Oil Prices: Moving to Red Alert

[Javaman]

http://www.forexpros.com/analysis/oil-prices:-moving-to-red-alert-110346

Peak oil is moving back fast as permitted dinner time talk - and even office time action on futures and options. And the reasons are multiple, well known, but heavily discounted until now. Through late 2011, many times, the IEA's chief economist Fatih Birol has outlined how radically the IEA sees the oil price outlook. Lost in the climate crisis talk however, the oil price message was often sidelined. Birol's agency in November said this: "If fossil fuel (energy) infrastructure is not rapidly changed, the world will lose for ever the chance to avoid dangerous climate change", but the oil price punch line came later. Birol has many times provided the IEA's estimate of how oil prices levered up through 2011, despite the European crisis, near-recession in the US, recession in Japan and falling growth in China and India.

Oil price rises in 2010-2011 levered up the OECD's net annual oil import costs (after re-exports and refined product exports) by 30% to about $790 billion from around $625 billion in 2010. For year 2011, Brent grade oil import prices to the 3 largest world importer countries and regions - USA, Europe, China - averaged $111 a barrel.

Until late 2011, both the US EIA and IEA were only forecasting low level price growth in 2012, but the bets are now off.

THE DEMAND DRIVEN PINCH

Oil imports to the United States are expected to stagnate or decline over the coming years because of new fuel efficiency standards for cars and trucks, and an increase in domestic oil and natural gas production, but oil import demand in Europe, and especially China and India will continue growing in a supply-constrained environment. For this reason, and apart from the geopolitical threats rising in the Middle East, both the EIA and IEA continue forecasting high oil prices - even very high oil prices.

more at link...