The head of OPEC’s research division is quoted as saying that a $60-$65 price per barrel of oil is fair: “A price of $60 to $65 is appropriate for consumers and producers, because it boosts means of investment in the oil industry in light of growing demand for oil in the coming years.”
Interesting that he implies that the oil industry needs that price level to maintain production. At the end of 2004, the OPEC target price band was $22-$28. I wonder where producers found money for investment back them? At any rate, the desired oil price has doubled in less than three years. Call it inflation.
If these analysts are correct, $60-$65 will soon seem cheap:
The $100-a-barrel oil that Goldman Sachs Group Inc. said would prevail by 2009 may be only a few months away.
Jeffrey Currie, a London-based commodity analyst at the world’s biggest securities firm, says $95 crude is likely this year unless OPEC unexpectedly increases production, and declining inventories are raising the chances for $100 oil. Jeff Rubin at CIBC World Markets predicts $100 a barrel as soon as next year.
It appears we are going to have an inappropriate problem on our hands.