Oil to reach $100 a barrel ‘next year’

OIL is set to reach $100 a barrel by the end of next year, with production set to peak as early as 2015, a conference on the subject was told yesterday.

Chief economist at CIBC World Markets Jeff Rubin made the comments at the Association for the Study of Peak Oil and Gas conference in Cork yesterday, where world renowned experts in oil supply and demand met to discuss the future of the commodity.

Mr Rubin predicts that the price of oil will rocket in the next 12 months as consumption increases and supply diminishes.

“Triple digit prices, around $100 a barrel by the end of next year, will further depress demand for oil and the higher prices go, the sooner we will wean ourselves off hydrocarbons, which is where we need to go,” said Mr Rubin.

The conference was also told by former US Energy Secretary Dr James R Schlesinger that the world would need to discover another four or five countries with oil levels similar to Saudi Arabia to sustain oil production.

The conference heard that the peak production rate for oil will be reached when the industry reaches 100 million barrels per day, and it will then spiral into decline.

Production is running at 86 million barrels per day.

Dr Schlesinger also told the conference that predictions for the peak of oil production have been estimated for 2022-23, a projection which he says is optimistic, “unless the public engage” he said, “we will never be able to grapple the transition from oil dependency”.

“We have the economic incentive as the price of oil reaches $80 a barrel.

“Necessity is the mother of invention and we need new, cost-effective technology to make the transition from oil dependence.”

“To solve global warming we need the participation of the major industrialising countries,” he said, adding that “it would take a lot of windmills in Denmark to offset what the Chinese are doing”.

Delegates also heard that increased reserves from existing oil fields are proving much more effective than adding new reserves.

Ray Leonard of Kuwait Energy told the conference that since 1981 there have been 240 billion barrels from exploration reserves with double that figure, 490 billion barrels, coming from existing proven reserves during the same period.