Steve Forbes 2005 Oil Prediction was completely wrong

Steve Forbes, editor-in-chief of Forbes magazine, predicts that skyrocketing oil prices are just temporary - and a massive price collapse will dwarf the Dot-Com crash that began in 2000. In Sydney, Australia this week for a global conference of CEOs, the respected financial editor said that the price of oil has inflated into an unsustainable and speculative market bubble - and he says that when this bursts, it will make the Dot-Com crash "look like a picnic."

The paper quotes Forbes as saying that the price of oil (which rose above $70 this week) had been inflated by speculators and would soon begin a rapid slide. "While there is a lot of talk in my country, the U.S., about the housing bubble, I think the real bubble, to be blunt, is in the price of oil," he said. "It's a huge bubble. I don't know what's going to pop it, but eventually it will pop. The price has to be brought down to earth, and when it does there's going to be a lot of yelping from the hedge fund managers."

Forbes said that speculation on oil hitting $100 a barrel was misplaced. He also believes that the price of oil will decline significantly in 2006.

"I'll make a bold prediction: I think in 12 months, you're going to see oil down to $35, $40 a barrel," Forbes said. "In the meantime, it's a huge drain, more a psychological drain (on the economy), but it's not forever. This thing is not going to last." Forbes blames the oil price spike on rising inflation and aggressive buying on the part of burgeoning Pacific Rim countries. "China and India are buying more of the stuff. As the global economy expands, more energy will be consumed," he said. "But if you look at the price of oil three years ago, it was $20 or $25 a barrel. Supply and demand might have shot it up to $30, $35 a barrel. The rest of it is inflation."

Forbes spoke to The Australian just as news was drifting in regarding the damage sustained to the oil-rich Gulf of Mexico in the wake of Hurricane Katrina. Industry observers say that energy companies such as BP, Chevron and Shell have been forced to shut down offshore platforms, which account for 25% of U.S. domestic oil and gas output.

here's a link to another Steve Forbes interview click here