Arjun Murti, the head of Goldman Sachs energy research team, is considered one of the best oil analysts out there.
He foresaw $100 oil prices when the market was at $50.
The group this week predicted that oil prices could reach $200 this year.
While some may look at such prediction with concern - its important to realize the huge boost high oil prices have in enabling alternative technologies to displace existing energy supplies:
"The ultimate benefit of going through an energy crisis is that while it's painful for a period of time because you are paying higher prices, you are going to end up with a world that uses less crude oil.
Higher prices would stimulate technological innovation in transportation and alternative energy, and encourage consumers to make more energy efficient choices", Murti said. He gave the example of a consumer choosing a fuel efficient hybrid vehicle instead of an SUV.
"All these things will reduce U.S. dependence on foreign oil and help improve our environment," Murti said, "but it comes at the price of higher oil prices in the short term."
We all know that as demand grows for alternative energy technologies (such as hybrids), scale production will increase, driving costs down further, and increasing demand... creating a virtuous cycle that will significantly decrease dependence on oil...
And all the sudden - this doesn't seem like such a distant dream.
(Seeing the impact $4 per gallon gas prices has on people here in San Francisco (buying a hybrid is becoming an increasingly easy decision)... its not hard to imagine what will happen at $8 per barrel...)
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