New reports see long-term high oil price - extended


The International Energy Agency has issued a report that says oil demand will accelerate into 2008 while supply will not. Demand in China and other emerging markets will put a great deal of pressure on pricing. Oil prices topped $74 a barrel in New York Monday morning and more than $80 for Brent crude on concerns over North Sea production.

The agency indicated that if OPEC does not increase output near the end of 2007, oil supply could become extremely tight. At almost the same time, the US oil industry is issuing a report entitled “Facing the Hard Truths About Energy.” This report also points to demand in developing countries as the primary driver of rising oil prices. Figures collected for the document also suggest that need for new supply could rise almost 50% by 2030. Although the case could be made that higher oil prices will mitigate demand, that would appear to be unlikely. Large markets, especially China, cannot keep GDP rising at recent rates without access to energy, and it may be that the government is willing to provide capital to make certain that there is no drop in oil supply for the country.

Consumers in the US are not likely to be as fortunate. Businesses and auto owners would feel the full force of rising oil prices, and the problem could cause long term problems without easy solution for large industries from airlines to automotive, shipping. It is an ugly picture of the future that appears to get more likely with each passing year.

Light, sweet crude for August delivery rose 20 cents to $74.13 a barrel in mid-morning trading on the New York Mercantile Exchange. Brent crude, the benchmark for two-thirds of global supplies, reached $80.16, up 51 cents. Brent's more-active September contract was at $77.38 a barrel, up 28 cents. In New York, August natural gas lost 17.7 cents to $6.485 per 1,000 cubic feet. Heating oil edged up 0.61 cent to $2.1167 a gallon. Reformulated-gasoline blendstock for oxygen blending rose 0.082 cent to $2.233 a gallon.
AAA said the average US retail regular unleaded gasoline price was $3.05 a gallon, up 0.6 cents from Sunday's $3.054 a gallon. (,



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