Jubak says $180 a barrel oil is coming

Jubak, my personal No. 1 financial analyst with MSN, expects oil prices to keep climbing for two more years. And yes, we would have $180/bbl oil at the end of that.

Besides any Peak Oil issues, he notes cold, hard cash — or the lack thereof in Mexico, Nigeria and Russia — is part of the problem. Russia is the kingpin of oil-supply scenarios, as I blogged last week. Jubak says that makes its decline more worrisome:

Any decline would mark a huge turnaround. Russian production has grown steadily over the past 10 years, and in its supply-and-demand projections the International Energy Agency has been counting on growth in Russian production of 5 percent by 2012 to offset big declines in older fields in the North Sea and Mexico.

The money problem is different everywhere.

In Russia, it’s windfall profits taxes that hit a “windfall” level of 80 percent at just $27/bbl. It’s no wonder Lukoil, et al, want relief.

In Nigeria, it’s the government failing to put money into joint ventures with private companies. The situation is similar in Mexico. Mexico could be a net importer in a decade or so unless it can gin up production. Here’s the problem there:

About 40 percent of total government revenue in Mexico comes from Pemex. And as a symbol of the country's economic independence from the United States, Pemex is prohibited from signing joint-production agreements that would let the company trade oil for the technology and investment it needs.

Well, the Mexican government, if it doesn’t want rebellious, welfare-deprived peasants storming Mexico City, is going to have to force Pemex to bite the joint- production bullet, as I’ve blogged long ago.

Oh, and those new oil finds in Brazil? Even if they pan out, they won’t hit the market for a decade.