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Gazprom CEO: $250 for oil not that far away

At $250 a barrel for crude oil, food prices double. The U.S., Japan and Europe plunge into deep recession. Companies go bankrupt. Airlines are nationalized. Sport-utility vehicle sales dry up as gasoline tops $7 a gallon.

The scenario may not be unimaginable. Alexei Miller, chief executive officer of OAO Gazprom, the world's biggest natural gas company, said last week that crude will climb to $250 a barrel in the “foreseeable future.”

While executives, elected leaders and economists disagree on the probability of Miller's vision, there is consensus it would jolt everyday life.

“It would be a disaster for all the oil-importing countries, all the democracies and China,” says James Woolsey, vice president of consultant Booz Allen & Hamilton Inc. in McLean, Va., and a former CIA director. “And it would be hugely beneficial for the many monarchies and dictatorships that are the main suppliers.”

Some investors are betting on the forecast. At least 3,008 options contracts have been purchased giving holders the right to buy oil at $250 a barrel in December, data compiled by Bloomberg show. The options closed at 64 cents on Friday.

Crude oil prices reached a record $139.12 a barrel on June 6, more than double a year earlier. Goldman Sachs Group Inc. and Morgan Stanley forecast the cost may reach $150 in the next few months.

Tom Kloza, chief oil analyst for the Oil Price Information Service in Wall, N.J., is skeptical about Miller's prediction because it may benefit Gazprom. “It's silly to take people with incredibly vested interests as having an unfettered, unbiased opinion,” he says.

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