Oil Price - Forecast by Prof. Owen

Seems highly optomistic to me...

Higher oil output to push down petrol price
By Matt Wade
November 19, 2005


The price of oil is likely to fall to about $US35 a barrel over the next few years and push petrol back down to about $1 a litre, an independent expert predicts.
An energy economist, Associate Professor Anthony Owen at the University of NSW, says the world has plenty of oil and it is only a matter of time before production and refinery capacity increase to meet growing global demand.
"There's stacks of oil available in the world," he said.
"Provided the investment is available, oil can be produced at a price that is certainly lower than it is at the moment."
Dr Owen made his predictions in a paper at the University of NSW Centre for Energy and Environmental Markets conference yesterday. He said extreme price fluctuations in the past and a lack of information about oil reserves had undermined investment in the oil production.
"Oil is a very volatile market and lots of people have had their fingers burnt and remember it."
Dr Owen said predictions that oil supplies were running out and would soon become prohibitively expensive - the so called "peak oil" argument - were scare tactics.
In addition to conventional sources, he said, there were considerable unconventional sources of oil, including oil sands and oil shales, which could be tapped in the future with new technologies.
The price of crude oil hit a record just above $US70 a barrel in late August and lifted petrol prices to $1.40 a litre. But the price has fallen, and reached a five-month low of $US56.33 a barrel on Thursday night.
The average price in Sydney yesterday was just under $1.20 a litre, according to the NRMA.
Bottlenecks throughout the "oil cycle" had contributed to higher prices recently, including limited petrol refinery capacity.
"Crude oil price increases of 2005 largely reflect the uncertain environment and expectations of future market tightness in production capacity," Dr Owen said.
But he believes oil prices will head down over the next three to five years as more supply capacity comes on line.
"I think you are going to see the oil price settle down in the mid-30s [$US] over the next couple of years," he said.
"That's the sort of price that will encourage investment in future production facilities."
If the price fell to $US35 a barrel, motorists could expect bowser prices to drop by about 20 cents a litre.
An unexpected downturn in the world economy would drive the price down even further. "A good recession usually brings petrol prices down," Dr Owen said.
However, alternative technologies would have to be adopted for environmental reasons in the longer-term, Dr Owen said. Global energy demand is expected to increase by 50 per cent by 2030, increasing emissions of CO 2 by 52 per cent.
"If oil is produced to meet demand over the next 25 to 30 years, then we are going to have dreadful environmental problems," he said.
Unless alternative technologies are adopted, a growing proportion of oil will be sourced in the Middle East, which may intensify energy-security problems.
Dr Owen said a stable oil price of around $US30-$35 a barrel would encourage investment in, and the use of, alternatives to conventional oil supplies.