a neighborhood that is going to be one of the biggest finds in decades."
Peak oil is a theory that there exists a point in time when the maximum rate of global petroleum extraction is reached. However, a recent BusinessWeek article [2] disputed this theory and Kilduff explained that when this idea was conceived, there wasn't the technology to confirm such a theory.
"With new technologies every day, Larry," Kilduff said. "This was thigh problem with the peak oil theory from the beginning. How could you have the hubris to tell me that we had the knowledge and the science to help us find this oil? Our cell phones were as big as cars. Now they fit in your pocket, right? Now, the same thing goes for satellite technology that can find oil and new drills that can get to places without harming the lands anywhere near what we had in the '50s and '60s and '70s."