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OilPriceHistory - dheiiewflorkdtmes “QT abllb Oil Prices...

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Unformatted text preview: dheiiewflorkdtmes “QT abllb Oil Prices Find a SweetSpot for the World Economy ByflIFPDRD m HDUS‘TflN — Oil prices have done something remarkable over the last hali— year or so: may hayehaiely bridged Memories are still fresh oftlie drastic climb to $14? a barrel only two sui'niners ago, accompanied by gasoline oostutg misgallon'lhespiltoiedtoacoisaoons from drivers and politicians that oil corn- panies were pricegooging. 'I1‘ien snide prices pliant-noted along with the econ- orny.toaround sssaiiarreljustovera year ago.onlytodo1.lhleagaioinamotter ofmonflisasconfidencebegaotorecover. Andflmmttlemicehasstayedmorcor lea. since hull-15L reaching a rough sta- bilityintbefilltolfll range. Economists and government oi'iicials saytltatiiprieesrernahrhtdtatbandit oouldbenefittheworldecononnr.thefu- turesecurinrotenergysuppliesandeveu nieerrviroitnient'i'hepriceishighenoagh todriveinveamientmhiuiieor'lproduc- tionandinauppliesoiaiteroadveenergy. titeynotebritlowenoughthatoonsumera canbeariL “It's a sweet spot.” said Hermeth S. Rogofi. a Harvard professor of interns tionai finance. “it's not too low that it’s mating demand for renewable energy sootcesormusingdaebtandfiscalu‘ises broil-exporthtgorsnnrieenndn'snotso high that it's adriving African countries deeper into poverty and threatern'ng the recoverylntlieU.S.andEumpe.' Gasoliocpaices have stabilized along whhoiipriceawitlitheavemgenatlonal priceioragailonoiregulargaaolinerang— mgo'omflhlltoilhflsioceluneli‘fices streamer-ted to go as high E 33 a gallon citing this summer's driving season. 'I'hatisareladvelyhighpriceliyhistorical standards. but it isniore tolerable than in the summer of coca. when prioes eit- oeeded $4 a gallon for weeks. and rose abovesLSflmatewstates. {iii prlcm havejuinped sornewhat this CbnliiuiedonPogefl! _—_,_._,——-.————I-———_-I mm Firsthand-tees Page Have till Prices Stabilized? ........................... Elli-i fillers], week. but they are still within the Historically. oil prices have been merited by long periods of 133 band may have occupied for relatively stability. punctuated by episodes of lunnoil, like the .. . . . . .. mantle. light. sweet Texas crude pyrations of 24003 and 2009. Prices have been in a band from $70 $9999 “Tl-15‘1“?” 5323731331“ to $33 a barrel [or the past six months. prompting some analysts T9? to s actuate that rise stabili rn have retumed for a while. Ens-es stoma say that serv- "' F' - '3' a? an oral iar-flmtg global dE'lrelup- Percent-cannons. ltlB‘l'ItS have converged to put “PM and demand in relative ............................................................................................................ it. equilibrium. atleastiorthetime ' ' " beins- inmost: roe INFLATHDN 4n mm [If the WM“ --------------------------- ' ...................................... ....... oi the Patrolman Exportoig Cosmo-res have more rainy ................................................... 3?. disuploied l.l'.l complying with their announced production one. .3 Meanwhile. among non— OPEC - producers. growing oil output in '90 ‘91 '92 '93 '9-1 '95 '90 '9? '96 '99 '00 ‘01 '02 '03 ‘04 '05 '09 ‘0? '03 '09 '10 monsoon ............................ “mm mm dedincs i“ the North 53“- Apadie Corporations. W101 rices But now most otthe sus ndcd rive power sources iilce and mwmmmm stabilizing. his company his in- oil sands projects are gel; for- nuclear. gas 0n the demand side growing appetites for oil in China. bulls and other developing nations have been offset. by decan do- rnimd in the United Stat- and Europe. because of their slowing MEMBER. conservation efforts and flooring use oihiohiels. “The current price range pro- vides a geopolitical benefit.” said David 1.. carom.“ serene- partmenr coordinator ior intcma- tional'energy affairs. “with ani- pie capacity; in oil. and common cial inventories at fivey'eai' highs. markets are well posi- tioned to absorb any potential supply disruption. even without resortingto strategic stocks.” While the last four decades have been punctuated Iiyvarious oil price booms and busts stem- ming from oil einbargoee, wars and recessions, periods ol' rela- tive stabllinr lasting months or years Iiavebeenoonnnonplaoe. Not surprisingly, oil produoors prefer stability to plan their in- vestments. “The worst thing that happens in our industry is volatil- ity." said (3. Steven Farris, chair- men and chief executive of oi‘eased its exploration and de- velopment budget by 59 percent, “155 Willis year. The now return to balance is rooted in the prise spike that oc- curred from lssilto zoos. when oil prices disabled from under $20 to nearly $150 a barrel. Those high prices performed their elemen- tary econowc function: they oalledhartb additional eupphr. the globe. in the beginning oi the hat decedefevrerthsn zodrilling ships were capable of finding and developing deepwater oil; today titers are well over a hundred. Saudi Arabia and Russia under— took big expansions of their pro- ductioncapachy 1lilrl'hort old prices suddenly on]- lapsed In late mos. future supply gains were put in doubt. Several large companies postponed deci- sions on whether to go torward with big projects to develop oil sands in Canada. for instance. and smaller independents slashed dieir exploration budg- eta. ward. with an estimated 580,” barrels of new capillary under construction. Meanwhile. many offlieindependentoilcotnpaniee areplnnpingupflieirriilenploia— tionlnvesonentbudgctsasweli. ”If we still had $35 oil prices. yoliwoiildnotheveseenushe' nearly as active in me Golf of Mexico? James T. Haoltett. chair- -inaneiiriehief-eneclitireeE-Ana-- darkoPeooieungsaidmmtm- gram of installing an deepoatcr exploration and appraisal wells this year in the Golf. .hsia and'hi- circa1 each costing $50 million to Still} million. “An 5311 price curve tends to worit for us." Mr. fuel-muddled. The biggestlong-termtlu'eat to the new balmoe is growing con- sonoptinn. in (Irina and other do Velopislg cotntb‘ics. But some an- alyata express hope that such countries can curb their oil de- mand growth as they build power oanaonission lines that will an- able them to replace biehlcient diesel generohns with alterna- Stable. relativchr high prices also may anchorage cum-pa. tion. Energy experts note that centive to buy efl‘lcient vehicles with gasoline prices at 523.30 a gallon. while high oil and low nat- ural gas prices are encouraging use of compressed noun-oi gas vehicles and blohiels in usury Monasteries. “'I'lseprioeraiigewearcmis ' non. "it‘s high enough so that ' countries that subsidize the prioe of oil still have a high inocmhre to reduce those subsidies and it's ' high enough to support energy- = efficiencymeasnresthatarepos- _ trim: for mitigating climate chalet.” For all me good stat stable prices can do, however. no one is . sailing to predict they will last 5 ,"Dernand will change; supply ' will change." said Christoi Elihu}. chief economist of BF. the all computer. “The world changes all tlietinte." . ...
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