Monday, October 04, 2010 (Bloomberg) – Oil may rise to the second-highest annual level on record next year on demand from China, India and Brazil, upsetting OPEC and threatening the nascent recovery in developed countries.
West Texas Intermediate crude, the U.S. benchmark grade, will average $85 in 2011, compared with $77.70 this year, according to the median of 23 analyst forecasts in a Bloomberg News survey, the highest price for any year except for $99.75 in 2008. Goldman Sachs Group Inc., which correctly predicted a year ago that oil would reach $85 a barrel by the end of 2009, said oil’s mean price will be $100 next year.
While China, India and Brazil need fuel to feed their growing economies, members of the Organization of Petroleum Exporting Countries say higher prices aren’t in the group’s interest and threaten the recovery. The International Monetary Fund’s No. 2 official, John Lipsky, said last week that the global economy’s “sluggishness will persist into 2011.”
“High oil prices have acted as the equivalent of a tax on consumers,” said Peter Beutel, president Cameron Hanover Inc., a trading-advisory company in New Canaan, Connecticut, who has followed the oil market for 30 years. “These artificially high prices lead to a lack of unity and cooperation among OPEC members.”
Dr. Pinna says:
The rise in the cost of energy will hurt those countries who are suffering in this depression. The U.S., in particular, with its huge cars and suburban life style, will lose the ability to pay workers and buy goods as its money goes to purchase energy.