Exactly a month ago, we commented on a topic of intense — and never-ending — interest to reporters: the specter of the $100 barrel of oil.
In late July, BusinessWeek, the New York Times and the Chicago Tribune all contributed their own versions of how and when a barrel of oil will hit the $100 mark. While it’s true that prices at the time were going up, topping off in the high $70 a barrel range, it seemed as if some reporters were so caught up in the fun of speculating — or at least interviewing speculators — that they forgot to consider all the facts, much less present them.
For example, BusinessWeek‘s hysteria seemed rooted mostly in a Standard & Poor’s report that mulled the possibility of oil cracking three digits, but certainly did not predict that $100 was actually in the offing. Now, in a somewhat belated move, USA Today‘s Dan Reed unearths the month-old S&P report to explore what would happen to the airline industry if the $100 scenario (as opposed to, say, the $20 scenario) were to actually pan out.
At least he does so with considerable caveats. “No one, not even S&P, has crawled out on a limb to predict that prices will go that high,” he writes up top, before proceeding to scare the wits out of us with a doomsday picture of life under the $100 oil regime.
The piece, published yesterday, reads like a horror movie, though with some feel-good scenes thrown in for good measure. Just as things start to get really scary, Reed gives us E.T. phoning home: “Still, some argue that oil is more likely to tumble below $40 a barrel in the next six months to a year than it is to rise to $100.”
To his credit, Reed at least avoids the unfortunate tendency to employ the “some argue” construction while failing to cite any real-life arguing humans. In this case, it’s Aaron Gellman, professor at Northwestern University’s Transportation Center, who says that oil prices are actually likely to fall in the near future.
So which is it? Is the airline industry going to go belly-up, or are prices falling below $50? Mark Morrison appears to lean toward the latter scenerio, offering a “Contrarian Case for $50 Oil” in this week’s BusinessWeek. He points out that “Despite BP’s bombshell announcement that it would have to shut down the Prudhoe Bay pipeline, a key source for the U.S., and the flareup of Israeli-Hezbollah fighting and its possible implications for Iran’s oil production, the price of crude never got all that close to $80,” during late July and early August.
With the heavy driving season almost over, Morrison notes, the American Petroleum Institute is reporting that “the highest-ever crude oil and product imports for July had left inventories at unusually high levels. Crude inventories were at 335 million barrels, up almost 5 percent from a year earlier, and gasoline stocks, which almost always fall in July, actually rose.” But is this scattering of facts enough to back up the case for $50 oil?
Beats us. All we know is what we read in the papers.
Paul McLeary is a former CJR staff writer. Since 2008, he has covered the Pentagon for Foreign Policy, Defense News, Breaking Defense, and other outlets. He is currently a defense reporter for Politico.