Oil Rigs Undergo Repairs After Hurrican Katrina

If you haven’t been near a computer, television or radio, benchmark oil prices are down about 40% from June. Given the ubiquitous media coverage, it can be hard to cut through the noise to find more insightful analysis and different views. (Liam Denning has an interesting piece in the Journal today that discusses Saudi pricing and strategy).

But you can always trust Strategic Energy and Economic Research President Michael Lynch to offer unique – and often humorous – perspectives on energy issues. Yesterday he cited a ridiculously long bumper sticker reportedly popular in 1980’s Texas (see the headline) to make his oil price point, which essentially chastised overleveraged producers for believing $100 per barrel oil had become sacrosanct.

“Being a bull looks like a brilliant strategy in a bull market, but if you think oil prices “must” be high enough to cover your costs, you should buy a bumper sticker.” – Michael Lynch’s Forbes column

Indeed, many analysts were surprised at the historic lack of volatility that permeated the international oil market for the past several years, which left them waiting for the other shoe to drop. Well the shoe is now falling and the only remaining question is how far it has to go.