Tuesday, September 13, 2005

Oil price bets

Nobody knows what oil will cost on the world market next year, but James Hamilton of Chicago University does a useful service in a note attached to Clive Crook's comment Does Oil Have a Future? (The Atlantic, October 2005).

Going on data from options andfutures contracts at the New York Mercantile exchange - where people are staking money rather than just talking - the probabilities look roughly like this:

12% chance for less than $40 per barrel
40% chance for $40 to $60
29% for $60 to $80
13% for $80 to $100
6% for more than $100

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