CNN’s money team is very concerned about high gas and oil prices, but the “biggest fear” of an economist on “Your $$$$$” wasn’t just that the prices would continue to climb.
Senior business correspondent and program host Ali Velshi, along with CNN’s Greg Hunter, interviewed “economist and author” Dr. Stephen Leeb about the consequences of high oil and gas prices during its June 14 broadcast.
“I fear it is game over,” said Leeb, president of Leeb Capital Management. According to Leeb, we have to find “somebody to sit down and commit maybe $100 billion just in research and then implement a very comprehensive energy plan or I fear it is game over.” Leeb didn’t say if he meant “game over” for the energy industry, the economy or civilization as a whole.
Why was Leeb so pessimistic? He said if oil prices continue to rise, they increase the cost of finding and refining new oil too. Speaking of costs to develop a Petrobas owned oil reserve discovered off of Brazil, Leeb suggested that development costs for the area would be so high and the return so low that the break-even point would be $240 per barrel.
“Now, where it gets worse, and I hate to sound this pessimistic, but it is an urgent thing. If oil were to rise to $150 or $200 a barrel, guess what happens to those costs? They go up further,” said Leeb.
Instead of pressing Leeb on the point, Velshi turned to Hunter for his “theory” on “why these things that seem obvious don’t get done.” Velshi continued, “If there is anything that you could describe as an energy crisis, we are in it now.”
Leeb also claimed, “Some Wall Street analysts think they will be lucky to get a billion barrels out of there,” but a June 16 article in The Wall Street Journal estimated the oil find in Brazil to be “between five and eight billion barrels of black gold.”
As BMI previously reported, Leeb told CNN viewers in May that “[W]e have to treat it [development of alternative energy] like it’s World War II.” “We have to be prepared to spend trillions of dollars,” he said on May 8. According to his “Your $$$$$” appearance the $3.6 billion current spent on
Leeb wasn't the only pessimist on “Your $$$$$.” Hunter, a CNN correspondent, declared: "The cheap [gas] stuff is gone, $100 a barrel, you would be lucky if you paid $3 a gallon for gas." Hunter also predicted price manipulation adding that since we are in an election year "they're going to drive that price down, they're going to pop the dollar up, they're going to drive the price down, they're going to work this, say, for the election."
On the May 18 edition of “Your $$$$$,” Hunter suggested that the current economic situation might be “the ‘mother of all crises,’” citing Federal Reserve chief Paul Volcker. “I think that would include the Great Depression,” said Hunter. BMI wrote about Hunter’s gloomy commentary and his solution – more regulation.