High-Priced Oil -- Again | Green Energy News

March 6, 2005 – Vol.9 No.50

HIGH - PRICED OIL -- AGAIN.

Last year at this time the International Energy Agency (IEA) predicted that gasoline prices would reach record highs worldwide.

Gasoline prices skyrocketed in the early spring of 2004, but were tempered by late summer and into the fall electoral season. (Lucky for George Bush.)

This year the IEA is predicting that oil demand will soar.

(Read that as gasoline prices at the pump climbing once again, possibly eclipsing last years figures. Maybe this year gas in the U.S. may approach that otherworldly $3 per gallon in some markets.)

The reason for the increased demand is, again, the economic growth of China, as well as a growing U.S. economy and cold weather. In the U.S., for instance, the heavily populated and heavily-reliant-on-oil-for-heating Northeast has had relentless cold weather and all-too-frequent snowfall. It’s been chilly in Europe too.

The IEA said that oil demand would rise by 1.8 million barrels per day to 84.3 million. Oil demand from OPEC countries would likely be 28.6 million barrels per day, a half million more than in 2004.

Graphs in the IEA website show oil demand reaching more than 86 million barrels per day by the end of 2005. The graphs aren’t exact, of course.

Is the world running out of oil? No one really knows for sure. No one in the industry would ever say. But right now supply is just meeting demand. Unless a huge new find is discovered (and recovered) or a few major economies collapse it will be a sellers market for oil for some time to come.

In the U.S. high gas prices are apparently having an effect on light-truck and SUV sales. According to various news stories those vehicles are piling up on dealership lots and manufacturers are cutting production.

Visit the IEA at http://www.iea.org/ .