Volatility of oil prices in spotlight
Global oil prices are likely to stay between US$70 to US$80 at the beginning of next year, petroleum scientist and advisor to Minister Felix Perera Dr Amara Ranaweera said.
Opec’s limits on daily oil production and lower dollar values will help keep prices at these levels, he said in a speech at the Expatriate Forum in Colombo.
A sudden change in oil prices a few months ago was attributed to higher demand for oil in China.
About one million automobiles are sold per month in China and higher oil consumption by vehicles has a major impact in global energy markets.
Dr Ranaweera also said oil prices are likely to hit $83 per barrel in 2010 and might presumably stay flat throughout the next year. He, however, predicted higher prices for 2011.
Dr Ranaweera said prices might rise to even $150 per barrel in 2015 as global economic conditions are expected to improve next year.
Opec countries are likely to control prices despite an expected increase in their production capacity.
He pointed out that there was a common belief that the current model for world’s energy policy was not sustainable.
The main reasons were due to increasing amount of greenhouse gas emissions and their negative impact on climate, as well as concerns regarding the security of energy supplies at affordable prices in the context of increasing needs of energy, notably in developing countries which were enjoying rapid economic growth.
Dr Ranaweera, citing data from the International Energy Agency, said governments around the globe would strive to maintain their current policies as the global primary energy demand is projected to grow by 55 per cent between 2005 and 2030 at an average rate of 1.8 per cent per year.
Fossil fuel remains the dominant source of primary energy, accounting for 84 per cent of the overall increase in demand. Oil remained the single largest fuel though its share in global demand in absolute terms, jumping up by 73 per cent between 2005 and 2030, and pushing its share of total energy demand up from 25 per cent to 28 per cent.
He said that coal utilization had risen in China and India. The share of natural gas also rose more modestly, from 21 per cent to 22 per cent. Some 22 trillion dollars of investment in supply infrastructure was needed to meet projected global demand, Dr Ranaweera pointed out. Mobilising all these investments would be a challenging task, he said.
Dr Ranaweera said that developing countries whose economies and populations were growing fast and contributing 74 per cent of the increase in global primary energy use in this scenario. China and India alone accounted for 45 per cent of this increase. Opec countries had accounted for one-fifth and the transition economies the remaining six per cent.
In aggregate, developing countries would make up 47 per cent of the gobal energy market in 2015 and more than half in 2030, compared with only 41 per cent today.