When Will We Get $100/barrel Oil? Maybe Sooner Than You Think.
An interesting article from Canada discussing the future price of oil. I am assuming that you are already planning for this. Correct?
With the way the analytic crowd is kicking around triple-digit oil prices, you'd think central bankers would be pulling out their hair and soaring prices would be capping demand.
But it isn't necessarily so. What we're finding out, courtesy of Jeff Rubin, is that demand for crude is a lot less price elastic than we were led to believe.
Not in the developed economies of the Americas and Europe, mind you, where gasoline taxes and subsidies for bio-fuels have cut crude oil consumption for two years running. But in the developing countries like China and even oil-producing regions like Russia and the Middle East, where demand this year is expected to grow by four times the rate in our backyard.
And all this comes with supply hard pressed to keep up.
"The arrival of $100 (U.S.) a barrel oil is likely to come earlier than first predicted back in 2005, when we pegged the end of the decade as the likely period," said Mr. Rubin, CIBC World Markets' chief economist and strategist. His charts suggest U.S. prices should set a new record high of $80 a barrel this year on tighter markets, climbing to an average of $90 in 2008, and then crossing the unthinkable barrier towards the end of next year.
He's not alone. On Tuesday, Goldman Sachs warned that the price of crude oil could top $90 a barrel this autumn and hit $95 by the end of the year, if the oil cartel keeps oil production capped at current levels.