Submitted by QTR's Fringe Finance

This is Part 1 of an exclusive interview with Doomberg, the collective that runs the Doomberg Substack. During this interview series, we discuss oil, Bitcoin, the coming Fed chair swap, fiscal policy, politics, uranium and more.

Doomberg publishes skeptical analyses through the hard money/Austrian lens and its objective is to be funny without being silly, to teach without being self-indulgent, and to provoke without being polarizing. They publish 10-12 pieces a month, which you can read for free here.

Q: Hi, Doomberg. Thanks for joining me. I love reading your blog. Can you briefly describe why you proposed oil could go to $300? Was it a joke or serious?

A: Our piece on oil was quite serious.

Policy makers in the U.S. are running an unprecedented experiment and actively working to reduce supply – although the administration may be changing its tune on that recently. At the same time, demand for fossil fuels is growing beyond pre-Covid levels.

If you study the capital expenditures of the oil majors in the recent past, you'll find they've cut back substantially. Major oil and gas projects take time to permit, build, and operate. Much of this hesitancy to invest flows from disappointing returns on equity from previous investments, but the move to defund the fossil fuel industry adds further pressure.

We arrived at our $300 price target by comparing the amount of gold it takes to buy a barrel of oil. Back at the previous all-time high for oil, gold was much weaker in dollar terms. Simply replicating the oil-as-priced-in-gold from the last peak gets you to $300. Frankly, it could go much higher. The price inelasticity of demand for oil is substantial.