Further, time was when an $80 or $85 price would be considered unreasonably high, or even outlandish. But given oil's breakthrough and close above key, psychological resistance of $100 per barrel this week, $80 looks almost like an acceptable price.
Moreover, oil mogul and billionaire T. Boone Pickens says we may get there. Providing a ray of light for concerned business executives, consumers and public officials, Pickens, who accurately predicted oil's rise to $100 per barrel, told CNBC Thursday oil should drop $10-15 in the second quarter of 2008.
"I think oil's going to back off," Pickens said during the interview. "The weakest quarter is the second quarter. We'll drop $10 or $15 a barrel in the second quarter. I think we'll be back above $100 in the second half of the year."
Supports alternative energy
Further, Pickens, who heads the $4 billion BP Capital Management hedge fund, also voiced some support for alternative energy development, saying a half-trillion dollars a year is leaving the United States economy to buy oil.
Pickens said solar power technology is "almost there," and there could be "corridors" of wind power developed from Texas through the Great Plains and west to California.
Oil rose 7 cents to $99.77 per barrel in Thursday afternoon trading. Heating oil rose about 1 cent to $2.76 per gallon, unleaded gasoline fell about 3 cents to $2.55 per gallon, and natural gas added about 6 cents to $9.02 per million BTUs.
Economist Glen Langan told BloggingStocks Thursday, Boone Pickens's support for alternative energy sources will help build the case for energy diversification in the United States.
"T. Boone Pickens's support is important in that oil industry players, not just non-oil energy companies, will begin or expand alternative energy source research and development," Langan said. "Granted, leadership support doesn't carry as much weight when oil is at $30 or $40 per barrel, but it does now, given what we know $100 oil can do the U.S. economy and U.S. wealth."
Further, while underscoring that "climate change remains the no. 1 environmental concern of our time," Langan argued that the factor that will best predict the transition timetable to different energy forms will be the price of oil and gasoline in U.S. markets. "Sustained high gasoline, diesel and heating oil prices will propel enormous changes in consumer behavior and in business processes, and of course at some point the price increases really impair economic activity," Langan said. "I think not only citizens now, but business leaders are beginning to realize this, and Pickens' analysis is part of that realization."