CIBC: Gas prices will go to $4.50
Long-term oil supply could impact U.S. gas prices, analysts say
By Dave Hannon -- Purchasing, 1/11/2008 12:20:00 PM
A new report from CIBC World Markets says retail gasoline prices in the U.S. could go to $4.50/gallon and oil prices at $150/barrell in four years as crude oil supply to the U.S. tightens.
Jeff Rubin, chief strategist and chief economist at CIBC World Markets, says in a recent report that oil supply forecasts from the U.S. Energy Department and the and the International Energy Agency overlook two major factors: Depletion rates at existing oil fields is now higher than 4% and the huge project delays and cost overruns with most new oilfield production projects.
“Even holding the current depletion rate constant over the next five years, we must produce nearly 20 million barrels per day of new oil just to offset what will be lost through depletion during this period," Rubin says in the report.
In another report out this week, Matt Simmons, founder of Houston-based analyst firm Simmons and Co, says the $100/barrell price tag currently seen will seem “cheap” in the not too distant future. In a Reuters report, Simmons dismissed the U.S. Energy Information Administration's view that crude oil prices could drop below $90 a barrel this year, calling it “preposterous" because production from many U.S. deepwater fields was "coming down like a rock."
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