The energy world is rapidly falling into two camps with regard to the most intractable problem facing global business today – the rising price of oil. Pretty soon the debate will come down to a simple question: are you a follower of Goldman Sachs or of Lehman Brothers?
Goldman's stance on the oil price is by now well-known. Having called it right back in 2006 by stating explicitly that it thought oil could hit $200 a barrel, the giant New York investment bank was proved spectacularly correct last year, and then went on to stick its neck out even more just a few months ago: not only is the $100-plus barrel here to stay, but we are likely to see the precious stuff at $200 before very long. That is called "doubling up" in speculative terms – a bold strategy to maximise returns but risk losing a large part of your original investment.
Now Lehman has weighed in with the counter-view. The twin forces of economic recession and expanding supply will mean the pressure on the oil price will be the opposite of the Goldman "spike", according to Lehman's highly respected energy gurus. With new refineries being brought onstream, new fields being opened and falling demand from the China and India, prices could fall to $83 next year and as low as $70 by 2010.
That is a big difference of opinion being played out between the two big US banks, and it looks as though there can only be one winner. Either oils goes through the roof, or it falls back to a level that would make the world's consumers much more comfortable, but would be bad news for the Middle East and the Gulf in particular.
So place your bets. But remember – energy prices are the dynamo of the world economy, and our standards of living and economic well-being are also caught up in the great debate.