High oil prices 'here to stay' says EU energy commissioner

High oil prices are here to stay, the European Union's energy commissioner has warned. Guenther Oettinger said on Thursday that the lower prices of the past three years had been the result of the financial crisis and recession, and that companies should plan for higher prices.

"The oil price will not go back to $60 [a barrel]," as it did in 2008, Oettinger said. "As a normal perspective, you have to accept the oil price will be near to $90 a barrel or some more."

But he suggested that the current price of around $100 a barrel could be problematic. "No one, neither oil producers nor consumers, have an interest in a long-term price higher than $95," he told reporters in London. "All stakeholders have an interest in stabilising the oil price."

Current oil prices of around $100 a barrel could hurt the European economy if they persist for a long period, he said, adding that companies should adjust their planning accordingly, and try to become more energy efficient or turn to other sources of fuel...

my commentary:

So, what Oettinger is basically saying is that oil will not ever be lower than $90 per barrel...that oil prices will be higher in the future...but that oil prices should not exceed $95 per barrel in the long-term. What Oettinger's claim then means for Europe is that Europe - and therefore the rest of the world - does not have much wiggle room for oil prices. Oil prices will be $90+ per barrel, but can't be above $95 for the long-term. Peak production of conventional oil has likely occurred, oil prices are only going to increase in the near- to long-term. It is very unlikely that global oil prices will ever return to below $95 per barrel for any extended period of time. With oil prices currently above $100 per barrel (Brent Oil Price) for the past couple weeks, it would seem that Europe's economy is in for more and bigger problems soon...further recession, no recovery, and an eventual collapse. All it would take is one big oil price shock like what happened in the Summer of 2008 to derail Europe and the rest of the world....Whatever happens to Europe's economies affects all other economies...and vice versa.

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    Oil Prices

    In mid-2004, oil prices increased from the range of $20 - $40 per barrel to $60 - $80+ per barrel. The current global economic crisis was triggered in part by the oil price shock starting in 2007 and culminating in the summer of 2008. When prices increased from around $80 per barrel to $141 per barrel by the summer of 2008. The global economy crashed within months in the autumn of 2008. This economic crisis will likely accelerate and become more volatile once oil prices exceed around $85 per barrel for an extended time. Demand destruction for oil may be somewhere above $80 per barrel and below $141 per barrel. Economic recovery (i.e., business as usual) will likely exacerbate the global recession by driving up oil prices.


    Tariel Mórrígan earned his B.A. in Physics from the University of California at Santa Barbara. He received his Master in Environmental Science and Management (MESM) from the Donald Bren School of Environmental Science and Management at UC Santa Barbara, where he specialized in climate change, conservation, and political economics. Mórrígan is currently the principal research associate of Global Climate Change, Human Security & Democracy (GCCHSD) and a member of its Global Academic Board. His most recent publication is Peak Energy, Climate Change, and the Collapse of Global Civilization: The Current Peak Oil Crisis.


    February 2011
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    International Energy Agency
    Peak Oil
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