According to Yahoo!Finance:
Expert: Oil Prices Set to Hit $100 by End of ’08, and Will Likely Stay at Triple-Digit Level
NEW YORK (AP) — Oil prices could top $100 a barrel by the end of next year and remain above that point for years to come, the chief economist of Canadian investment bank CIBC World Markets said Tuesday.
Jeffrey Rubin said rising demand within oil-rich nations such as Mexico, Venezuela and Saudi Arabia will put pressure on global oil prices in the coming years. That, combined with the increased cost of pulling petroleum from reserves deep under the sea or wringing it out of oil sands in Canada, will keep oil prices high even if demand in the Western world remains constant.
“We’re in a world of triple digit oil prices for the foreseeable future,” Rubin said during a speech to investors here.
Rubin said oil exports from OPEC countries, Russia and Mexico will likely decline by about 3 million barrels per day over the next five years. The biggest drop, he expects, will come from Mexico, a key U.S. supplier.
“Of the 3 million barrels, we’re probably talking about 2 million barrels are going to come directly out of U.S. supplies,” he said.
Rubin expects Mexican oil imports to the U.S. will dry up by about 2012. Some of that decline will be made up by imports from other parts of the world, but the lions’ share — nearly a third of all U.S. oil imports — will come from Canadian oil sands, he predicted.
But replacing relatively easy-to-refine liquid crude with petroleum from oil sands is certain to increase costs, he said. By the end of the decade, Canadian oil sands are likely to represent the world’s largest source of new oil supplies, he said.
“We’re basically replacing low-cost oil with high-cost oil,” he said.
Looking ahead, Rubin expects crude oil prices to average as much as $90 a barrel next year, rising to around $100 by the end of 2008. That would represent an increase of nearly 25 percent over Tuesday’s settlement price of $80.05 a barrel for light, sweet crude on the New York Mercantile Exchange.
“Triple digit prices is not a spike,” he said. “Triple digit oil prices is what is going to be required to maintain, let alone grow, world oil supplies.”
- This is one of the key elements of a oil shock, the cost of oil will escalates with all knowing people continue to buy vehicles using petroleum. The demand will continue to rise and prices will only go NORTH. The problem with this event is when ALL the poor nations in the world had completely ruined with civil unrest and wars due to high fuel oil cost…where do we find food for rich nations to import from?
This eventually will only lead to wars to “liberate” the poor from “tyranny” and bring “democracy” to the poor and slave them to grow ethanol for the rich while continue to starve them legally….
There might be serious consequences with higher cost of oil…some nations will go through civil unrest like Burma that the people no longer can tolerate the hike of oil prices and protest publicly that lead to social unrest. Many third world nations are seriously in need of fuel supply and electricity to feed the demand of a growing population with modern electronics.
Politicians have little choices and sometimes have to make unpopular decisions to make the country to continue to prosper while the world struggle to rejuvenate their economy. The politician are making ways to attract oversea investments and cultivate the habit of spending by the consumer to make the economy prosper. Spreading business friendly policy, cutting corporate taxes and many other policies such as making it easier to become a citizen attracting foreign talents.
The rest of the world might be fighting in chaos and anarchy but the rich can continue to buy off stuff from the markets and as long as there are some stability somewhere…to create some supply regardless of the situation ….however this might be very very costly indeed.
Many workers might be underpaid due to strong international competition and inability to hike the prices to match the rising cost of manufacturing any products. Petroleum based products will rise in prices and will eat into the margin of any company if they refuse to jack up the prices.
The general inflation will start to spike when companies start rising prices and hope that things will go back to normal but it will only work if the inflation don’t go up too quickly but gradually for the consumer to get used to it or simply have their pay to rise accordingly over time (or switch to a better paying job).
Those people who cannot find a better job or their pay remain stagnant for a long period of time will find themselves becoming victims and starts to protest against in-equality or unfairness or blame the government for mismanagement or corruption and might end up badly.
The world should wake up and start researching on alternative energy and start investing in it immediately. There should not be any delays or the global economy will be increasingly unstable and self destruct over time as the main key support of cheap fossil fuels are starting to wane off…
The event that I am describing are not far off into the future…and NOT ONLY the problem of the next generation but in the near future within 5 to 10 years. The third world country are NOW being hit then the developing country will starts to crumble and the first world nations will discover that they are in deep crisis.
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