The Oil Drum

Breaking News: GM places it's bet on cheaper oil, or Westexas vs. General Motors! :-)

UPDATE 1-AUTOSHOW-GM says oil price to drop, yen undervalued

By Kevin Krolicki

DETROIT, Jan 9 (Reuters) - Oil prices are set to decline sharply in 2007, dropping as low as $40 per barrel because of increasing production and a slowing U.S economy, the chief economist of General Motors Corp. (GM) said on Tuesday.

"Last year, I said oil prices would be in the forties," GM chief economist Mustafa Mohatarem told a conference of auto analysts. "Obviously, I missed that forecast by a few dollars. I think they will be in the forties this year."

In January, 2006, crude oil on the New York Mercantile Exchange was trading in the mid-$60 level, rising to a record high of $78.40 in mid-July. On Tuesday, crude oil was trading slightly under $55, the lowest level in 1-1/2 years.

Oil traders have cited forecasts for heating oil demand in the United States to average about 24 percent below normal for this time of the year due to abnormally warm winter weather.

Mohatarem on Tuesday cited rising oil production from non-OPEC economies and slower global economic growth as reasons for forecasting a slide in oil prices, a move that could take some of the pressure off the embattled U.S. auto industry.

"On the balance, the risk for oil prices is that they are more likely to go down than to go up," he said, saying one Wall Street forecast for $100-per-barrel oil had convinced him that the market was peaking.

"This morning the price is down to $54, so we're on our way to $40," he said.

http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyID=...

In a somewhat related story, GM showed it's "Volt" a series hybrid (although they don't like to call it that) showing a real world car that could be revolutionary, getting 100 plus miles per gallon in mixed used, and infinite onboard fossil fuel mileage in local around town driving, due to the electric drive (the cars wheels are never driven by the fossil fuel engine, used only as a range/performance enhancer by keeping the batteries charged)

It is a stunning piece of technical work, EXACTLY the car that the "Plug hybrid" supporters have always known has been possible for years, but is at least 3 to 5 years away, if ever. The combined weight of projections from General Motors, ExxonMobil, the Department of Energy's EIA, and CERA mean that no one in the executive suites are in a hurry on the effort needed to reduce energy consumption. And the American public and press seem just as uninterested, as the Volt showcar was not even featured on most national news coverage of the North American Auto Show, instead pushed off center stage by a new flashy Rolls Royce with a push button umbrella compartment and a Ford minvan with an artificial "electronic fireplace" and the full assortment of mobile hotel electronics, done up in art deco pastel colors (it was an atrocity, to put it mildly, but the crowds loved it...:-(

Oh well, a few thousand more troops in the burning sand and the road goes on forever and the party never ends,,,,,

Roger Conner known to you as ThatsItImout