The Case Against An Energy Comeback

The economy that does come back may be different than the one that collapsed. A huge increase in wind power will trim natural gas demand, says Barclays analyst Biliana Pehlivanova, as utilities shut down more expensive gas-fired plants to accommodate the new supply.

"We see oil trading in a narrow range with a slight bias to the upside," she says, perhaps as high as $85 a barrel. "We’re definitely not looking for anything like last year."

SHOOT: I agree with the view here. Essentially it boils down to the fact that energy prices won't increase so long as demand remains dampened, and 'recovery' doesn't happen. The flip side? As soon as growth manifests, energy prices will respond swiftly to turn around the trend back towards the overarching trend - which is contraction.

clipped from www.forbes.com The accelerating rise in commodities prices may leave energy behind. Even if the economy recovers next year as expected, energy consumption in the industrialized world fell so far, so fast, that it will struggle just to meet 2007 levels. Barclays ( BCS - news - people ) Capital estimates that oil demand in the Organization of Economic Cooperation and Development nations will actually be down 8,000 barrels a day in 2010 compared with 2007, while U.S. demand will be down by 754,000 barrels a day. The sudden price rise last year to $140 a barrel followed by economic collapse had a dramatic effect on energy consumption, from automotive fuel to electricity. While gold prices surge to a record high and commodity metals like copper and nickel rise daily, oil has seemingly stalled out at around $77 a barrel.