VP: Australia will have to contend with the forecast oil price
The situation is out of the frying pan into the fire and it’s the opportune time for Australia to comprehend the reality and initiate a new series of struggles. The notion is daunting, without a shred of doubt, and has come to the fore owing to a recently published study of an international energy expert visiting Adelaide.
Well, he is none other than Professor Paul Stevens, Senior Research Fellow (Energy) at Chatham House (The Royal Institute of International Affairs) in London. As per his prudence, Australia will have to contend with the forecast oil price of around US$200 a barrel since overseas economies recover from the Global Financial Crisis (GFC). What’s more, as per him, a considerable section of the hike blame can be placed at the feet of national and international oil companies, especially their inadequate investment in key sectors like hydrocarbon exploration, development and infrastructure over many years.
There were enough deliberations regarding the eminent professor’s visit, being sponsored by the energy education and sector commentator specialist, the University College London’s newly established Australian campus in Adelaide. He said, as well, the US$200 per barrel horizon could be reached within five to 10 years “but more likely nearer five”.
What has led to this development then? As per him, “The reasons for such a price curveball rest partly in the possible emergence of tightness between spare capacity to produce crude and stronger demand as the Australian and other modern economies recover from the global recession.” “This increasing supply-demand dynamic will be further frustrated by the wrong and illogical guessing by “Paper Barrel Oil Markets “ - the money managers such as those in charge of super funds - who invest in oil futures but who have no real grasp of the factors governing oil price and supply.”
“Yet their bad decisions have an undue influence on price settings in the “Wet Barrel Market” - those oil markets that actually deal in real barrels of oil.”
“Combined with the difficulties of OPEC producers in controlling output - and it was as recent as 2004 that any excess oil capacity disappeared globally - this could force prices above the 2008 records of around US$140 a barrel and well towards US$200.”
