Word: oil
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...Oil prices hit a record high of $97 a barrel on Tuesday, but the next generation of consumers could look back on that price with envy. The dire predictions of a key report on international oil supplies released Wednesday suggest that oil prices could move irreversibly over the $100-a-barrel threshold in the not too distant future, as the global economy faces a serious energy shortage...
...analysts, as prices in recent months have galloped ahead of their worst predictions. Says Oswald Clint, a London-based analyst for Sanford Bernstein: "A year ago, our predictions for November 2007 were about $50 to $62 dollars a barrel" - at least $35 short of Tuesday's price. The oil-research firm predicts that expanded production will bring oil prices back to $70 a barrel by 2010. But to Birol, that sounds optimistic...
...news is not only environmental. As the world scrambles to boost energy supplies over the next two decades, an ever-greater percentage of its supplies of oil and gas will come from a dwindling number of countries, largely arrayed around the Persian Gulf, as the massive North Sea and Gulf of Mexico deposits are finally exhausted. That will leave the industrialized countries far more dependent on the volatile Middle East in 2030 than they are today, and the likes of Saudi Arabia, Kuwait and Iran will dictate terms to companies like ExxonMobil and Chevron, which increasingly operate as contractors...
...Most of the oil companies are going to be in an identity crisis, and need to redefine their business strategies," Birol says. The soul-searching may have already begun, as oil executives begin sounding the alarm about the supply crunch that lies ahead. Last week, Christophe de Margerie, CEO of the French oil giant Total, told the Financial Times that even the target of 100 million barrels a day is an optimistic one for an industry that currently produces 85 million - far short of the 116 million barrels a day the IEA projects will be needed by 2030 to fuel...
...sharp departure from the usually reassuring comments offered by Big Oil executives, De Margerie said companies and governments now realize that they have overestimated the amount of oil that could be extracted from places difficult to reach and costly to explore. "It is not my view, it is the industry view," he said. In other words, the message is that the current sky-high oil prices may not be a temporary burden on the world economy...