CIBC economist sees $100 oil in 2008
Oil prices could top $100 a barrel by the end of next year and remain above that point for years to come, the chief economist of Canadian investment bank CIBC World Markets said Oct. 2.
Jeffrey Rubin said rising demand within oil-rich nations, such as Mexico, Venezuela and Saudi Arabia, will put pressure on global oil prices in the coming years. That, combined with the increased cost of pulling petroleum from reserves deep under the sea or wringing it out of oil sands in Canada, will keep oil prices high even if demand in the Western world remains constant.
“We’re in a world of triple-digit oil prices for the foreseeable future,” Rubin said during a speech to investors.
Rubin said oil exports from OPEC countries, Russia and Mexico will likely decline by about 3 million barrels per day over the next five years. The biggest drop, he expects, will come from Mexico, a key U.S. supplier.
“Of the 3 million barrels, we’re probably talking about 2 million barrels are going to come directly out of U.S. supplies,” he said.
Rubin expects Mexican oil imports to the United State will dry up by about 2012. Some of that decline will be made up by imports from other parts of the world, but the lions’ share — nearly a third of all U.S. oil imports — will come from Canadian oil sands, he predicted.
But replacing relatively easy-to-refine liquid crude with petroleum from oil sands is certain to increase costs, he said. By the end of the decade, Canadian oil sands are likely to represent the world’s largest source of new oil supplies, he said.
“We’re basically replacing low-cost oil with high-cost oil,” he said.
Looking ahead, Rubin expects crude oil prices to average as much as $90 a barrel next year, rising to around $100 by the end of 2008. That would represent an increase of nearly 25 percent over Oct. 1’s settlement price of $80.05 a barrel for light, sweet crude on the New York Mercantile Exchange.
“Triple-digit prices is not a spike,” he said. “Triple-digit oil prices is what is going to be required to maintain, let alone grow, world oil supplies.”
—The Associated Press?
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