see if. you visit. this is. publish the full transcript of the conversation between ground control and the cockpit of the jet that crashed killing the polish president teens to the official report doesn't give the full picture of. media freedom to. the rats a series of raids on the homes of journalists investigating the activities of high ranking official. rivals the chinese leader pays a red visit to the united states to discuss water lies ahead of the world's biggest

economic heavyweights. next as the energy industry gets the cash pumping. gas also whether it will make the world's fragile recovery. and you can. still get. a low and welcome to cross talk on peter lavelle the one hundred dollar question the rising price of oil the cost of petroleum has been increasing steadily over the past few weeks and months and our market forces it working and is the global recovery at risk. and you can. start. to discuss the oil question i'm joined by tyson slocum in washington he is the

research director for public citizens energy program in london we have angus mccrone he is the chief editor at bloomberg new energy finance and in atlanta we go to gail faerber she's the editor of the oil drum and another member of our crosstalk team yell on the hunger all right folks cross talk rules in effect that means you can jump in anytime you want as we sit down folks to do this program brant is training at ninety seven dollars thirty seven cents and well gail if i go to you first here one hundred dollars seems to be this like magic number is i mean is it good for us in the media as a good reason for me to do a program on this because one hundred dollars is the benchmark everybody talks about the one hundred psychological benchmark is it really one. well i think that the world really cannot stand very high oil prices i think some studies have shown that even prices in the eighty five dollars range can cause problems recession and certainly if we're getting up to one hundred dollars there's

a real issue of whether we're going to be seeing recession ok i mean if i can stay with you i mean recession for whom well i think we're talking about. the developed countries and china and japan china and india and the oil exporting countries is they always see countries ok angus if i go you really tend to have problems with this one go to you i mean what is high oil mean in your opinion ok and i guess when i say high oil i guess maybe from the consumer's point of view what is the threshold for high oil and that would be negative well i think the first thing i'd say is that we've sort of gone into two thousand and ten and there is almost universal positive opinion about their oil price that it's going to go higher and in those circumstances being sort of contrary and sort of chap i tend to be a little bit wary and i suspect that this will be an enormously important if they all price with a great deal of volatility and we may see. oil well i wrote hundred dollars but we

may also see it coming down sharply at some point so i wouldn't necessarily say that it's all going to be in one direction ok tyson if i go to you do you see a lot of volatility this year is well because i mean when we look back at two thousand and eight at the height of oil i think it was what was one hundred forty seven dollars even during two thousand and eight the average price was still lower than one hundred dollars everybody remembers a very high number. yeah i mean we've seen enormous volatility and that's what's been crushing businesses and consumers and the fact is that this is a consumption driven economy in the united states and where the united states goes the rest of the world is going to follow china is heavily dependent on its export market to the united states and if we see an economic slowdown here that's going to have massive ripple effects even for the oil exporting countries like the saudis in

the middle east and russia that's why the opec member nations are ramping up production right now although kind of quietly because they're starting to panic a little bit because they understand that these high oil prices in the ninety's even up to one hundred dollars are unsustainable and really threaten the economic recovery that was just starting to show some signs of life here in the united states the federal reserve has been flooding the system with with money and all of this threatens to be racked with with creeping higher oil prices well i tend to be a little bit more contrarian and if angus and i go back to you i mean what is the difference because in preparing for this program everyone's looking at what happened in one thousand in two thousand and eight then the recession had very high oil prices and is the backdrop of this whole discussion is that we're seeing it happen again it could wreck the recovery what is the two thousand and eight in two thousand and eleven the same or if they're not how much how different are they. i

think there are some similarities but i think the key thing this year is going to be what happens in the big emerging markets particularly china because they have an inflation problem they're developing quite rapidly and the question is will they be able to prick the bubble in in a way that will allow a sort of gentle slowdown in economic growth and then take a bit of sting out of oil prices in so doing or are they going to burst the bubble and cause a really sharp economic downturn and could have that kind of negative impact on the oil price that i was mentioning a moment ago gail what do you think about that the given the comparisons with two thousand and eight in two thousand and eleven i mean that's when we were going up you know up the ladder towards disaster now where we're trying to you know. return to a level field and start returning to economic growth in a good part of the world is maybe the developing developed world is having a lot of problems the similarities that mean there's enough differences or similarities that we should be worried about. well you know as i wrote an article

called will two thousand and eleven be a rerun of two thousand and eight i'm sure it's not going to be a rerun but i expect that we're going to see some of the same kinds of effects we're going to see a run up in oil prices and we're probably going to see a crash again. we're going to see of course the competition for. oil that is there i think it will be different because the economies are weaker now than they were before and there's different situations i don't think that for instance china hasn't quite the position to keep wrapping up the coal as fast as it has been and there's hell mitigate their having as much oil as they need ok and we heard earlier in the program that opec's position here tyson i mean it is the opec just giving us a snow job saying it's no big deal we're not going to call any kind of meeting we're going to have a meeting in june there's nothing to be worried about of course there is the be the

oil hawks within opec that are very happy with the oil price obviously and obviously would not be concerned at this point but what do you think what is going on behind closed doors there i mean we've heard saudi arabia repeatedly say that the what seventy five to eighty five years ago is a good price it's good for stability good for growth for everyone in there still making money but then you have the iranians and even as we learned some of course they certainly would like to see the oil price hike and i'll be honest you russia doesn't isn't bothered by high oil prices. right well i think it's closed doors i think some of the big hitters in opec particularly the saudis are panicking because they understand that the current price level is unsustainable that it threatens global economic recovery and that from a long term investment perspective they're better off with prices closer to where the supply demand fundamentals dictate they should be which is in the seventy five to eighty dollars range i mean as the e.i.a.

said we've got commercial crude oil stocks well above the five year average so so stocks are at a comfortable high level i don't see that these current high prices are supported by the supply demand fundamentals which tells me that speculators are really driving a premium right now ok you still the thunder out of my land my next question here ok then why is only one hundred dollars here why is it hovering there i mean it looks like everyone on the panel thinks it's not a good idea it's damaging even for the producers in the long run all right let's say we're all in universal agreement how do we get to this place because fundamentals was was the word fundamentals was used here so angus why is only prices so high if it's so bad for the economy global economy. well i mean i think an important issue is a lot of the fast developing emerging economies are fairly energy intensive they used to use a lot of energy because there are that stage of the industrialization and they're

also not particularly efficient uses of energy so when it's them that's growing very very fast that does put a lot of put pressure on no price and you know you probably have the to speculate effects that my colleague was just was just talking about but i think one of the very interesting linkages in all this is what effect does the high oil price have on the gas price which has lagged a long way behind i think over the last three years gas is underperformed oil by about fifty percent that's u.s. natural gas and that's not something you'd expect to see continued so you'd expect that to sort of really write itself at some point soon and also what's the bigger effect on the overall and if you mix what about clean energy if oil prices are high is that going to push governments into prioritizing more on new sources of energy that are low carbon and increase energy security what do you think where you come from on this on this question about where this price spike is coming from in and it

looks like again the there's agreement here that is and it isn't sustainable for very long where does it come from in your mind. well i think there is still is a price from the there is stress from the fundamentals that over the long term we're not producing enough oil and we need high prices in order to encourage. well production from the areas that require higher prices so that we do need higher prices there may be some speculative element as well but i think the fundamentals still are a big part of it ok tyson you brought up the speculation the mean how much of it is this right now and i mean in this in people are very sensitive this issue expression since the recovery is so fragile particularly for the eurozone and in the united states i mean it looks like there are people within within the our own tents that are plotting against this here because a it has risen you know steadily

there's no been there hasn't been any huge jumps but could speculation be behind it and what degree do you think it is. yeah absolutely i mean like i said i think i think the supply demand fundamentals should be dictating a price closer to the seventy five eighty dollar a barrel range a couple months ago you had goldman sachs followed by morgan stanley you know predicting one hundred dollars a barrel so that sent a clear signal to all the traders out there that this was the new target to shoot at we've seen that time and time again where where internal analysts. release a target price and you mediately see the markets gravitate towards that target price and so it's kind of a self-fulfilling prophecy that that these speculators are doing granted i'm not saying that oil should be a forty dollars a barrel or anything like that there are supply demand fundamentals that dictate higher prices but but ninety ninety seven one hundred dollars a barrel i don't see that as being reflected in the supply demand fundamentals this

is a speculative driven bubble right now and i think that that's dangerous not only to the economy but but to continued volatility in these markets which is really killing the business sector all right at this point i'm going to jump in i'm going to jump in and this will go to you when we get after the break and after the break we'll continue our discussion on oil prices stay with our.

her. explicit history still keeps its secrets but now it's time to reveal it in the soviet files house on the embankment. it is easy to. see.

a. mother. to. welcome our also talk on peter all about tree mind you we're discussing it high oil prices in danger of the fragile recovery. but before let's see what russians think about their economic prospects. or the prices how high is high many now believe in one price beyond one hundred dollars a barrel is not realistic economists are worried that a world economic recovery could be put to truths that public opinion agency love others and ask russians when they think they can all make situation in their country will improve thirty one percent predict improvements within a five year period eighty percent see them in the next three four years fourteen

percent within two years however the spike in oil prices may to rail the global recovery and is putting upward pressure on food prices because the cost of transporting and processing crops has risen sharply peter. again just before we went to the rate we were talking about speculation there you want to jump in a divider and there go ahead now. yes i mean i suppose the word speculation paints a picture of. some sort of crazed individuals making hundreds of trades every day and making a profit on that basis but i think. there's a wider picture here which is that a lot of commodity prices are very strong you can look at some of the food stuffs for instance corn and wheat and sugar and you know some of the metals and so on so there's generally a commodity bull market which is certainly fueled by speculation but there's no limit to fashion and investment and what is a fashionable right now u.s.

interest rates at zero if you're if you keep your money in cash almost guaranteed a loss so there's every incentive to put it somewhere and commodities are a thing that's in fashion so whether that's what people normally think of as speculation or not i don't know but i think that's an important element i think that's a very good point it was brought up earlier in the program in and i guess maybe to be a little bit of a contrarian here is that if we look at the developing world that are doing quite well relative to the developed world i mean they aren't they taking more of these commodities now and that's helped driving the price because they have recovered or recovered relatively in this economic turndown and they're saying you know the chinese we need more oil we need more metals we need more grain and this helps push up the prices too because they're just keep going on their way i mean the u.s. may or may not have a currency war with the chinese but the chinese are continuing to develop the internal infrastructure and whatnot so i mean when i met my point is that we could

have just kind of a disparity of economic development in the developing world in the developed world in any and that's where a lot of demand is in developing world because they got their house in order. well i think that there is a double edged sword for a lot of emerging economies in the in the developing world with higher commodity prices while they benefit from some higher commodity prices. possibly in the agricultural sector they're going to have other inputs in the energy sector that are going to drag them down and we don't really have global free trade markets in agriculture and so you're not really seeing their ability to cash in on those higher agricultural commodity prices to the extent that oil or energy exports nations are so i don't see uniform positive news for for the developing world with with sustained higher commodity prices and i do see

a lot of big investment vehicles in the united states and elsewhere. as angus said using commodities as an investment tool it's more attractive than equities. and other investments and so i don't think that's a positive. impact especially with with the fragile sense of the of the global economy in the u.s. economy well i mean gail i mean again i mean to be kind of a contrarian this is just market forces i mean just get used to it live with it hound i mean i you know it seems to be kind of a vicious circle here because i mean if it's good for investment good for speculation eccentrics cetera i mean it's not keeping it's not keeping the common interest of the fragile recovery that everyone's talking about and again i'm speak really speaking about the eurozone in the united states here i mean i mean how do we balance the two and how do we get oil back where it should be. well i'm not sure i see a way of getting a back i think with respect to food i think there really is

a real shortage issue you know that we're talking about smaller reserves being carried over. some of the higher demand because people have higher incomes and they're going to need to afford more me and then more eat meat takes more grain but trying to get it while prices back down again. it's not something that's easily changed i don't see what you think about that angus i mean you know if it were in this one hundred dollar environment could you just would you see it go steadily going down and why would it go down to be some kind of fundamental news that we would have to take into account structural changes in the world economy what would what will drive it the other direction and beyond another recession. the sharp slowdown in emerging economies is the thing that will cause it i think there's always a risk that you have middle east tension that could cause a massive spike in the short term so you know we could see

a number of these movements during the year but i think i mean the key issue for for me in a sense with my particular interest in clean energy is that high oil prices will actually contribute to diversification of the world and it's the mix they'll make governments and populations think about their choices on energy and also be directly good news for the biofuels sector for instance in terms of the finished fuel price as long as that keeps ahead of the feedstock prices and also if they're all price pulls the gas price up which i expect at least up differential to nairobi between two then that's also good news for other types of other tricity that compete with gus for a generation and that means wind power sort of power and so on so i think there are a big ramifications for all those sectors this year depending on what type of spill price paid tyson if i go to you i don't know your position on what we just heard here but can we get can the world or should the world be balancing the recovery

high oil prices and looking for alternative energy can we do all three simultaneously. well i mean we have to in a carbon constrained future we're going to have to move into low and no carbon energy sources and that's where the lack of a global binding agreement to deal with greenhouse gas emissions is inhibiting these investments that the united states domestically has not been able to get it together in terms of legislative action and coherent regulatory policy but when it comes to energy you know you've got two different sets you've got the electricity sector in the transportation sector and the electricity sector i do see a path forward. sustained low natural gas prices. this is angus pointed out have so far not been. chasing oil upwards and so that sustained relatively low prices for natural gas have been very beneficial we've seen

a lot of switching from coal fired power plants into natural gas in the united states but the transportation sector has a lot of challenges and we've got infrastructure in both countries like the united states and china where it's not that easy to get off of the oil addiction and you're going to have to complement high prices with some sort of regulatory approach to really have an effective transition to cleaner more efficient transportation sector you know gail this is there's a lot of people that don't really want to go in that direction obviously the oil companies are doing when you know one hundred dollars a barrel it's great news great news for shareholders too i mean you know there's a huge vested interest there that is very quite happy with these this status quo and i was even reading something before this program that a few people in the a in their in their in the investment community are saying i think it's going to go to one hundred ten and it goes back to what we heard earlier you know these projections now the next benchmark is one hundred ten get us ready

for it ok and i don't want to make cast aspersions on anyone but i mean the oil industry certainly has an interest in having people say such things. well i think the advantage in high oil prices is that's really the only way you get really high cost oil that. we need to expand oil production out you have to have a very high oil price to go to the high cost areas and people look at all of these resources we supposedly have but a lot of these resources are really high cost resources you know they've been asked the most the say oh they'll be economic at forty dollars a barrel and then they say they'll be economic at sixty dollars a barrel and then at eighty dollars a barrel i'm thinking things like the or i will share elon so i should things but what happens is that if you have high oil prices it theoretically should you give you more oil production so that's the one upside that i can see from higher oil

prices ok and i'd like to ask all three of you the same question here if we were doing this program exactly one year from now what do you think that will price would be and i know there's a lot of volatility out there but i'm going to put you on this like tyson i want to go to first if you watch two thousand and eleven get a hold for oil prices going to your crystal ball you know brush it off. well hopefully it'll end with prices around seventy five or eighty dollars a barrel that's where the supply demand fundamentals i think dictate it should be and hopefully that's where it is i think that even for oil exporting nations they'll be better off in the long term with prices closer to the seventy five eighty dollars range angus what do you think about you know what your crystal ball tell you that's going off well my crystal ball isn't primarily to do with oil prices it's more to do with clean energy but i suspect that we could see our own price in the short term and the low one by the end of the year but i think what we

will see is a great more focus a great deal more focus on different types of energy we saw record investment in clean energy last year of two hundred forty three billion dollars on our estimates and lots of countries that weren't previously associated with clean energy in the middle east and and africa and russia and so on looking more closely at where the things they can do on wind and solar we can all mix are improving price of hardware is coming down so i think it will be a good year for clean energy whatever happens to oil prices but i suspect on oil we'll see iran lower ok gail you got fifteen seconds where you think that if you're right your crystal ball tell you one year from now well i think we'll see higher than lower but i think i will see is a lot of recession and so the rebut session they bring they all price down to say by this really the recession that will dominate ok that's not a very optimistic note to end on thanks many thanks my guest today in washington

london and in line and thanks to our viewers for watching as you are to see you next time and remember crosstalk.

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