On the supply side, producers have cancelled over $150B in investments. In addition, OPEC has pretty much abandoned its quotas (that restrict oil output. On the demand side, consumption is up (as expected). However, oil consumed per unit of economic output is declining.
With prices hovering in the upper 40's, lower 50's, where do you expect them to go by 2020? (the article mentions two estimates, $50-60 and $80)
4 comments:
I would take a guess that it would be around the 70's. However if the Keystone pipeline goes through, prices could potentially be much less so that those in Canada can be competitive in the States. Another reasons prices could possible be lower is all of the changing technology in the automobile industry, vehicles are now being run on electricity, and with how rapidly this technology is advancing, oil prices might have to keep dropping in order to sustain their market share in powering vehicles.
I agree with Rachel in that I would guess that oil prices will be hovering around $70.00 due to the shortage of abundant oil in the future. I also think that the implementation of new technology in the automobile industry has significantly hurt the oil market and to be able to compete in today's market, and so, prices have had to be lowered to compensate for that. Therefore, with continued innovation in the automobile industry, it is very possible that the price of oil will have to remain low to be able to survive in the market. If the price is too high, then consumers will change to a different fuel. So, oil prices could remain on the lower end of $50.00 in the year 2020.
I also think that the reverse could also be possible and the price of oil could augment to around $70.00, like the article predicts by the year 2020. This could be due to the lack of supply. Right now, thousands of tons of oil are being pumped out of the ground every minute. If this continues to be the case, there will come a time when the amount of oil left in the Earth is minimal. Therefore, according to supply and demand, a lowered supply of product will constitute a higher price.
I expect oil prices to be around $50-60 it should stay around the same because the falling oil price is boosting consumption to a degree. The price of gas is still dropping and so there are more people out driving and buying gas, the demand of gas is high and will probably remain high.
While on the Supply side, Saudi Arabia is controlling the price of oil therefore all the other companies have to lower their costs. It's a monopoly.
There are many factors that affect the price of oil per barrel, and with a decline in monopolistic tendencies, the prices have been decreasing. This points at the increase in the supply of oil, which is lowering price. Also, as mentioned, technology will play a large role on the price of oil. Many energy alternatives to oil have been proposed, and if those end up being pragmatic, we could see a huge change in prices. it will be interesting to see where prices end up.
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