AOL Money & Finance
Forget about running out of oil. A Deutsche Bank analyst wrote: "The world will never run out of oil."
You are probably wondering why the analyst was able to make this prediction. The foremost reason is that we are becoming more efficient. This should keep prices in check at about $65.00 per barrel, down from this year's $80.00 per barrel.
The next question is how do you know that the world is becoming more efficient. The Energy Information Administration uses a metric called: "energy intensity." Energy intensity measures the amount of oil used in relation to the size of the economy.
US energy intensity dropped 2% a year, every year since the early 1980's. Deutsche Bank expects it to drop to 3% as people buy more fuel efficient cars. This, coupled with only 2.5% growth, is keeping demand low.
Actually, the US demand may have already peaked. US oil consumption peaked at 21 million barrels per day in 2005. Since then it dropped to 19 million bpd. The last time we saw such a big drop was 1979 -- 1982. The US will not consume 21 million bpd until 2029.
As for the Chinese economy, Addison Armstrong of Tradition Energy says that Chinese growth will slow in coming years, reducing oil demand. Add to this electric cars in China and oil demand will slack off instead of rising.
Last year, spare oil supplies hit a low of 1 million bpd. Now that has jumped to 4 million bpd and will probably rise to 4.5 million bpd next year.
Do you expect gas prices to fall next year?
12-03-2009 @ 5:18PM
Oil will never run out. It may cost $10K a barrel but it will always be available. The western world depends on CHEAP AND PLENTIFUL energy and without both of those the western way of life and it's people are doomed.
12-03-2009 @ 6:08PM
Of course the world will never run out of oil. At some point the price of oil will simply be so high that many other energy sources will be more economical. No one will ever seriously consider burning oil costing 10,000 in 2009 dollars: Even solar and wind energy can beat that price. http://jpetervanschaik.googlepages.com
12-03-2009 @ 7:32PM
This analysts doesn't understand the meaning of a finite resource, at least not in the real world sense. Simple as that.You can not somehow reach infinite supply from a finite quantity simply by introducing a variable called 'efficiency'. If you increase efficiency to infinity, maybe theoretically the limit goes to infinity but that's calculus fantasy, not the real world. So good luck with that prediction.
First time? A confirmation email will be sent to you after submitting.
Members enter your username and password.
Enter your AOL or AIM screenname and password.
Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.
When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.
To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.
Find out why more people track their portfolios on AOL Money & Finance then anywhere else.
More on AOL: Money, Investing, Bonds, Broker Center, Currency, ETF Center, Futures, International Markets, Mutual Fund Center, Stock Charts, Stock Quotes, Stock Screener, Portfolios, Personal Finance, Personal Loans, Finance Calculators, Money Basics, Retirement, Taxes, Market News, Small Business
All contents copyright © 2003-2009, Weblogs, Inc. All rights reserved
BloggingStocks is a member of the Weblogs, Inc. Network. Privacy Policy, Terms of Service, Notify AOL
Other Weblogs Inc. Network blogs you might be interested in:
Read Full Article »