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Study: Oil Companies Are Driving Toward Huge Price Spike in 2 Years

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Oil Pump

Image: Paul Lowry

A new study has predicted that the recent rises in oil prices are just the beginning of a long climb, forecasting that, if things carry on as they are, the price of oil in 2020 could reach a “super spike.”

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This study was the conclusion of research by Bernstein, an investment research company, and the gist is this: oil companies aren’t investing much in new long-term projects to find new sources of crude oil due to the recent precipitous slump in oil prices. As a result, Bernstein predicts that around 2020 there will be a shortfall in supply with sharply rising gas prices, potentially larger than the spike in 2008 that led to prices just above $147 per barrel. Current prices are around $70-80 per barrel.

On the other hand, Bernstein does acknowledge that oil companies are facing uncertainty in the face of rising popularity of the new kids on the block, renewable energy and electric vehicles. If these outside factors do lead to a peak in oil demand before 2030, then oil companies who pull back now on production will save significant amounts of money. However, if oil consumption is still growing in 2030, Bernstein said that the oil CEOs will look foolish.

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Meanwhile, oil demand has been rising in Asia as the car market has boomed, particularly in China, and new rules are on the way that would ban the use of bunker oil ships, forcing petroleum-burning transport vessels to use lower-sulfur diesel fuel, putting them in competition with trucks and other freight vehicles.

All in all, an oil and gasoline price spike would likely push electric vehicles into popularity far faster than otherwise.

News Source: CNBC, Green Car Reports