Jeff Rubin @ CIBC Projects Oil At $200/Barrel Within Five Years - Globe & Mail

[hatrack]

OTTAWA — Crude oil prices will soar to more than $200 (U.S.) per barrel over the next five year – driving Canadian pump prices to $2.25 a litre and forcing a fundamental transformation in the North American economy, says Jeff Rubin, chief economist with CIBC World Markets Inc.

In a new report, Mr. Rubin forecast a continued run-up in crude prices, despite a slowing world economy and slumping petroleum demand in United States, the world's leading oil consumer.

He said he expects crude prices – now trading at above $116 (U.S.) a barrel - to average $150 by 2010, and more than $200 by 2012. That would translate into pump prices of $7 (U.S.) per gallon in the United States, and $2.25 per litre in Canada, double the current levels.

“Whether we are already at the peak of world oil production remains to be seen, but it increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity,” the economist said.

EDIT

http://www.theglobeandmail.com/servlet/story/RTGAM.20080424.woilRubin0424/BNStory/energy/home

[virtualobserver]

1. probably more like five months

[phantom power]

2. My money is on $150 by the end of this year, and $200 by 2010.

[GliderGuider]

3. I'd agree with that projection.

And $300/bbl within 4 years.

[phantom power]

4. Any thoughts on the "ultimate" price per barrel?

As the ER doctors say, nobody bleeds forever.

[GliderGuider]

6. That depends more on the value of money than the value of oil

I wouldn't be surprised to see a peak price north of $1000, though.

[Strelnikov_]

12. So $7/gal. by 2010

Wonder how all those 'Prius does not pay off' calculations look now.

On edit: Although, for myself, my main purpose for getting a high mpg car 3 years ago was to make provisions for the inevitable shortages/rationing. That 10 gal./mo. ration goes a lot farther at 45 mpg vs. 18 mpg.


At 6,000 mi./yr. 28 mpg ~ 214.3 gal. 45 mpg ~ 133.3 gal.

At $7/gal., $567/yr. fuel savings, or pay off of the $2,500 hybrid premium in a little over 4 years, well less than the useful life of the car (12+ years).

[phantom power]

13. I have never felt that I understood the relation between oil and gas cost.

Aside from that the correlation is positive, and we can expect the price of both to rise from here on out.

[Strelnikov_]

14. Found a source at EIA one time, but it no longer seems to correlate

I think it came to feedstock (crude) cost being 55%+/- of UNL cost at the pump.

So at $120/bbl / 42 gal/bbl x 1/0.55 = $5.19 gal.


One could probably establish a reasonable relationship over the long run, but on a spot basis the price of finished go-juice is subject to a lot of market forces beyond the feedstock cost.

In the end, it is like heroin to an addict, so it is what it is.

[GliderGuider]

15. Your math is off.

$120/bbl / 42 gal/bbl x 0.55 = $1.57 gal. It still doesn't correlate, though. One reason is that the 0.55 factor is just the amount of gasoline you get out of a barrel. Used this way it ignores the value of the other fractions like diesel, as well.

Here's my explanation.

1 barrel of oil turns into about 36 gallons of diesel&gasoline. So the raw average cost of the refined product is 120/36 = $3.33/gal. Add on the refining cost, distribution cost, markup and taxes and you're around $4.00. Now remember, this is the average cost of the diesel and gasoline made from that barrel, so the diesel will be higher and the gasoline will be lower.

Considering that the oil flowing though the refineries today was purchased at a lower price a while ago, the price will fall below $4.00. Say the oil being used cost $105. That gives a raw average cost of $2.92 per gallon. Add the overhead and taxes, and you're at about $3.50 - say $3.25 for gasoline and $3.75 for diesel. Make sense?

[Strelnikov_]

16. What I cited

http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html

Correction: "I think it came to feedstock (crude) cost correlating to 55%+/- of UNL cost at the pump."

[Purveyor]

5. That price is a guarantee the minute we start sending missiles into Iran. eom

[hunter]

7. I doubt it.

It's much harder to take oil than it used to be. The extraction and transport technology is fragile, and since our military uses huge amounts of oil, it's also self-defeating.

More likely we will be trying to win Iran's favor with the insane tactics of a demented stalker, but it's Russia and China and Europe that'll be bringing Iran flowers, taking them out to dinner, and telling us to get the hell out of there.

We're not a superpower, no matter how much we pretend to be one.

[Javaman]

8. boy, isn't he optimistic?

I say 200 by the middle of next year if not by x-mas.

[madinmaryland]

9. OTOH, as the price rises, and will push down demand,

which will at least modereate the price increases or even cause slight drops. It will hit a point that will cause this. I'm assuming in the next couple of years, probably hitting 140-150/bbl.

[truebrit71]

10. We will hit $150 in the next 3-4 months...$175+ by year end...

...$200/barrel is coming next year.

[OKthatsIT]

11. I agree with you...they're on a roll

It's also part of the depopulation program. Raising food prices to disaster levels.

Global warming scare AND high fuel prices have forced American farmers to grow ethanol corn, instead of food. We have anough food for everyone, but the BANKS ->UN/WTO/IMF has designed things to collapse worldwide.