Calgary, Alberta – A fourth-quarter price forecast for oil and gas released by AJM Petroleum Consultants of Calgary predicts a decrease in prices over the next three years, but holds long-term forecast prices at the same rate as predicted last quarter. AJM economist and vice-president of oeprations Ralph Glass cautioned against weighing the current turmoil in the financial markets too heavily against long-term price trends.
“If the U.S. dollar goes deeper into debt and recession, the value of the U.S. dollar will drop and the price of crude oil will increase,” Glass said. “This is why AJM is predicting oil prices at $100 per barrel in the longer term. Our short-term price drop reflects the fact that global economic concern appears to be causing a reduction in demand, especially in the U.S. It also reflects the ripple effect the economic turmoil in the U.S. is causing throughout the world. As Europe experiences a credit crunch, the Euro is dropping against the U.S. dollar, causing a corresponding drop in the crude oil price. And as oil goes, so does gas.”
Glass said that despite current turmoil, he believes that the basic fundamentals of an increasing worldwide demand, a declining production capability, and the lack of a cost-effective alternative energy source are still the drivers keeping oil and gas prices high.
AJM’s fourth-quarter 2008 price forecast shows crude oil prices at US$100 per barrel for the last quarter of 2008, US$108 for 2009, and a decline to US$104 in 2015.