06/20/2008 12:08 AM | By Gaurav Ghose, Financial Features Editor
Dubai: Unlike the mid-1980s, when oil prices fell from $40 a barrel to $15, the prevailing high energy prices are here to stay, said a top official of the region’s largest private sector natural gas company.
“The era of cheap oil is over,” said Hamid Jafar, executive chairman of Dana Gas at the Dubai International Financial Authority yesterday. “The fall in prices [as it happened during the mid-80s] – that’s not repeatable.”
Refraining from predicting how high the prices could climb, Jafar said, “The sky is the limit, but certain issues come into play such as recession, political factors. It could go up $200 a barrel without the world getting into recession.”
Referring to how the International Energy Agency’s projections went off the mark, he said that the agency had projected last year that the price from the then $65 a barrel would reach $100 a barrel by 2030, when in reality the price has not only surpassed $100, but is now hovering in the $130s, without a major impact on the world economy.
Currently, global oil production stands at 85 million barrels a day and the projection of peak production is between 100 and 116 million barrels. However, Jafar pointed out that on the global consumption side, there is an increase of one to two million barrels a day per year.
“In addition, there is natural decline in oil wells. Annually, more oil is being produced than found. Reserves are not keeping up despite dazzling technology.”