1. Oil prices are very volatile. How do prevent an oil based economy from suffering from volatility of its main export? Assume the worst. Plan for the lowest possible price and save everything else.
2. No one can predict the future. We don’t know when oil prices will crash but we know they will at some point. Better to start planning now. The last time prices crashed we were saved by our excess crude account. We need to have something next time it happens. Else we will have to go cap in hand to …..
Is $85 a good benchmark? No it is not. You don’t have to fear a catastrophe to see oil prices dropping below that. Is $70 a better benchmark? Probably.