August 26, 2008
At Platts Energy Podium, EIA Chief Says Oil ‘Could’ Fall Below $100
WASHINGTON, Aug. 26 /PRNewswire/ -- Crude oil prices "could" fall below $100 per barrel over the next 18 months on slowing worldwide demand and an increase in oil production, Energy Information Administration (EIA) chief Guy Caruso said Tuesday.
Caruso made the comment to reporters at the Platts Energy Podium in Washington.
"I think [prices] could fall below $100 a barrel on slowing global demand and rising production in the US, Brazil and Canada, and from OPEC states such as Saudi Arabia and Angola," Caruso said.
While Caruso said "most of the risk is on the upside," and that it was not the official EIA prediction, he added that a scenario of falling oil prices is "now closer to 50-50" if worldwide spare production capacity continues to increase from the current 1.5 million barrels per day (b/d) to 3-4 million b/d while global oil demand softens.
"That scenario is now more realistic than any time in the past five years," said Caruso, who will leave EIA in September.
A decline in oil prices also "opens up the possibility of conflict in OPEC" as the producers' group debates whether to trim output, Caruso said.
EIA earlier this month said it expected oil to remain at $120 to $130/b in 2008. Crude oil prices reached a record $147.27/b on July 11. Prices have fallen more than 20% since then on waning demand.
Caruso also reiterated that releasing oil from the Strategic Petroleum Reserve, or the home heating oil reserve, would have little effect on prices. "I think it would be more valuable to save it for real emergencies," he said.
House Speaker Nancy Pelosi and other Democrats, including Senator Barack Obama, the presumptive presidential nominee, have urged releasing about 70 million barrels of crude oil from the nation's emergency reserve, about 10% of the US supply, to cut gasoline prices.
Caruso said that even if oil prices continued to fall, it would be unlikely that many policies, such as the Renewable Fuels Standard, which requires the use of 9 billion gallons of biofuels in the US in 2008, might be rolled back or reduced.
"There's no going back," he said. "We're near a tipping point here."
Caruso said that the debate in Congress over more drilling in the Outer Continental Shelf and the Gulf of Mexico as well as reining in oil speculators also had little to do with the decline in crude oil prices. Increasing oil "by small increments over long periods of time doesn't have a lot of impact on price."
Sponsored by Platts, a division of The McGraw-Hill Companies, Platts Energy Podium provides an ongoing forum for prominent newsmakers and the press to address important energy and environmental issues. Members of the media may receive complementary registration for Energy Podium events by contacting Nancy Covey at 202-942-8719, [email protected] A recording of the Guy Caruso session is available via podcast at http://platts.com/energypodium/index.xml/ .
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