The key is oil prices

I have been looking at various consensus S&P EPS projections for 2010. Depending on which analyst it is, EPS is going up from $45-55 in CY09 to $60-$70 in CY10. Almost everyone assumes oil prices will be $70-$80 next year, up from $50 this year.

The bull argument for oil is - credit crunch has made new supplies difficult. So when global growth resumes - coupled with the natural field decline each year - the excess oil inventory and supply will be taken care of soon. And, it is a good inflation hedge. 

What was unusual between 2003-2007 was that not only did global growth happen, but it lasted for a long time. For the oil bulls to be correct, not only should global growth occur, but it should continue for some period of time. If growth were instead turn out to be erratic - which is what I think is more likely - productivity improvements and climate change pressures might ensure that the time taken to work off the excess inventory and supplies is more than just a couple of years.  Oil companies and national governments are still doing capex - it is down but not to 0.