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Page added on June 3, 2015
Doubtful We’ll Ever Again See Sustained $100+ Oil Prices
Harvard University professor Meghan O’Sullivan doubts that the price of oil will ever climb to its previous heights, CBC News last week reported.
“Will prices be sustained over $100? Doubtful,” the Jeane Kirkpatrick Professor of the Practice of International Affairs, Harvard Kennedy School, and former special assistant to U.S. President George Bush said during the Energy Visions 2015 event in Calgary.
“We have, from 2011 to 2014, had enormous production gains in the United States and production gains on the global level; that energy abundance will continue.”
With IFO380 historically priced at around 70 to 75 percent of crude, $100 per barrel oil would put bunkers at $527 to $565 per metric tonnes (pmt).
O’Sullivan’s outlook is not shared by Robert Johnston, CEO of the Eurasia Group, who argued that given the continued rise in global energy demand $100-plus oil is possible
But O’Sullivan’s outlook is not shared by Robert Johnston, CEO of the Eurasia Group, who argued that given the continued rise in global energy demand $100-plus oil is possible and will help producers keep up with the demand.
“Ultimately, we’ll need $100 oil,” he said.
Johnston’s sentiments were shared by Paul Stevens, a research associate at the Oxford Institute for Energy Studies, who thinks prices could surpass the $100 mark as early as this month because of the high level of volatility in the Middle East.
Rich Kruger, CEO of Imperial Oil Ltd., drew laughter from Energy Visions delegates when he remarked, “I don’t have a clue where oil prices are going to be. My best guess is somewhere between where it is now and where it was before it started to fall.”
Earlier this year, Total SA CEO Patrick Pouyanné said that oil prices will bounce back and that the negative effects for the industry of current oil prices may be overplayed.
11 Comments on "Doubtful We’ll Ever Again See Sustained $100+ Oil Prices"
rockman on Wed, 3rd Jun 2015 8:18 am
“Doubtful We’ll Ever Again See Sustained $100+ Oil Prices”. Nothing new about such pessimism: on 18 December 1998 when oil hit $10.95/bbl few believed we would ever see $35/bbl ever again.
As Yogi said: “Predictions are difficult…especially about the future”. LOL
Nony on Wed, 3rd Jun 2015 12:30 pm
Hamilton still hasn’t eaten his crow.
BobInget on Wed, 3rd Jun 2015 12:34 pm
100 is just a number, nothing else.
It will take two possibly three generations
to shake our oil habit. During that period the very substance in question, oil, will be increasing difficult to obtain.
2008, the last time oil hit $147 has been seven years of hard riding. Replacement crude is as difficult to discover as ever. Some still have high hopes for ultra deep Arctic, if that fails where next?
Predicting (for math challenged) remains dicy as ever.
shortonoil on Wed, 3rd Jun 2015 1:16 pm
It is really not necessary to have a PhD. to determine the value of a barrel of oil. The value of a barrel of oil is a matter of how far it can power a car, ship, plane, or whatever. A barrel of oil that could only get you a hundred yards down the road is not going to bring a very high price. Most of us would just walk.
For the most part the value of a barrel of oil is determined by the amount of work that can be generated by using it. To determine that all that is needed is the amount of energy it contributes to the buyer, and the value of the energy. Then you divide. That usually does not take a PhD.
Curious as we are, we calculated the energy delivered to the end user from a barrel of oil. Being basically lazy, and shiftless we ripped the value of energy off from the EIA, and the World Bank. We divided. What we discovered was that in today’s world only an idiot would pay more than $77 for a barrel of oil. So we think that the price of oil will never go over $77; which by the way, is less than $100.
There is one cravat in the statement above; “only an idiot”. The world seems to have an awful lot of those. If there were enough of them they could run the price of oil up over $77 until they went completely flat broke. Since America is already completely flat broke, oil just may go to $78 at some point. Just how many idiots it takes to go completely flat broke is not known. We will leave it up to some PhD. to figure that out?
http://www.thehillsgroup.org/
GregT on Wed, 3rd Jun 2015 1:37 pm
Nony said:
“Hamilton still hasn’t eaten his crow.”
If it bothers you so much Nony, perhaps you should take it up with Hamilton. Maybe you can find some kind of closure.
Plantagenet on Wed, 3rd Jun 2015 1:57 pm
The price of a barrel of oil depends on supply and demand. A year ago the price of a barrel of oil was $90-$100—-now that we are in an oil glut the price of a barrel of oil has fallen by 40%.
Its the same barrel of oil—its utility and energy content and “value” remain unchanged—but the price changes quickly and dramatically in response to supply and demand.
shortonoil on Wed, 3rd Jun 2015 3:11 pm
“The price of a barrel of oil depends on supply and demand.”
“What we discovered was that in today’s world only an idiot would pay more than $77 for a barrel of oil.”
Idiot counter + 1
GregT on Wed, 3rd Jun 2015 4:07 pm
“but the price changes quickly and dramatically in response to supply and demand”
In this case, it is demand that has responded to price. $100/bbl oil has done major damage to the world’s economies, and finances. $60/bbl oil is still over twice the price that has historically caused recessions.
The world remains in a ‘global financial crisis’, and cannot recover with such high oil prices. As the average quality of oil declines, and the costs to extract the oil continue to rise, the world’s economies will continue to unravel.
We are already at the end of the age of oil. Once the band aids come off of the global financial systems, the extent of the damage will no longer be able to be hidden.
Davy on Wed, 3rd Jun 2015 4:54 pm
Yea, Greg, if it were only the issues of oil with this financial crisis but it is also structural with debt, massive mal-investments (bad debt), and huge unfunded liabilities.
It is the oil situation that has been creeping up on the global financial system with insidious depletion. Add to the depletion issues with oil all the other peak oil dynamics above and bellow ground.
This is a perfect storm of problems a global economy requiring +3% global average growth cannot overcome. We are now in the economic endgame. The time frame is uncertain but the direction is perfectly clear.
GregT on Wed, 3rd Jun 2015 6:17 pm
Davy,
Add to that the corruption at all levels globally, a rapidly declining environment, continued population growth, and that perfect storm becomes a storm of biblical proportions. Almost like somebody saw it all coming…….
MSN Fanboy on Wed, 3rd Jun 2015 6:29 pm
shortonoil on Wed, 3rd Jun 2015 3:11 pm
“The price of a barrel of oil depends on supply and demand.”
“What we discovered was that in today’s world only an idiot would pay more than $77 for a barrel of oil.”
Idiot counter + 1
LOL, Can’t stop laughing.
One question though short, what stops the Fed just printing the money no matter the price?