Oil prices could soar as high as $200 a barrel if Saudi Arabia is the hit by the unrest sweeping the Arab world and the United States shies away from nuclear power in the wake of Japan’s crisis, says John Licata, chief commodity strategist at Blue Phoenix Commodities, a commodities and metals research company.
Turmoil around the world underscores the need to develop more alternative sources of energy, he tells Newsmax.TV.
“I think $200 a barrel is regarded as realistic. I think $300 is a bit aggressive,” Licata says in response to comments from a former Saudi oil minister that prices could go as high as $300 a barrel.
Story continues below video
He thinks the events in Japan have caused many countries around the world to re-evaluate their nuclear power plans, including the United States. "If we move away from the nuclear story – I think that we can actually hit that $200 level.”
U.S. benchmark West Texas Intermediate crude oil jumped above $110 per barrel Thursday for the first time since September 2008.
He says the only way to lower crude oil prices it to reduce U.S. dependence on foreign oil. And that means developing other sources of energy, including nuclear.
“The time is now,” says Licata.
Another reason Licata advocates developing alternatives to oil: He doesn’t believe the Saudi wells have an inexhaustible supply.
“I don’t believe the Saudis have as much crude oil as they say they have,” he says, pointing out that some Middle Eastern nations are beginning to look at solar energy.
While the disaster at Japan’s Fukushima plant has made many uneasy about the future of nuclear power, Licata says it’s actually a good bet for long-term investors.
“Unlike what happened with Three-Mile Island, where the nuclear industry kind of went away and buried their heads in the sand, this time they are looking to fight back,” Licata says.
“For the long-term investor, I think this is a great industry to be in because we need nuclear power,” he says. “Nuclear energy is one of the cleanest sources of energy in the world.”
While the unrest in the Middle East and North Africa affects world markets. Licata says investors are always dealing with trouble everywhere, particularly at home, where the U.S. government will shut down if Democrats and Republicans can’t reach a budget deal by late Friday night.
“You can’t talk about unrest without looking at our own backyard,” he says.
“The typical investor is being barraged by occurrences that are happening all over the world including our own backyard, and I think that makes the case for gold a little more bullish.”
He adds, however, that “a lot of the optimism relating to the gold market is causing me to be a bit concerned.”
Gold climbed to a record Thursday for the third straight day on speculation that inflation will accelerate as the U.S. trails Europe in raising interest rates. Bullion advanced to an all-time high of $1,466.50 an ounce.
Meanwhile, Licata says House negotiators have been too concerned about attaching political issues to the budget negotiations. “The budget needs to be balanced and by hook or crook I think they need to do it.”
© 2017 Newsmax Finance. All rights reserved.