The International Monetary Fund (IMF) has been warned by its internal research team that there could be a permanent doubling of oil prices in the coming decade with profound implications for global trade.
Undertaken amid mounting concerns about “peak oil”, the IMF study does not presume that there is a constraint on how much oil can be taken out of the ground. It prefers to believe that extraction rates will depend on the price that will be able to be charged for the final product.
Meanwhile, the Paris-based International Energy Agency, which advises industrialised nations, including the UK on energy policy, said crude prices would remain high in 2012, due to tensions between Iran and the west. “The path of market fundamentals for the rest of the year remains highly uncertain and geopolitical risks will likely continue to keep prices high,” the agency said.
The agency believes that a period of declining demand – triggered by the slowdown in the global economy – is now over and the upward trajectory resumed.
Titled "The Future of Oil: Geology versus Technology," the Fund attempted to find a way around the "geological" case, better known as "peak oil," which argues that the world has hit critical scarcity on recoverable oil deposits.
They conclude that that scenario is likely not far off the mark.
Using a model that assigns values to the historical ability of supply and demand forecasts to accurately predict prices, the authors find that indeed, there are likely to be only slight increases in production
Sources:
Democratic Underground
Business Insider
The Guardian
The Raw Story
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