Oil prices, gasoline costs to double: CIBC report
SHAWN MCCARTHY
Globe and Mail Update
April 24, 2008 at 11:17 AM EDT
OTTAWA — Crude oil prices will soar to more than $200 (U.S.) per barrel over the next five year – driving Canadian pump prices to $2.25 a litre and forcing a fundamental transformation in the North American economy, says Jeff Rubin, chief economist with CIBC World Markets Inc.
In a new report, Mr. Rubin forecast a continued run-up in crude prices, despite a slowing world economy and slumping petroleum demand in United States, the world's leading oil consumer.
He said he expects crude prices – now trading at above $116 (U.S.) a barrel - to average $150 by 2010, and more than $200 by 2012. That would translate into pump prices of $7 (U.S.) per gallon in the United States, and $2.25 per litre in Canada, double the current levels.
“Whether we are already at the peak of world oil production remains to be seen, but it increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity,” the economist said.
Videos
U.S. hit by gas thefts
As gas prices soar, gas thefts are becoming more common in the United States. One Tennessee woman says she was hit in an incident
Related Articles
Recent
Discussion: Explaining sky-high gasoline prices
Commodity index hits another record high
Oil settles down on U.S. dollar gains
Far from Middle East, U.S. farmland is yielding new oil
Record oil prices drive earnings higher at ConocoPhillips
World oil production has essentially stagnated at about 85-million barrels per day over the last two years, with growing demand met by increases in natural gas liquids, a fuel source that is used by the petrochemical industry but is of little use for transportation.
Mr. Rubin said he expects crude oil production to grow by about 1-million barrels per day over the next several years.
Meanwhile, growing demand in China, India, Russia and the Middle East will more than offset declines in the industrialized world.
“Millions of new households will suddenly have straws to start sucking at the world's rapidly shrinking oil reserves,” he wrote.
He said the sharply higher oil prices will prove devastating for the North America's industrial base, particularly the auto industry. But Canadians will benefit from the spinoffs, in terms of jobs, tax revenues and procurement, from the country's oil-rich provinces.
