Where’s the price of oil headed? Higher, says Matt Simmons, CEO of Simmons & Co. International, a Houston energy-focused investment bank. Of course, Simmons has been saying that for years. In fact, his bullish view on crude predates the great energy bull market of the 21st century.
The surge in oil’s price doesn’t surprise Simmons because the fundamentals of supply and demand have been sending a clear signal about the future since the late-1990s, he says. For example, the discovery of large oil fields on a global basis has trailed off over the years, his research advises. Meanwhile, global demand keeps rising. And with China, India and other developing economies looking for more oil than ever before, the prospect of keeping supply and demand balanced looks more challenging by the day.
Your editor recently caught up with Simmons for an interview in the May issue of Wealth Manager. True to form, he sees oil prices headed higher still. At the end of the Q&A, we asked if he thought $200 a barrel is a possibility. His answer: “Sure, but I don’t know when. Meanwhile, I keep telling people that $100 for a barrel of oil is cheap. And they ask, ‘How can you say that?’ Well, it’s 15 cents a cup. Do you know of anything else we can buy for 15 cents a cup?”
For the rest of the conversation, read on…