Posted on 11/15/2007 6:45:47 AM PST by beaversmom
TAIPEI, Taiwan (AP) — Perhaps the biggest reason that oil costs nearly $100 a barrel can be found in places like China, where roads that were full of bicycles 15 years ago are now choking with cars and trucks. Or in India, where sales of diesel-powered generators have soared as people try to avoid frequent power outages.
The rapid growth in China, India and other emerging economies has been fed by crude oil, but this rising demand for fossil fuels may finally be pushing the limits of supply. If basic economics is any guide, that could also mean $100 is just the beginning of far higher prices.
The International Energy Agency warned earlier this month that growing global demand, particularly from China and India, could create a supply crunch as early as 2015. Currently, oil producers are turning out about 85 million barrels a day, while the U.S. Department of Energy says consumption is between 85 million and 86 million barrels a day.
The department predicts output will reach 118 million barrels by 2030.
Some experts see a potential disaster looming — in as soon as five years or even less. Chris Skrebowski, the editor of the London-based Petroleum Review, thinks slower-than-expected supply growth combined with rising demand from burgeoning Asian economies could result in a worldwide shortfall of as much as 7 million barrels a day by 2013.
Demand is so strong that Matthew Simmons, a Houston oil and gas investment banker, says $100 a barrel oil may even be a bargain, with $300 crude likely in the future.
"I think oil prices are unbelievably inexpensive," said Simmons, the author of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," a widely debated book suggesting that the world's largest oil exporter will be hard pressed to maintain its crude output, let alone increase it.
From the oil industry, too, there are voices of concern. For example, Christophe de Margerie, chief executive of Total SA, France's largest oil company, believes the Department of Energy's global production forecast is far too high.
"One hundred million barrels ... is now in my view an optimistic case," de Margerie said at an industry conference in London late last month.
Over time, soaring energy costs could have disastrous consequences for the world economy, with affordable transportation being the most obvious casualty. Manufacturing, petrochemicals and power generation would all be affected.
But some analysts argue that consumption growth will slow if limited supply keeps prices high.
Recent evidence suggests that prices of $80 a barrel have already begun to put a crimp in consumption in industrialized countries, said Leo Drollas, chief economist at the London-based Center for Global Energy Studies.
He projects annual consumption growth of 1.2 percent to about 93 million barrels a day in 2015. That growth figure is lower than in many existing forecasts.
Oil prices surged to a record $98.62 a barrel last week and hovered just below $94 in Asian trading Thursday.
"Demand will not grow at those prices," Drollas said of oil at current, let alone higher levels.
Drollas' view appeared to get a boost Tuesday when the IEA lowered its oil demand forecast for the fourth quarter by 500,000 barrels a day and for 2008 by 300,000 barrels a day. Demand growth will now average 1.2 percent in 2007, the group said.
However, it said demand will likely grow 2.3 percent in 2008, keeping consumption close to global supply.
So far, subsidies in China and India have blunted the impact of high prices on their consumers. But state-run oil refineries are feeling the pinch, and China recently raised retail gasoline prices about 10 percent.
And if anecdotal evidence is right, that could indeed affect demand.
"If the gasoline price jumps another 50 percent, I'll quit driving and take public transportation," said Zhou Zhiqiang, a Beijing driver. "I think it is the trend for oil price is to go up. The international oil price will ultimately surpass $100, because the resource will become scarcer and scarcer."
Looking at planned oil field developments, Skrebowski, the London-based oil expert, calculates that 23.6 million barrels a day of new production will come onto the market by 2013 — and that only if projects are completed on schedule, despite growing shortages of equipment and qualified personnel.
But the former long-term planner for energy giant BP PLC and oil analyst for Saudi Arabia believes that new production will be largely offset by the natural depletion of existing fields totaling 20 million barrels a day. The net gain, then, would be only about 3.5 million barrels over the five-year period, raising daily production to 88.5 million barrels.
Against that, Skrebowski says IEA demand projections would raise consumption to 96 million barrels by 2013, more than 7 million barrels short of his production estimate.
"After 2011 we could be in for serious trouble," he said.
We’re doomed! Doomed!
Sawgrass, biomass and ethanol (not from corn) ... and drill our nation’s oil fields.
Drill.ANWR.Now.
Folks will start turning coal into fuel long before “$300/ barrel”.
$75 crude by the 1st Q, 2008.
Don’t forget diesel fuel from algae.
I never suspected then watching him that he wasn't just dirt poor and stuck in the past, he was simply ahead of his time. It didn't affect him if gas was 25 cents a gallon or 25 dollars a gallon.
The predicament we've put ourselves into today regarding dependency on oil, make me wonder whether I'll see a return of the "not so good" old days.
The more people talk about $300/barrel, the more I expect $50/barrel.
The analysts who expect oil prices to continue up indefinitely remind me of my old boss, who always expected sales in January to top December sales, since business had been surging since the day after Thanksgiving.
If prices hit $200/bbl, worldwide depression will reduce demand and lower oil prices.
I don’t know about this, just yesterday I read where an OPEC guy said that there is no need for $100 a barrel right now, that there is plenty of oil. It’s the refineries that are to blame. I do totally agree though that we should be in ANWAR and off the gulf. BUT then you’d have that oil being sold on the open market. I’ve heard that the oil from Alaska right now is going to Japan. If that’s true, then all the extra drilling won’t help. Would it?
That is why the constant stories of doom and gloom we've heard for decades haven't proved true.
We should definitely be looking at alternatives to oil as well as alternative ways of getting oil. However, in the near future our biggest problem is making sure production keeps up with demand. Of course the free market usually does a pretty good job of taking care of that on its own.
Ethanol is a sick joke, and "Peak Oil" is a lie. The world is an oil economy and we have centuries of oil under land and sea. Drill, drill, drill. Or continue to send $1 billion per day to our mortal enemies and enrich them at our expense.
Drill.ANWR.Now. ................... Yes, if we were to get the benefit, but with the price high and the demand high, it won’t change anything. The oil companies main goal is profit. We’d still have shortages because it will be more profitable to export the oil than to keep it here where there is a limited demand. It isn’t like they would pump the oil just to give us 50 cents a gallon gas.
OR, is it time to buy a stove that can burn COAL ?
Another answer - Ebay Item number: 300172421164 ? I say either drill here at home or make it yourself.
Mass transportation may, once again, become the norm.
If the oil fields in the mid-East ever DO run out, all bets are off. I think islamofascists would rule that area then.
I can’t look at Ebay here at work. Is this the bio-diesel machine? The local news has done stories on this and while it’s a great idea, if everyone decided to do this, then we’d have a shortage of used french fry grease! :)
Plus, at that price, alternative energy and the reopening of certain types of oil drilling become economically viable, and that will serve in and of itself as a check on the price of oil.
Bush’s fault. Cheney is greedy. Halliburton will get all the jobs. Rove has everything to do with it. And so on and so on.
Drill EVERYWHERE that there is oil reserves. In Mass., in Manhattan, AMWAR.
No, it is a software package that lets you make H2, E85 Ethanol, Bio-diesel and Bio-fuel oil. I checked the website www.touchntalk.com - pretty interesting...
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