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Survey says executives see oil prices falling

By JOHN PORRETTO,

Posted: 2008-05-09 00:07:07

HOUSTON (AP) - Even as oil prices ascended to new highs of more than $124 a barrel this week, many oil and gas industry executives say they expect the price to fall significantly by year's end, a new survey shows.

Fifty-five percent of 372 petroleum industry executives surveyed by KPMG LLP said they think the price of a barrel of crude will drop below $100 by the end of the year. Twenty-one percent of respondents predicted a barrel of oil will end the year between $101 and $110, while 15 percent forecast the year-end price to be between $111 and $120 a barrel.

Nine percent said they expect the price to close the year where it's been this week - above $120 a barrel.

What's more, 44 percent of the executives said their companies plan to increase capital spending on exploration and production by 10 percent during the next year.

The survey was conducted last month and scheduled for release Friday. Participants included executives for major oil companies, independent exploration and production outfits and other energy companies.

"The expectation of increased investment by U.S. energy companies shows oil and gas executives are deeply concerned about energy security," said Bill Kimble, who oversees the global energy institute at KPMG, the audit, tax and advisory firm.

Of late, all eyes have been on crude prices, which have nearly doubled in the past year. The dollar's decline against the euro and other foreign currencies has helped spur the rise, attracting investors looking for a hedge against inflation.

Rising demand for oil from the rapidly developing economies of China and India has played a role too, as have concerns about tighter supplies. Indeed, 63 percent of survey participants said growing demand in emerging markets was the main factor in the historic rise in oil prices.

Widely watched oil price prognosticator Goldman Sachs said this week oil prices could rise to $150 to $200 within two years; others say crude could plummet to as low as $40 or $50 a barrel during the same period.

"To be sure, the future does not unfold neatly in line with any projection, and the time frame of the actual price surge has been remarkably short," Cambridge Energy Research Associates Inc. said in a report this week.

Asked what would most enhance U.S. energy security, participants overwhelmingly said opening up more acreage for domestic drilling was the best option. In particular, 43 percent said the Arctic National Wildlife Refuge should be opened for drilling. Another 28 percent said more investment in renewable energy sources such as biodiesel would enhance U.S. energy security the most.

However, even though many of the executives support further investment in renewable energy sources, the majority still don't view renewables as a serious near-term solution to the energy supply equation.

In last year's survey, 60 percent of 553 petroleum industry executives said large-scale production of renewable fuels was not a near-term possibility, at least not in the next couple of years.

In the most-recent survey, 54 percent gave the same response, though 2015 was the target date.

Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

05/09/08 00:05 EDT

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28 comments

Fopdaddy1 07:17:51 AM May 09 2008

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i believe the government thinks it is in our national interest for oil prices to be high at this time. tax dollars from the oil companies are supporting bush`s war, and providing a situation whereby this millitary action will be justified. they are wrong, but does that matter?

Linewyork76 07:14:03 AM May 09 2008

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when Bush is out oil prices will drop

k21bhL 07:10:55 AM May 09 2008

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Don't believe a word they tell you!

Fivestarfoodsux 07:07:16 AM May 09 2008

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True Americans need to boycott corporations such as Five Star Food Service Inc. that are not american owned and operated. They will screw the american people in order to cater to terrorists that threaten our great country. Shut them down before they can use your money and resources to finance any more terrorist acts against the US. Thank you and God bless America.

RMyers6160 07:03:38 AM May 09 2008

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About a year ago i said oil would be between 120. and 130. I just got letter from one who said i was nuts at the time. Now after election oil might go down ,it all depends who get to live in dark brown house?

Macungiee8 06:50:04 AM May 09 2008

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It's amzing but I see oil execs falling, it's a wonder that nobody or a radical group hasn't taken some of them hostage. Out of greed these people are ruining peoples lives, families etc. It's not only in America. Brazil did it right, using 85% ethanol, only the leadership in our country are two former oilmen. The congress is hog tied because the president can veto anyhing they propose and there are not enough votes to over ride the veto, Bush has too much dirt on his fellow republican congressmen......

Lilstang289 06:44:08 AM May 09 2008

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I dont believe anything these money hungry jerks say. If they get a chance to screw us to make a DOLLAR, grab hold of your pants and your wallets and WATCH OUT!!

Michaelluongo 06:34:36 AM May 09 2008

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APOCALYPTO239 12:35:34 AM May 09 2008
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Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy theory society. Rather, it is the scientific conclusion of the best paid, most widely-respected geologists, physicists, bankers, and investors in the world. These are rational, professional, conservative individuals who are absolutely terrified by a phenomenon known as global "Peak Oil."

These "experts" are in the pockets of the oil industry. You seriously think they stood by and did nothing, absolutely nothing all these years if they knew "peak oil" was coming soon. And the media play right along.