I realize that I have not yet organised the oil price guessing contest like in the previous two years, and we're getting closer to the end of the year, so it's high time to do it now.
As previously, the principle is simple: post a comment with what you think will be the price of oil (the next-month forward WTI, as quoted on NYMEX) on the last day of 2007. The answer which is closest to wherever the price ends up being wins a bottle of (French) champagne, sent by me.
Meteor Blades won the contest in 2005 (see diary 20 below); wchurchill, from the European Tribune, won in 2006 (see diary 38 below) and was kind enough to donate his bottle to Fran, who posts the Salon (her extensive press review) daily on ET. Maybe you'll be next... all it takes is to write a number.
The past two years ended at almost the same level, $61/bbl, which is also the level that oil had reached (for the first time) when I started this "Countdown" series over two years ago, and which was the price still seen as recently as May this year.
Some have occasionally made gentle fun of me for that lack of obvious movement of oil prices, and in particular for its failure to get anywhere close to $100 despite my best Cassandra-like encouragements. What can I say? They have a point - oil has not yet reached $100/bbl (although natural gas did in the UK (see diary 22) when shortages threatened in early 2006).
On the other hand, oil reaching $60 two years ago was huge, worrisome, news - today it's seen as a pretty low price. In fact, perceptions have changed amazingly quickly with regards expectations of future prices. As diary 24 noted, the most amazing change was with respect to futures - in the space of just a few months, the markets have gone from the expectation that prices would always come back to $20/bbl, to the expectation that they will stay above $60 for the foreseaable future (the current futures chart is flat near $70/bbl far into the future).
And we went from $50/bbl in January to $75/bbl right now, a 50% increase in 8 months. Going from $75 to $100 only requires an additional 33% increase, so it's likely to be an anti-climax more than anything else when it actually happens.
Anyway, to help you make your bet, here's the helpful hints from two oil major CEOs:
Price of oil will continue to rise, says Total chief
High oil prices are here to stay, according to Total, the French oil multinational, which has raised its forecast value of a barrel of crude from $40 to $60 as it predicts continuing strong demand for oil, rising costs and political constraints on production.
Total's decision to bet on a higher oil price is based on fundamentals, said Christophe de Margerie, the chief executive, who said the recent turmoil in the debt markets had shaken most of the speculative money out of oil futures. Despite the loss of the hot money, the price of Brent crude was about $77 per barrel yesterday, close to its peak of $78.
"Demand is still strong in Asia, there is strong demand in the Middle East for electricity generation and water purification. The price will remain high," he said.
The Total chief said that biofuels would not provide an answer for the world's energy needs, insisting that hydrocarbons and, increasingly, nuclear power, would supply 80 per cent of the world's energy for the next 50 years.
Fundamentals don't justify $70 oil price: Exxon CEO
CALGARY (Reuters) - Oil market fundamentals do not justify a crude oil price as high as $70 a barrel, which is below today's level, Exxon Mobil Corp's top executive said on Friday.
"I cannot explain why we have $70 oil. The fundamentals behind supply and demand do not support $70 oil. The fundamentals support something much less," Exxon Mobil CEO Rex Tillerson told a business roundtable at the Spruce Meadows equestrian facility on the outskirts of Calgary.
(...)
"There's something else going on there that I don't get," Tillerson said, speaking to an audience of business and political leaders about energy security.
He said he believes Saudi Arabia has the oil resources and technological ability to boost its daily output capacity to 12.5 million barrels. However, he did not give a timeframe for such an increase.
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And if you feel like sifting through the earlier Countdown diaries, here they are:
Countdown to $100 oil (44) - oil industry admits it cannot save us
Countdown to $100 oil (43) - IEA boss denies and confirms peak oil in same breath
Countdown to $100 oil (42) - IEA predicts shortages within 5 years
Countdown to $100 oil (41) - oil more expensive than it appears
Countdown to $100 oil (40) - Undulating plateau
Countdown to $100 oil (39) - BigOil running out of oil
Countdown to $100 oil (38) - Who gets Champagne edition
Countdown to $100 oil (37) - OPEC says peak oil (and $100 oil) is near
Countdown to $100 oil (36) - Free game! win champagne! no risk! (eurotrib)
Countdown to $100 oil (36) - Free game! win champagne! no risk! (DailyKos)
Countdown to $100 oil (35) - peak oil: the last skeptics capitulate (CERA)
Countdown to $100 oil (34) - Oil major CEO calls for demand reduction
Countdown to $100 oil (33) - Below zero
Countdown to $100 oil (32) - peak oil is, like, so over. Not!
Countdown to $100 oil (31) - $15 oil? The cornucopians are fighting back
Countdown to $100 oil (30) - senior politico fears looming oil wars
Countdown to $100 oil (29) - Alaska joins axis of evil (unreliable oil suppliers)
Countdown to $100 oil (28) - New records suggest more to come
Countdown to $100 oil (27) - 'Mission Accomplished' - High oil prices are here to stay
Countdown to $100 oil (26) - Time to bet again (eurotrib)
Countdown to $100 oil (26) - Time to bet again (dKos)
Countdown to $100 oil (25) - Iran vows that oil prices will not go down
Countdown to $100 oil (24) - What markets are telling us about future energy prices
Countdown to $100 oil (23) - Running out of natural gas in North America
Countdown to 100$ oil (22) - gas shortages in the UK - 240$/boe
Countdown to $100 oil (21A) - The 4 biggest oil fields in the world are in decline *
Countdown to 100$ oil (21bis) - long term vs short term worries (dKos)
Countdown to 100$ oil (21) - 8-page extravaganza in the Independent: 'we're doomed'
Countdown to 100$ oil (20) - Meteor Blades is Da Man in 2005
Countdown to 100$ oil (19) - Your bets for 2006 (Eurotrib)
Countdown to 100$ oil (19) - Your bets for 2006 (DailyKos)
Countdown to 100$ oil (18) - OPEC happy with oil above 50$
Countdown to 100$ oil (17) - Does it matter politically? A naked appeal for your support
Countdown to 100$ oil (16) - We'll know on Monday
Countdown to 100$ oil (15) - the impact on your electricity bill
Countdown to 100$ oil (14) - Greenspan acknoweldges peak oil
Countdown to 100$ oil (13) - Katrina strikes / refinery crisis
Countdown to 100$ oil (12) - Al-Qaeda, oil and Asian financial centers
Countdown to 100$ oil (11) - it's Greenspan's fault!
Countdown to 100$ oil (10) - Simmons says 300$ soon - and more
Countdown to 100$ oil (9) - I am taking bets (eurotrib)
Countdown to 100$ oil (9) - I am taking bets (dKos)
Countdown to 100$ oil (8) - just raw data
Countdown to 100$ oil (7) - a smart solution: the bike
Countdown to 100$ oil (6) - and the loser is ... Africa
Countdown to 100$ oil (5) - OPEC inexorably raises floor price
Countdown to 100$ oil (4) - WSJ wingnuts vs China
Countdown to 100$ oil (3) - industry is beginning to suffer
Countdown to 100$ oil (2) - the views of the elites on peak oil
Countdown to 100$ oil (1) (eurotrib)
Countdown to 100$ oil (1) (dKos)
- added to the series after the fact