Tuesday, February 5, 2008

$15 a Gallon?

EnergyTechStocks,com is this week posting a 4 part story this week centering around the oil supply forecasts of Charles T. Maxwell, a senior energy analyst at Weeden & Co. Maxwell is considered to be the “dean of energy analysts,” thus his forecasts should be considered carefully. In part I of of the story on Maxwell, he observes that the world oil supply is now growing at about 1.2% a year, but demand is growing at 1.5% per year. Until 2010, the supply shortfall can be meet by a drawdown in world oil inventories, but after that an unmitigated crisis will occur. Maxwell estimates that by 2015 the peak production of oil will be reached. After that oil production will begin to decline.

In Part 2 of the story, Maxwell foresees oil prices reaching $180 a barrel in 2015 and $300 a barrel in 2020. He foresees gas prices reaching as high as $12 to $15 a gallon.

The really scary part is that this is not Maxwell's first prognoses. In 2004 Maxwell forecast:
"For 2004 to 2010, the [oil] price range could be $30 to $60 [per barrel], with an average of $40. For 2011 to 2020, the range could be $50 to $100, with an average price of $70 per barrel."

Considering that we are already past Maxwell's 2004 projected oil price peak for 2011 to 2020, I wonder how far his new price forecast will be off?

Update: There is a discussion on the Maxwell predictions on the Energy Blog.  Some of the commenters seem bewildered, but that is no big surprise.   Had they been Oil Drum regulars, they would have broken out the champaign to celebrate.

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