The Next Price to Watch for After $100 Oil

Now that oil has closed at $100.01 a barrel, what is the next benchmark to watch for on the way to potential global energy crisis?

Well, the price of oil still has to rise about $1.70 more to surpass its all-time inflation-adjusted peak of $101.70, as calculated by the International Energy Agency. As we’ve noted here, there are a lot of different calculations for that all-time high, since the futures market in oil did not exist when oil hit its old apex in 1980.
But if you want a longer benchmark to keep an eye on, look at The Coming Triple-Digit Oil Prices(.pdf) by petroleum economist Philip Verleger, published last fall in the International Economy magazine. Writing during the summer, when oil was in the $70s, Verleger noted six factors that would lead to higher oil prices: demand created by economic growth, underinvestment, nationalism in oil-exporting countries, investment uncertainty, disruptions from global conflicts, and issues of scale—”efforts to substitute away from hydrocarbons or to conserve will be hampered by the problem’s enormity.”

“Indeed, looking forward,” Verleger wrote, “it appears that triple-digit oil prices may become a regular feature of the global economy within three or four years, and soon the first digit may become something other than one.”

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