04 February 2008 19:26 [Source: ICIS news]
ORLANDO, Florida (ICIS news)--The US housing sector downturn will eventually wipe 20% off the value of the $20,000bn (€13,600bn) national real estate market, contributing to a recession that will take up to four years to pass, prominent forecaster Don Reynolds said on Monday.
Reynolds, an economist who was appointed by President George Bush as chairman of the government's Pension Board with oversight of $120bn in funds, told the National Biodiesel Board (NBB) annual conference that there are 3m foreclosures coming in the US housing sector.
Major banks holding the debt on those properties will have to write off around $300bn in bad loans, Reynolds said.
The dire predictions portend more bad news for the chemical industry, which has already seen demand for many products sag because of declines in both housing starts and sales of existing homes.
However, Reynolds said the biodiesel industry can look forward to better times ahead despite its current trough and a coming shakeout in the sector, in which producer margins are being squeezed by high feedstock costs.
The future for biodiesel includes an upward demand trend and a boost from the global movement toward more sustainable consumption, Reynolds said.
The crude oil market points to higher energy costs, and that would benefit biodiesel, he said.
Although in the near term crude might pull back to $80-85/bbl, China's oil consumption growth should swallow up the world's existing spare production capacity in the next few years, Reynolds predicted.
That will send crude oil up to around $120/bbl, with the potential to hit $150/bbl due to geopolitical instability in the Mideast, he said.
($1.00 = €0.68)
Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels
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