It was just a few months ago really that oil prices peaked – July, 2008. Now look at where we are today, here in mid-November, only four months later.

For the past couple of years, the chorus, from me included, has been that the days of low priced energy are gone, at least until there is a technology breakthrough.

What got me thinking about that was a visit to the MIT university web site, where I ran across a piece from not that long ago by Dr. Yossi Sheffi, the well-known academic and occasional entrepreneur, titled “Cheap Oil: a Thing of the Past.”

Sheffi wrote: “Supply chain executives have to plan for a world where cheap oil is a thing of the past.”

The pertinent question right now, of course, is: Is that really true? Is the current collapse just a temporary aberration, with an overall trend that will soon again lead to rising prices and expensive oil? Or will it take years to get back to 2007/08 levels?

There were so many factors in the rise: slowly growing supplies, rising demand from India and China, speculators, geopolitical tensions, etc.

The confluence of events from the financial crisis is a once in a lifetime occurrence. Seeing even a 25% drop from the peaks wouldn’t have surprised me, but could anyone have foreseen a drop of more than 50%? As I write this, we are at about $60 a barrel, down from a peak of $144 or so.

OPEC is promising output cuts, but it is very uncertain they be able to hold it, with cash flows of OEC members being decimated by the price decline. Not that any of us are sorry to see Russia, Venezuela, or most of the OPEC countries take a financial beating for a while to our benefit.

My own bet is that we will see significant increases by the end of 2009, all the way back to $100 or so, a level at which logistics is still pretty expensive. Mid-term, demand from India, China and other developing countries will continue to march strongly ahead. We aren’t finding much new supply (Peak Oil and all that).

There is always the possibility of terrorism, and the right event could shoot prices way up. It might even be in the interests of OPEC now to have such an event happen.

But I think absent something like that, it will be several years before we see $150 or something again. Users and speculators will remember 2008 for a long while.

What do you plan for? Who knows. I think you have to run scenarios from $40 to $120 over the next couple of years, and maybe even throw in $160 again for fun.

I’d love your thoughts on this.