Skip to comments.'Sky-High' Oil Prices to Last Until 2020
Posted on 04/12/2008 7:20:50 AM PDT by kellynla
The world is now in a period of sky-high oil prices that will last a long timeprobably until 2020, according to the world's largest investment bank. Senior analyst Gioavanni Serio in Goldman Sachs, visiting Norway, told participants in an energy seminar that the oil industry moves in 20-year cycles, reports finance industry newswire E24.
The price for American raw oil rose to a record-high USD 112 per barrel this week after new figures revealed a surprising decrease in storage the week before.
Brent oil from the North Sea also rose to new highs, selling for USD 109 per barrel.
In the long-term, oil prices reflect marginal costs to the oil industry," said Serio at a yearly energy seminar held by Wilhelmsen at Lysaker outside of Oslo. "The oil price and marginal costs stayed low in the 1990s. Now that it has become far more expensive for the oil producers to retrieve oil, the price is going to rise correspondingly," he predicted.
The Goldman analyst does not think oil demand will increase significantly but he pointed to "bottlenecks everywhere". He said: "Oil companies are lacking professionals and rig rates have exploded from around USD 100,000 per day in 2002 to USD 500,000 per day this year."
Serio expects oil prices to fall in the short-term, to about USD 90 per barrel, but said it is "unrealistic" that the price would fall under USD 70 per barrel in the coming years. By the end of 2008, he expects the price to be well over USD 100 per barrel.
However, not everyone shares Goldman Sachs' bullish predictions. Italian oil giant ENI's CEO Paolo Scaroni said last week he believes oil prices will fall as a result of increased production.
"We expect the oil price to fall to USD 50-60 per barrel, a price that will provide for global growth," said Scaroni in an interview on Italian TV.
The Norwegian economy has boomed on the back of soaring prices for Norway's oil and gas amid a general world economic downturn.
For all those claiming to predict oil prices 12 years away, ask how they did predicting prices 5 years away starting in 1993 and again in 2002.
We heard the same about tech stocks and real estate.
This is not too far from reality.
Because the Stock market has lost much of it’s revenue, it has been transferred into physical trading commodities like Gold and oil; Hard currency, which will be protected by those who control the money. Oil in itself has become money, a currency that is being used and is irreplaceable. So naturally the value will keep going up. Gold is in the same category.
More the effect of war and other international politics than the industry itself.
Supply limited / increased demand = Higher Price. ...Econ 101 Page 1.
When will America wake up and relaize that there is plenty of oil, It just needs to be drilled and refined. The scarcity of oil is a myth.
I have a difficult time buying what you just said.
To begin with, it is becoming more and more difficult to find and drill for Oil as each year goes by. The supply is also being depleted.
Of course, the technology has provided us with methods to keep on exploring and drilling, but the costs have gone up accordingly.
Of course prices fluctuate based on immediate situations, but the overall trend over the last two decades has been a steady increase in value per barrel. That trend will not change.
and add corn...since we merely human looking for a quick buck...even a plain ol’ every day farmer can see the dollar signs on that commodity...less soy, wheat, rice, etc...we will see lots of corn turned into fuel...
Hear me now; understand me later.
AND ... enough oil drilling/refining politicians to tell the anti's to pound sand.
Refineries in the USA are running about 83% of capacity.
This is total crap! There are a huge number of new technologies and new oil fields that will be coming online during the next few years.
NO...it is more than that...one of the biggest group of retiring industries is the oil and gas personnel. The experience that existed 20 years and longer ago is retiring and the “X & Y” generation” of wuzzies who don’t want to get sweaty and dirty aren’t filling the shoes.
There is a HUGE career opportunity in O&G but it has been demonized and made to look unstable so people shun it as a career path.
I can tell you that we have “rig hands” at my place of employment...many who are high school drop outs and with a bit of a prison record...making at the ripe age of 22 & 23 yrs of age over 150,000.00 EASY!
EASY easy easy money....BUT it involves hard and dangerous work.
Bingo. People looking for complicated answers to the price of gas kill me. Its the most popular product in the history of our country. Demand and use is at an all time high. Hmmm, and price is at an all time high... I wonder if there's a connection...?
The price is accurate for the market (disregarding the impact of gas taxes which are an entirely different thread) The roads are full of people commuting to work in full size pick ups and mini-vans. Until that changes, you will not be able to convince me that gas prices have become too high for the American consumer.
“To begin with, it is becoming more and more difficult to find and drill for Oil as each year goes by. The supply is also being depleted.”
There’s more oil in the Canadian oil shale up in Alberta than there’s in the whole middle east, and it’s been barely tapped. The trouble is the difficulty of extracting it, but that became economic at $40/barrel. There is pleeeeeenty of oil and carbohydron fuel out there.
“Sky high” must be one of those technical economic terms.