Educated Guesses | Green Energy News

June 12, 2005 – Vol.10 No.12

EDUCATED GUESSES.

What can those in the know tell us about the future of prices for oil and natural gas?

A survey of energy executives and institutional investors attending RBC Capital Market’s 2005 North American Energy and Power Conference revealed this:

--- Two-thirds surveyed expect oil prices to fall back to $35 per barrel in the next five years.

--- But, one-third thought oil would skyrocket to $100 in the same time period.

--- All seemed to agree that oil would reach $62 per barrel in 2005, but retreat back to $53 by year’s end.

--- This year the average price of gasoline (all blends considered, all over the U.S.) would reach $2.60 per gallon.

While prices at the pump catch the eye of consumers - and make headline news - monthly gas and electric bills are the ones that should make heads turn.

The same executives thought natural gas would sell for $7.70 per million cubic feet (Mcf) by the end of 2005, up from last winter’s price of $6.24 per Mcf - an increase nearing 25 percent this year over last.

Hikes in natural gas prices can be a double whammy for many consumers. Homeowners who heat and cook with natural gas are directly affected by skyrocketing natural gas prices. But, homeowners who heat and cook with natural gas AND buy electricity generated by natural gas-fueled power plants will see the price of their electricity climb too.

(There may actually be multiple whammies hitting consumers. Businesses need the same heat and power as consumers. Higher natural gas prices for them may mean higher mark-ups on items in stores. Natural gas is also a common component of many industrial processes. Expect higher prices from producers, too.)

It should be noted that the move to build natural gas fueled power plants in the effort to help clean the air has also put a strain on domestic natural gas supplies and helped the growth of natural gas imports (in liquefied form).

Nearly half of respondents thought an economic slowdown would take place because of high energy costs.