Energy in 2008 is Telecom in 2000

OK, but where are we going to find the additional supply of oil? Or, is your primary driver for falling prices reduced demand? I don't think oil will go straight up from here. But, it's hard to see how it would fall hard in the absence of either extra supply or substitutes. And both of those look to be a long way off.

Hey Cody, I'm really disappointed that you totally disregard the principle of resource scarcity! Don't you have a degree in Economics? 10 years ago, you had the majority of Chinese riding bikes to work and now they are driving SUV's. By 2020 there will be more cars in China than there are in the United States. You showed a graph of how oil increased during the past decade, but you did not show how the major oil wells in the world started to decline in oil production. Oil production will increase in the near future as a result of the current oil prices, but the majority of the new oil supplies will be coming from the Tar Sands from Canada and those producers need at least $70/bbl to break even. I'm not saying that oil will shoot to the moon, but the days of cheap oil is gone and the economies of the world are going through a readjustment from the current price shock. Besides if demand is greater than supply of a certain resource, how can one predict the price increase for that resource? Maybe oil was undervalued this entire time? Oh by the way, I enjoy your show and I'm glad that you are getting better =)

Seriously, if you are so certain about it, why not take a massive short position? Was oil's run to $147 too fast? You bet and we've pulled back a good 15% since then. Heck, we may even pull back 33% from the peak to $100 a barrell. The time to buy oil again is when longs go through a panic sell off. When these institutional ibanks have to liquidate their holdings due to people selling oil and taking profits, it'll be time to move back in. Ibanks will probably have to liquidate their holdings anyway sooner rather than later as oil/commodities are falling and their real estate losses are mounting (and the subprime credit default swaps are looking nastier each passing day). When it comes back though, it's going to make the run to $200. The bull market in commodities lives on baby!!!

You wrote: "All shortages are followed by gluts. Especially in pure commodities." Along those lines: "The cobweb theorem memorialized the dynamic process whereby farmers increase their supply of a commodity in the year after an increase in price of the commodity, thus causing a price drop in the next year. There were four occasions where soybean prices increased by more than $1 a bushel in one year, and the average decline in price the next year was some 25%. The power of substitution, the choice that suppliers have in deploying their resources and their recovery techniques is underlined and provides a caution for those that haven't a copy of a recent economics book close at hand, or who are not anticipating a similar reductomy in oil." -- Victor Niederhoffer http://www.dailyspeculations.com/vic/cobweb.html

My father was 10 when the crash of 1929 occurred. His family was dirt poor, my Grandfather was a US Marshall with a nominal salary for even that period. My father is now 89 and still mowes his own yard and he did well in his career in trucking. But my Dad would tell you oil will drop, in fact it is very possible in my life time that the internal combustion engine may very well be replaced (I love my gas hog Suburban, and big Dodge Diesel and I ain't tradeing them off any time soon). Things change. Ask my Dad just how much change he has seen in his life time, get ready for a long conversation. My Dad will tell you that the only certain thing is that things will change. New technologies are immerging, yes some of them are a long ways off. But we still have shell oil in the midwest (a reserve considered by some bigger than the middle east). Which is profitable to extract at $60 a barrel. Ask any geologist or oil man in the know and they will tell you we have no idea how much oil is in the Gulf of Mexico, far less than 30% has been explored. The only thing that can keep oil prices high, is the same thing that made them high to begin with, LIBERAL DEMOCRATIC POLICES MARRIED TO THE JUNK SCIENCE OF ENVIROMENTALISM. Want cheap oil? Vote out EVERY POLITICIAN THAT REFUSES TO VOTE YES TO DRILLING, THAT STANDS IN THE WAY OF BUILDING NEW REFINERIES, THAT FORCES BUSINESS TO ADHERE TO BAD ENVIRONMENTAL POLICIES BASED ON EMOTION AND NOT SCIENCE! Make America free again, vote against liberalism in every form.