ALAN PEAT THE OIL price had just pushed through the US$70 per barrel level at the time of writing – with some forecasts suggesting there seemed little reason for it not to keep rising to the US$100/bl mark. The US$70 level was breached as Hurricane Katrina forced Gulf oil installations to shut down – a move which affected some 25% of US oil production. But, when the Bush government decided to lend refiners oil from its strategic stockpile, the price eased back below US$70 again. But is this just a temporary downward fluctuation? Yes, say the US$100 pundits. No say others, including Steve Forbes, editor-in-chief of Forbes business magazine, who said that the higher the oil price rose, the harder it would eventually crash. “So I’ll make a bold prediction,” he added. “In 12 months, you’re going to see oil down to US$35-US$40 a barrel.” Making no such prediction is Colin McClelland, executive To page 12 From page 1 director of the SA Petroleum Industry Association (Sapia). The first implication of this recent upward spiral, he said, is that “prices have gone, and will continue to go up”. The price, he added, has had only a limited effect on demand in the last two years. “But more worrying over the medium-term is the market not having enough oil to meet demand. “The price has a message. We are operating in market circumstances, and we should bring usage down, and supply up.” The most recent searches for new oil reserves have mostly come up dry, and there is a growing feeling amongst oil experts that the market may have to exist on the already proven reserves. This means, said Colin Campbell of the Association for the Study of Peak Oil and Gas (Aspo), that present production of oil can be kept up for 40-years. We are reaching something of a turning point in history, McClelland added. And the result for the transport industry around the globe could be a major impact. “It could,” said McClelland, “bring rail transport back into preference, for example.” But whatever, according to most of the commentators, cheap oil is finished. Just how high the price will go is more the question of the moment.
