Future oil prices will determine the future path of transportation, and a whole lot more. Unless there is some radical huge new discovery of petroleum reserves, oil prices are most likely headed up the mountain. Note we said "most likely." As you can see below, recent forecasts are oftern in error.
The future is uncertain, and future oil prices are uncertain. However, considering the 3 factors of declining reserves, increasing population and development, and political instability, we think oil prices are headed up. The US EIA (Energy Information Administration) agrees.
Future Forecasts
Forecasting future energy prices is a complex and dynamic exercise. There are many factors to consider, and those factors are constantly changing.
Declining Reserves: Depending on what you read, reserves are practically unlimited, or on the verge of running out. The truth is way more complicated, and falls somewhere inbetween the extremes of feast and famine.
As we cover in our Peak Oil Facts page, there is a limited amount of oil in the ground. Those reserves are declining and their use is increasing. As a result more marginal oil like tar and shale oil deposits are being exploited.
The situation today has companies producing lower grades of oil and oil liquids and listing them under the banner of crude oil. In fact, the higher quality crude oils are steadily declining. It is going to cost more and more to produce the same barrel of oil as time goes on.
Development: Due to the recent worldwide recession, the fast growth in the last decades has slowed. As it increases, expect thin surplus margins to be sucked up. As large new Asian economies grow even more they will need all the oil they can get which will affect oil politics.
Oil Politics: The main supplier of world oil in the Middle East region. By way of example, China gets a lot of crude from Iran. Iran is not well favored by the west, despite huge crude reserves. Europe will likely continue to export oil from the region as well.
Any new instabilities in mid east area governments and coalitions will likely lead to uncertainty in the market, which will lead to higher oil prices.
There are any number of estimates regarding world oil reserves, growth projections, and politics. One thing that is certain is continued oil use at around 90 million barrels of crude and equivalent liquids per day, whth that consumption very likely increasing. Getting this crude to market is only likely to become more expensive over time.
The Forecasts
There are a few orginizations and individuals dedicated to oil price predictions. We have summarized their forecasts for the next six months.
