Oil Price to Reach US$ 350 in Near Future
January 12, 2020 - Even though the oil price crossed another barrier earlier this week with US$ 320 a barrel, we have probably not seen the end of it. With the stumbling of the world's current oil production even higher oil prices are to expect in the future. When Saudi Arabia officially announced in 2010 that the oil production in Ghawar, the biggest oil field in the world, was significantly decreasing, the price for a barrel passed US$ 200. The current total world production of oil is 91 million barrels a day. To get down to the same oil price as before 2010, adjusted for inflation, an estimated world production increase of about 10% is needed.
This can only be achieved in three deposits in the world, Green River Oil Shale in the US, Athabasca Oil Sand in Canada, or Orinoco Oil Sand in Venezuela. However, all of them are extremely stressed at the moment with full capacity, which prevent them from increasing production for a lower oil price.
Some people also set their hopes for an increased output of the drilling in the deepwaters of the Gulf of Mexico. However, since the start of the production six years ago, it has not reached a substantial level to make a significant impact on the oil supply.
Even though the production eventually will increase at these sites, it will not match the current loss of production at conventional oil fields in the world, which means that we have passed the peak of world oil production. This will increase the oil price even more in the near future, some analysts believe it can reach as high as US$ 350 a barrel before the year ends. Hopes that were earlier set to find new reserves is now basically only focused on more efficient output from the three major sites.
US has made giant investments during the last decade in the Green River deposit, which is projected to reach a production of 1.6 million barrels a day this year. Since that is still not enough, US put a constant pressure on Canada for a higher output from Athabasca of another 1 million barrels a day, apart from current production of 3.7 million.
US is the country that consumes most oil in the world with about 22.5 million barrels a day. 71% of the total oil consumption in the US is used for transportation, which includes gasoline, diesel, jet fuel and residual fuel oil. Gasoline has been the dominant oil product for almost a century, and 40% of all oil consumed in the US end up in a fuel tank of a car.
The main adjustment to a higher oil price in the last decade has been the shift to less gasoline consuming cars, but so far only about 10% of the American car fleet consist of hybrids. The main reason for the slow transition to a more fuel-efficient fleet is still the lack of a competitive fuel to gasoline.
China is also suffering heavily from the high oil price for their economic growth. Analysts say an oil price at US$ 350 sets back their growth rate with 1.0% of GDP per year compared to the oil price before the Saudi Arabian peak. Even though China has more than doubled their oil consumption during the last 20 years, they are still per capita only using 2.7 barrels per year, compared to 24.4 for the US.
Argument: The world oil production is based on forecasts from the U.S. Energy Information Administration and Association for the Study of Peak Oil, and other relevant data. For the output of Athabasca consideration have been taken to numbers from the Canadian Association of Petroleum Producers, and the output of Green river is revised information from the study Oil Shale Development in the United States from Rand Corporation. With such a high oil price, heavily investments will most likely be made in the exploration of existing deposits of oil sand and oil shale. Predictions of the output of the deepwaters of the Gulf of Mexico are from The Oil Drum.
Questions: What other effects will the increasing oil price have on the everyday life? How will the developing countries manage when they will not afford to buy the oil needed and don't have the resources for alternatives?
Please note: This article is an updated version based on new development. You find the old article if you click here.
By Pontus Edenberg
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Comments:
Nanotechnology will replace oil-based materials, probably within the next 15 years. Hydrogenengines en micro-thermonuclear fusion will emerge within 10 years, along with other means. Materials and energy will become very cheap. For propulsion synthetic fuel is under development.
Posted by: furture
Yay, this means that the Russian Federation will be able to make profit and become a true superpower in the next decades =)
Posted by: Andrei
Oil never reach 180$
Posted by: b
2020? I don't think so. Oil WILL hit $180 one day, but not until some time in the 22nd century, unless 99942 Apophis hits Earth in 2036.
Posted by: Roy
The article says that the oil price will be US$150 in 2020. During the oil crisis in 1979 the oil price reached US$39.50 a barrel, which adjusted to inflation will be around US$150 in 2020. In 1979 the crisis was due to controlled production, in 2020 it will be because of lack of supply, which will most likely make the market even more shaky.
Posted by: Pontus Edenberg
In my openion Oil futures will hit nearly $500 USD per barrell by 2010. This is mainly due to steady demand and increasing money supply.
United States 8 Trillion Dollars, 8% YoY Growth
China 34 Trillion Yuan, 19% YoY Growth
India 36 Trillion Rupee, 18% YoY Growth
Russia 10 Trillion Rubles, 27% YoY Growth
European Union 9 Trillion Euro, 8% YoY Growth
Posted by: Mark
Well seeing how this article says it will reach $100 by 2010 and it already has in 07 i would say over $200 by 2020 maybe $300.
Posted by: Jeremy
umm. how about like next 5 years. it being $105 in April of 2008 already.
Posted by: Mattew
Stupid sheeple. There is no shortage of oil. Even Opec has admitted that. Also, no such thing as supply and demand anymore.
Posted by: Bob
maybe it will be 180 within a year or two, considering May of 2008, gas is $120 a barrel
Posted by: d
Its over $200 a barrel now. :P
Posted by: Joe
this sounds completely plausible to me, just a couple years ago oil was around 60$ May 22 2008 it broke records at 135$ many analysis say 180$ in less than a year, In 20 Years? with the modernization of China and India, This sounds like a likely senerio. However, a world war or economic depression would set in even before prices got that high
Posted by: john
I think oil will get close to $200 a barrel by the winter (modest forecast). Depending on the election I think we are going to see $8 by next year. I think the current administration, OPEC, and Domestic Oil Companies are detecting "peak oil". I beleive demand needs to drop about 6% every year in order to hide this, and that will only happen on a temporary basis with $8 USD gas here in America. Or if the 10 Iraqi Oil Fields went into full production again. That would hide it too for the next 2-3 years so the next Administration can get blamed, and anyone currently in the Federal Government who has their fingers in the oil industry can relax on the liquidated assests of these companies while the rest of the country gets hit with the real recession. My opinion we need federal subsidies to individual consumers and auto recyclers to aggressively change the overall type of vehicles Americans drive. Its better to loose a painful amount of money now then have several years of economic stress. Remember in the 80's when we thought the Japanese Yen would be the dominant currency for decades to come?
Posted by: Scott
The pricing of oil is too difficult to predict. There are too many variables involved for any long term accurate forecast. The price of a barrel of oil has increased by 100% plus since April of last year, 2007. The government has asked the auto industry to up the estimated mpg of future vehicles. However, the price of gas continues to rise, therefore dampening any economic relief at the pump, but a predictable profit margin for "Big Oil."
I do think that alternative fuel sources will come on-line by 2020, but only after the US government, "Big Oil", and the auto industry agree upon when the launch day is here. We can send a man to the moon, split an atom, and experience the type of technology boom, specifically nano-tech, yet, we cannot deliver an alternative fuel source for everyday use..I dont think so! We have it on the books now, we have prototypes now, however, until "Big Oil" can "own it" and guarantee the same profit and growth margin to share holders..it wont happen. This is not about improving the quality of life for the everyday family.....its about control, money, power, and greed..and its shameful.
Tracy M. Jordan
Posted by: Tracy M. Jordan