Page 7 - Aruba Today
P. 7
U.S. NEWS A7
Tuesday 23 February 2016
US Financial Front:
IEA: Slashed spending by drillers could lead to price spike
DAVID KOENIG that U.S. production, along Fatih Birol, Executive Director International Energy Agency, percent, to $34.69 a bar-
AP Business Writer with new supplies from Iran, speaks about the state of the oil industry at the annual IHS CER- rel in London. The price
HOUSTON (AP) — Oil prices which has been freed from AWeek global energy conference Monday, Feb. 22, 2016, in of wholesale gasoline
will more than double by international sanctions, will Houston. jumped 4 percent.
2020 as current low prices blunt what otherwise might Oil prices have tumbled 70
lead drillers to cut invest- be a sharper run-up in pric- (AP Photo/Pat Sullivan) percent since mid-2014,
ment in new production es. and gasoline prices have
and gradually reduce the Nobody saw the shale-oil followed. The U.S. Energy In-
glut of crude, the head of boom coming, and it has formation Agency expects
a group of oil-importing changed the market, said an average price of $1.98
countries said Monday. Neil Atkinson, who edited per gallon nationwide this
Fatih Birol, executive direc- the IEA report released year. The last time gasoline
tor of the International En- Monday. averaged less than $2 for a
ergy Agency, said oil would “Producers everywhere full year was 2004.
rise gradually to about $80 around the world are hav- Low oil prices have had
a barrel. ing to accept that $100 a devastating effects on
Oil prices shot to more than barrel is not something that communities that rely on
$100 a barrel in mid-2014 is likely to return soon,” At- the energy industry. Home
before a long slide sent kinson said. He and Birol sales have fallen sharply in
them crashing below $30 declined to blame low oil North Dakota and the West
last month. prices on OPEC’s decision Texas cities of Midland and
“There was a rise, there will to keep pumping away to Odessa, and more recent-
be a fall, and soon there preserve market share in ly in Houston.q
will be a rise again,” Birol the face of rising competi-
said on the opening day tion from the U.S. and else-
of a huge energy-industry where.
conference that will fea- Now, IEA says, investment
ture addresses by the oil in future oil exploration
minister of Saudi Arabia, and production is declining
the secretary-general of for a second straight year
OPEC, the president of — the first back-to-back
Mexico, and U.S. Energy downturn in 30 years. U.S.
Secretary Ernest Moniz. shale oil production will fall
Birol’s group issued a fresh in 2016 and 2017 before re-
outlook on energy markets. covering with higher prices,
It forecast that 4.1 million the group predicted.
barrels a day will be add- Meanwhile, Saudi Arabia,
ed to the global oil supply Russia, Venezuela and Qa-
between 2015 and 2021, tar have discussed freez-
down sharply from growth ing production if other oil
of 11 million barrels a day countries go along with a
between 2009 and 2015. strategy to boost prices. On
A year ago, the Paris-based Monday at IHS CERAWeek,
IEA, an organization of 29 an annual energy-industry
major oil-importing nations conference in Houston,
including the United States, OPEC Secretary General
had forecast a relatively Abdalla Salem El-Badri
swift recovery in oil prices, called a potential freeze
but the decline continued, “a first step” that, if it sticks,
with the price for a barrel could be followed by other
of crude hitting levels last measures, which he did not
seen in 2003. specify.
Experts underestimated the The price of U.S. crude
ability of shale-oil producers soared more than 6 per-
in the United States to with- cent Monday. A barrel of
stand falling prices — for a benchmark U.S. oil rose
time — which, combined $1.84 to $31.48 a barrel
with OPEC refusing to cut in New York. Brent crude,
production, led to a glut. the international bench-
The same experts now think mark, climbed $1.68, or 5.1
