U.S. oil prices dropped to a six-year trough below $44 a barrel last week amid sluggish demand and bountiful supply. Some experts say a slide to $30 is in the offing.
But CNBC commentator Ron Insana says that may be a conservative estimate, given the disruption likely to be caused by alternative energy sources.
"I think that the long-term implications for oil prices are far more bearish than the $30 bottom that many are waiting for," he wrote on CNBC.com
"It may be an exaggeration to suggest that oil is going to zero. But it may be quite possible that oil has no meaningful upside — save for a trade, every now and then."
U.S. crude oil traded at $47.44 a barrel late Tuesday afternoon, down 56 percent from late June. U.S. oil output and inventories have reached more-than-30-year highs.
Alternative energy could ultimately "drive oil out of the market entirely," Insana states. Among the alternatives he cites are electric cars, wind and solar power.
"It used to be widely believed that oil came from the remains of dinosaurs. Well, oil may ultimately face the same fate: extinction."
Meanwhile, we can thank Saudi Arabia for much of the oil price plunge, according to Richard Fisher, president of the Dallas Federal Reserve. "The Saudis have engineered" the move, he said in a speech last month, CNNMoney reports
Saudi Arabia led OPEC to reject production cuts, and the nation has offered price reductions to its customers. Presumably the Saudis are trying to drive high-cost suppliers, such as U.S. shale oil producers, out of business.
"We are a huge supplier of energy. The Saudis took a while to realize what was going on," Fisher said, referring to the growth of U.S. output.
Low oil prices also cause pain for Iran, Saudi Arabia's hated neighbor, he noted.
Given Saudi Arabia's policy, Fisher doesn't expect oil prices to rebound back to $100 anytime soon. "From a budget stand point, [the Saudis] have reserves that can handle this," he said.
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