Believe it or not, OPEC isn't all that comfortable with $60 or $65 oil. That's the appraisal of Fadel Gheit, New York-based senior vice president and energy analyst for Oppenheimer & Co. Gheit met informally twice this fall in Geneva with Adnan Shehab Eldin, OPEC acting secretary general and head of economic analysis. There's concern by the cartel that, after three damaging hurricanes, there could be a slowing of U.S. economic growth that could domino into a slow-down in global economic growth, Gheit says. That, in turn, could dampen global oil demand-and sustained high crude prices could curtail demand even further. "Given this apprehension, the new unofficial oil-price target that OPEC has in mind is closer to $45," Gheit says. He would be surprised, however, if oil prices next year strayed out of the $50 to $70 range. "The U.S. economy is good and demand is likely to continue growing, perhaps 1.5% to 2% in 2006, plus there's an adequate supply of crude even though we're facing the lowest spare productive capacity in history." The analyst contends that up until recently, the global economy has been getting a free pass when it comes to the real price of oil, but now crude prices are catching up with inflation. In his view, there's no reason oil prices should drop from their recent levels because companies can no longer replace production at $5 to $10 per barrel. "Today, the replacement cost of a barrel of oil in the ground is around $11 to $12, and that's a bargain because we're beginning to see M&A transactions where companies are willing to pay $15 to $20 per barrel for reserves." For more on this, see the December issue of Oil and Gas Investor. For a subscription, call 713-993-9320, ext. 126.