The oil price will shoot back through $100 a barrel as soon as economic conditions return to normal, and will break through $200 threshold by 2030, say officials at the International Energy Agency.
“While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over,” says the IEA in the World Energy Outlook report, obtained by the Financial Times ahead of its release next week.
Oil prices have endured a rollercoaster ride this year during some of the most volatile trading on record. Crude climbed relentlessly from $96 a barrel in January to a record $147 by mid-July, spelling misery for drivers.
Households also suffered as wholesale gas and electricity prices – which are linked to those of oil – soared to record levels and were swiftly passed on in higher fuel bills. Oil’s rise was also a main driver for soaring inflation in the UK, which doubled in six months to nearly 5%. But the intensification of the financial crisis this autumn has depressed the oil price to $60-$70 a barrel…
But the IEA cautions the low oil price will be short-lived. It expects oil to trade at an average of more than $100 a barrel between now and 2015 as supply shortages become a reality.
I can see the history-challenged reacting in predictable fashion to short-term phenomena. American automobile manufacturers will crank up for big V-8’s and barely green-washed SUV’s. And the dumbest semi-employed drug dealers in town will buy ’em.