On the same day in June that oil reached a new high of $139 a barrel, I had a conversation with Ben Warwick, CIO of Denver-based Quantitative Equity Strategies and author of IA's monthly Searching for Alpha electronic newsletter, in which he calmly predicted the return of oil prices to around $20 a barrel.
Warwick points out that we've had at least one energy crisis in every decade since the 1970s, and they've all started with a disruption in supply relative to demand, which causes prices to spike. Then consumption patterns change, production increases, technology offers solutions, or a combination of the above leads to a new stabilization.
While acknowledging that prices are higher than ever, Warwick doesn't think the current prices are sustainable, never mind the predictions of $200 and $300 a barrel.
