Gas, oil prices to double by 2012, CIBC economist predicts
Alia McMullen, Financial Post
Published: Thursday, April 24, 2008
CIBC World Markets' Jeff Rubin stands by a screen showing his predictions for gas prices to double by 2012.
TORONTO -- Forget the fuss about US$100 oil; the liquid gold will be trading twice as high within the next few years as production stalls, Canada's most aggressive oil forecaster says.
Jeff Rubin, chief economist at CIBC World Markets says oil production will barely grow over the next five years, edging up barely more than 1-million barrels a day over the next three years, and only half a million barrels a day between 2010 and 2012.
The increases will fall far short of demand, forcing the price of crude oil to surge to US$150 a barrel by 2010, and over US$200 a barrel by 2012. The updated forecast is aggressively higher than Mr. Rubin's previous forecast of US$150 a barrel by 2010 and follows the recent record-breaking run in light crude prices, which fell just US10-cents short of US$120 a barrel on Tuesday.
"Despite the recent record jump in oil prices, the outlook suggests that oil prices will continue to rise steadily over the next five years, almost doubling from current levels," Mr. Rubin said in his latest oil outlook report.
"Whether in fact, these levels will define ultimate production peaks or not, cannot of course be known at this time, but whether they do or do not define such peaks, they indicate at a minimum that world oil markets will remain as tight over the next five years as they have over the last two years."
He said growing demand for fuel from developing countries such as India would drive a surge in car ownership, and hence intensify demand for fuel. However, surging prices would cause demand to ease in the United States, with gasoline prices, already averaging US$3.60 a gallon, climbing to well over US$4 a gallon this summer and as much as US$7 a gallon by 2012.
Furthermore, he said a rise in natural gas liquids found in current oil production was a sign of depleting oil supply as falling well pressure releases natural gas trapped in mature oil fields.
The forecasts goes against many strategists that expect slower global and U.S. economic growth to drag oil prices back below US$100 a barrel this year
Alia McMullen, Financial Post
Published: Thursday, April 24, 2008
CIBC World Markets' Jeff Rubin stands by a screen showing his predictions for gas prices to double by 2012.
TORONTO -- Forget the fuss about US$100 oil; the liquid gold will be trading twice as high within the next few years as production stalls, Canada's most aggressive oil forecaster says.
Jeff Rubin, chief economist at CIBC World Markets says oil production will barely grow over the next five years, edging up barely more than 1-million barrels a day over the next three years, and only half a million barrels a day between 2010 and 2012.
The increases will fall far short of demand, forcing the price of crude oil to surge to US$150 a barrel by 2010, and over US$200 a barrel by 2012. The updated forecast is aggressively higher than Mr. Rubin's previous forecast of US$150 a barrel by 2010 and follows the recent record-breaking run in light crude prices, which fell just US10-cents short of US$120 a barrel on Tuesday.
"Despite the recent record jump in oil prices, the outlook suggests that oil prices will continue to rise steadily over the next five years, almost doubling from current levels," Mr. Rubin said in his latest oil outlook report.
"Whether in fact, these levels will define ultimate production peaks or not, cannot of course be known at this time, but whether they do or do not define such peaks, they indicate at a minimum that world oil markets will remain as tight over the next five years as they have over the last two years."
He said growing demand for fuel from developing countries such as India would drive a surge in car ownership, and hence intensify demand for fuel. However, surging prices would cause demand to ease in the United States, with gasoline prices, already averaging US$3.60 a gallon, climbing to well over US$4 a gallon this summer and as much as US$7 a gallon by 2012.
Furthermore, he said a rise in natural gas liquids found in current oil production was a sign of depleting oil supply as falling well pressure releases natural gas trapped in mature oil fields.
The forecasts goes against many strategists that expect slower global and U.S. economic growth to drag oil prices back below US$100 a barrel this year
