Get Ready For Oil At $100, And Chinese Stocks To Fall Another 65% In 2009
- By Professor Prabhu Guptara
- Published 01/2/2009
Professor Prabhu Guptara
Professor Prabhu Guptara is Executive Director, Organisational Development, Wolfsberg (a subsidiary of UBS - one of the largest banks in the world). He is also Freeman of the City of London and of the Worshipful Company of Information Technologists, and Chartered Fellow of the of the Chartered Institute of Personnel and Development; he is also Fellow: of the Institute of Directors, of the Royal Commonwealth Society, and of the Royal Society for the Encouragement of the Arts Commerce and Manufactures; and he continues to supervise PhD research at the University of Fribourg (Switzerland) as well as to be Visiting Professor at various Universities and Business Schools around the world.
Earlier roles include: a Governor of the Polytechnic of Central London, Member of the Council of the British Institute of Management, of the International Federation of Training & Development Organisations (IFTDO), of the Association for Management Education and Development (UK), of the South East Regional Council of the Confederation of British Industry.
Judge, 1988 National Training Awards, 1980 Commonwealth Poetry Prize, 1990 & 1991 Deo Gloria Prize for Fiction; Chair of the Panel of Judges, Deo Gloria Prize 1992 & 1993.
Experience with an enormous range of organisations including: Akzo Nobel (Netherlands), the Associated Banks Institute (Germany), Barclays Bank (UK), British Petroleum (UK), the Council of Europe, Cultor (Finland), Deutsche Bank (Germany), Groupe Bull (France), Federation of Finnish Engineers (Finland), the International Management Association of Japan, Kemira (Finland), Kraft Jakob Suchard (Switzerland), Leadership Academy (Finland), Nokia Telecommunications (Finland), Novo Nordisk (Denmark), Sedgwick International Insurance and Reinsurance Brokers (UK), Singapore Institute of Management, Sonatrach (Algeria), Sun Alliance (UK), UNCTAD, Valeo (France), and so on.
Organiser, chair and lecturer by invitation for numerous international conferences, he has contributed widely to radio and television in the UK and other countries (The Money Program, Any Questions) and has written for Financial Times (London, UK), The Guardian, The Times and other publications; articles, for example, in The Gower Handbook of Management, The Gower Handbook of Quality, and the International Encyclopedia of Business & Management (Routledge).
A CD-ROM has been issued of his lecture at the Professorenforum, University of Zurich, titled "Making the World Better - Why it does NOT happen...and what TO DO about it"
Further information available from firstname.lastname@example.org
His best-known research publication is "Top Executives in the Global 100 Companies and their IT-Competence" (ADVANCE: Management Training Ltd., UK, and Wolfsberg Executive Development Centre, Switzerland, 1998); and he is included in Debrett's People of Today and in Who's Who in the World. Professor Prabhu Guptara lives in Switzerland.
You will recollect that when oil was around $120, and some were forecasting oil going up to $250, I forecast oil at $40.
Then, when I was proved right, others started forecasting oil at down to $25. I stuck to my guns and said that while oil prices were volatile, the natural point of gravity for oil then was 40, not 25. Though oil did dip occasionally to around 33 (so that I was even at the bottom price more right than the doomsayers), it has continued to be around 40.
Today, I tell you that we will soon see the oil price go back up to $100.
However, just as oil at $140+ had nothing to do with fundamentals but only with speculation, and just as oil even at $33 had nothing to do with reality but only to do with speculation, so speculation is what will drive the price up to $100. The "natural market price" for oil (including "normal speculation"), in my view, remains around $70.
So why will the oil price soon shoot to $100? Why will speculators push the price to this level? Because of the attacks on Israel, and the crisis around oil production and supply that will soon emerge, created by Iran but aided and abetted by other countries which "need" the price of oil to be as high as possible - or at least around the natural market price.
Why then will it go to 100? Because the current structure of the global economy commits it to pendulum swings. And the swing has gone too far (down) for too long (from the viewpoint of certain countries).
So the next upswing (coming soon) is what will take the price to $100.
Why not higher? Because even speculators need something to speculate with and speculate on. There isn't the same supply of money to speculate with, there isn't the appetite to speculate that much right now, and the "excuse" of a booming economy and "booming demand" (on which the price of 140+ was predicated) is not to be seen anywhere.
WHEN will the oil price START swinging up? Pretty soon. As soon as the conflict in the middle east hots up a little more.
However, because this oil price rise has nothing to do with an increase in productive demand or a productive economy, but only to do with war and fears of war, it will worsen the situation for all oil-importing countries.
That is also why other commodities will benefit marginally because of a sympathetic rise in slow sync with the oil price, but the commodity price rise will soon steady or deflate.
The global problem of a deflating economy will continue. Chinese stocks, for example lost 65% of their value in 2008. Though they may recover by as much as 50% from today's levels at some point in 2009, altogether they will lose at least another 65% from today's levels during the course of the next 12 months - possibly, they will crash much more, depending on how China manages the social unrest that will grip it this year.
And President Ma of Taiwan will be shown to have been an idiot for having driven the country's economy, society and even military to such deep entanglement with China.
As Taiwan then tries to withdraw, while China wants to get even closer hold of all of Taiwan's money and productive talent and capacity, the US and other countries will be called upon to get involved - with consequences that are at present unclear to me, because I don't see right now the relative strength of the US military presence in the area at that time, let alone the shape of the US economy, nor the will of Obama and others around him.
Some of that will become clearer towards the end of January as Obama's soaring rhetoric is tested by the reality of developments to do with the Middle East and Russia.