The price of crude petroleum should stabilize at around $90 a barrel. After a wild ride to almost $150, crude is down to the $40 - $50 range. American consumers, the world's largest consumers of petroleum products, have already tasted $4 gasoline. In the long run, the relative frugality of gas usage will increase - possibly at a slow pace. The sweet spot for the American consumers seems to be a shade under $3 a gallon. This price will cut into the consumer's pocketbook, but will not be disruptive.
At the same time, the unease with the relatively high gasoline price will lead consumers to look for opportunities to cut down fuel consumption without a dramatic sacrifice of lifestyle. This will lead to incremental innovation leading to an energy economy where petroleum will coexist with other renewable and non-renewable energy sources.
In the long-term, the overwhelming dependence on petroleum products will decrease and I expect it to be another energy source and an equitable part of the energy mix. I also expect conversion efficiency (example: miles per gallon) to also increase significantly to offset the higher petroleum prices.
When will the prices move? I believe that crude price will reach $65 - $70 by the end of 2009 and $80 - 90 by end of 2010.
Subscribe to:
Comments (Atom)