Oil importing countries faced an unassailable challenge with the "historic high" price of oil. In 1864, a barrel of Pennsylvanian oil traded for 8.06 in dollars of the day ($97.79 of 2004) and in 1980, a barrel of Arabian light (posted at Ras Tanura) sold for 35.69 in dollars of the day ($82.15 of 2004). The world has not yet faced a "fourth oil shock" mainly because the price went up gradually to over $70 a barrel over a full three-year period, unlike in 1979-80.
There is a "fear" premium of $7 to $15 due to the destabilisation of the Gulf region. The world energy growth started to increase significantly from 1995. Especially since 2002, the real trend of growth rate of world oil demand is well above 2.25 per cent a year.� For some countries, notably China, Iran and Brazil, the growth rate is at least 4 per cent a year.
The question that naturally arises is whether the high price of crude oil is due to its physical shortage, the geo-political "risk" or demand exceeding supply in the short term. Or has the time for peaking of crude oil arrived?
Peak oil
A study of the reserves to production (R/P) ratios �-- �the number of years that reserves of oil will last at current production rates �-- �shows that the R/P ratio of non-OPEC countries is about eight to 10 years (for instance, in the case of the US and Norway). For the Organisation of Petroleum Exporting Countries (OPEC), it is over 55 years. Indonesia and China are now net importers of crude oil. Chinese, Mexican and Canadian production will peak in the next few years. Former Soviet Union's production peaked in 1988. OPEC production is likely to peak between 2025 and 2030.
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Oil importing countries faced an unassailable challenge with the "historic high" price of oil. In 1864, a barrel of Pennsylvanian oil traded for 8.06 in dollars of the day ($97.79 of 2004) and in 1980, a barrel of Arabian light (posted at Ras Tanura) sold for 35.69 in dollars of the day ($82.15 of 2004). The world has not yet faced a "fourth oil shock" mainly because the price went up gradually to over $70 a barrel over a full three-year period, unlike in 1979-80.
