WHITHER THE PRICE OF OIL? Newsweek's Leonardo Maugeri seems pretty confident that oil prices are staying down for the time being, even as OPEC is discussing possible cuts in supply (there are conflicting reports about this, but there will at least be a meeting to consider the possibility). Cambridge Energy Research Associates (CERA), my go-to guys on oil pricing issues, disagree with Maugeri: they see that demand will continue to rise through 2007 faster than new refining capacity can keep up. Much hinges on Chinese growth and growth in oil consumption, specifically. Maugeri asserts that China has been hyped, that growth is slowing, and that the phaseout of gasoline subsidies that China plans to implement, combined with a substitution of other sources of energy for oil in other parts of the Chinese economy, will ease the pressure. China's consumption growth did slow last year, but I'm inclined to agree with CERA on this one. It's not just China that is projected to grow, but other parts of Asia like India, as well as South and Central America. So if I had to bet, I'd say higher oil prices are here to stay despite the recent lowering.
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Blake Hounshell
