Crude Oil Price Chart 1998 - 2009: Facing the inevitable - oil prices are bound to rise
crude oil prices 1998 - 2009 (monthly averages, West Texas Intermediate)
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Growing industrialization in BRIC (Brazil, Russia, India, China) nations has pushed energy demand to record levels. Obviously, the current crisis won’t last forever. So we have to be aware of the fact that it will be harder to satisfy the global energy demand in the coming years. The world’s energy consumption will be soaring in the medium and long term.
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As last year’s oil price spike has shown, demand for gasoline, jet fuel and heating oil has not been reduced significantly by sky-high oil prices. Unlike it’s the case with other consumer goods, higher prices for energy did not curb demand. The price mechanism doesn’t work for oil.
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Higher oil prices can barely bring more production since the global oil output is close to its peak. Christophe de Margerie, CEO of Total - Europe’s third largest energy group - said that the world will never be able to produce more than 89 million barrels of oil a day. To give you an idea how close PEAK OIL is: In March 2008, the International Energy Agency forecasted a global demand of 87.54 million barrels a day for 2009, taking into account the demand-lowering effects of record-high oil prices at that time. (-> Bloomberg News) More recent forecasts predict a daily demand for about 84 million barrels this year. However, once the global economy recovers, we are likely to touch the 89 million barrel line rather quickly.
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Another important point which should be taken into consideration is that the big private oil companies only have direct access to 5% of the world’s oil reserves. 95% of oil reserves are controlled by rather inefficient, state-owned oil companies like Saudi Aramco, Petrobras and Rosneft.
The inevitable consequence is that energy prices in general and oil prices in particular are bound to rise in the medium and long term. The most important oil fields are nearing depletion which drives up extraction costs.
In addition, the price of oil - which is the most important commodity price of all due its numerous direct and indirect impacts on the economy - is subject to enormous fluctuations which can be seen easily taking a look at the oil price chart.
Under these circumstances, shifting to new forms of energy generated from renewable energy sources as well as saving energy by improving efficiency standards is the best thing we can do.
For further reading:
IEA: Oil supply crunch and mega-recession by 2013
it’s time to become energy independent, overhaul the entire economy and infrastructure
Oil & Gas NEWS mixed - 天上的馅饼 - Free Lunch
The Post-American World, China and the global economy
May 16th, 2009 at 4:47 PM
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May 20th, 2009 at 2:47 PM
[...] Crude Oil Price Chart 1998 - 2009: Facing the inevitable - oil prices are bound to rise [...]
May 21st, 2009 at 3:18 PM
[...] Algeria demands that the cartel enforces stricter discipline first. In fact, the global oil production would go down by approximately 700,000 barrels a day if all members sticked to their quotas. But few expect that to happen. Many OPEC countries have inflated their budgets in times of sky-rocketing oil prices. The bulk of the petro dollars were used to finance an arrogant foreing policy and generous domestic welfare programs and subsidized gasoline prices. Now they’re facing budget deficits. To compensate for the lower market value of crude oil, several members are producing above their target levels - leaving markets oversupplied in times of falling demand which puts pressure on oil prices on the expense of OPEC members which stick to their quotas. more information on current trends in the oil sector: Crude Oil Price Chart 1998 - 2009: Facing the inevitable - oil prices are bound to rise [...]
May 28th, 2009 at 2:14 PM
Oh Pat, you