$100 Oil: Not If, But When
So the crisis is over, right? Hardly, say some oil industry analysts. At the beginning of the year, some warned of a "super-spike" that could push oil prices well above $100 per barrel. But as it happened, prices peaked at $71 per barrel after Katrina, and will likely continue to fall over the short term.
However, we may be seeing a "perfect storm" of circumstances that could lead to oil shortages and sharp price increases over the long term:
- According to an estimate by Gold & Energy Advisor, a Florida-based energy consulting firm, the US only has about 11 years of oil reserves remaining. Most of the world's remaining oil -- about 1 trillion barrels -- is contained in volatile Middle Eastern countries, shifting price and production power to these countries as well as to OPEC.
- Alternative energy sources will likely not ease demand for oil anytime soon.
- Even in countries with large oil reserves, politics is keeping output down.
- Global demand will remain high for the near future.
- The world's oil supply remains vulnerable to disruption through terrorism or severe weather.
- Refineries may have to resort to using lower quality crude oil that's more difficult and costly to refine, thereby driving up prices for consumers.
With all this in mind, commodities expert Kevin Kerr says that we could see $100-per-barrel oil within the next 30 months -- or sooner in the event of a catastrophic terror attack or weather event. So instead of $1.98 gas prices being a return to stability, it could be simply a temporary dip in the "new normal."
Source: CBS MarketWatch (via Excite)