Oil to hit $200 a barrel in two years: CIBC
Growing global demand and supply challenges will cause oil prices to hit $200 per barrel in 2010, according to a ne...
Growing global demand and supply challenges will cause oil prices to hit $200 per barrel in 2010, according to a new report by CIBC World Markets.
The forecast is more bad news for plastic manufacturers, who have felt the effect of rising energy costs across the supply chain. However, CIBC World Markets notes that skyrocketing oil prices will have a bigger impact on the already-reeling auto sector.
“By 2012, there should be some 10 million fewer vehicles on American roadways than there are today — a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks,” said CIBC World Markets chief economist and chief strategist Jeff Rubin.
CIBC noted that car sales have dropped to 14 million units a year after averaging 17 million units for the first half of the decade.
The group is forecasting that gasoline at $7 a gallon will see the sales drop to as low as 11 million units a year by 2012 — the lowest level since the early 1980s.
Rubin predicted that Americans will start to mimic the driving habits of Europeans, who have faced the pressure of higher gasoline prices for many years.
The group also predicted that promised production increases from Saudi Arabia and reduced subsidies in China will not do much to slow the increase in oil prices.
“The additional 200,000 barrels per day pledged from Saudi Arabia is a pittance compared to the 4,000,000 barrels per day that depletion will hive off world production this year,” said Rubin.
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