EXTRACT: Some hundred years ago, Sir Marcus Samuel, founder of the Shell Transport & Trading Company, British half of the later Royal Dutch Shell, quizzed by a statutory committee investigating allegations of price gouging, responded, “price of oil, gentlemen, is what the market can bear.”
THE ARTICLE
Growth in demand for oil has been contained in those non-OECD countries which have raised administered prices of petroleum products
By Saumitra Chaudhuri
It is just two years and some months back that crude prices crossed the $40 per barrel (/bbl) mark. A perceptive industry analyst (Purvin Barrow, July 2004) had focused on the two ‘engines’ of demand growth—the US and Chinese transportation sectors—and the severe supply side squeeze with spare Opec capacity dropping sharply and inadequate new asset creation by oil companies in the environment of low oil prices characterising the second half of the previous decade. The conclusion was that if everything came out wrong—the ‘train wreck’ scenario, crude prices would rise to nearly $90/bbl in 2006 and gradually fall over the next few years. The moderate picture of ‘controlled’ shortfalls would see prices rise steadily to $55/bbl by 2006, with the up trend continuing to $60/bbl in 2007. read more
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