Despite short term peaks and valleys, and a recent agreement by OPEC to ease production restrictions, the overall trend in oil prices is on the rise.
That’s the conclusion of Bernstein research, an investment research company, which forecast last week that oil could hit $150 a barrel by 2020, just a couple of years from now, according to an article in the Energy Security Weekly Update.
Those levels would surpass the $147 per barrel that oil hit in 2008, and could represent nearly a doubling of today’s gas prices. (Oil closed around $70 on Wednesday.)
That price spike in 2007 was one of the major factors that put electric cars on consumers’ shopping radar and led to Tesla’s popularity among others. It prompted Nissan CEO Carlos Ghosn put the original Leaf on the drawing board.
Bernstein says tight supplies have very thin spare capacity. Unplanned refinery outages are affecting production in major oil fields around the world. Demand is still increasing in Asia, where millions of consumers are buying their first cars. (Despite China’s high incentive for electric cars, they still make up only about 3 percent of the market there. That’s still significantly higher than in North America.)
“The Saudis’ roughly 1.5 million barrels per day of spare capacity along [with] U.S. shale growth cannot meet demand growth, offset natural declines, and fill in the gap for unexpected outages,” the report says.
ExxonMobil oil refinery, Baton Rouge, Louisiana, by WClarke [CC BY-SA 4.0]
Compounding the supply shortages, new rules take effect in 2020 banning the use of bunker oil in ships. Under the new rules by the International Maritime Organization, ships still burning petroleum will have to use more conventional, lower-sulfur diesel fuel, putting them in competition with trucks and other freight haulers, and further increasing demand. Marine fuels account about 5 percent of petroleum demand, according to the report.
If Bernstein’s forecast proves correct, it could provide a big boost for electric cars and bolster forecasts showing dramatic growth for electric cars between 2020 and 2040.
It could also make those who have already bought electric cars especially grateful—maybe even smug.