Oil Path Prediction for 2007
Daring prediction: A reversal of the inflationary trend in Western Canada's oil patch. Prices for goods and services in the upstream Canadian oil and gas industry have been hyper-inflating in recent years, running over 20 per cent this year. Now, the money in circulation is leveling, the economic viability of natural gas projects is shrinking and oil field service capacity is expanding. Market economics are working to arrest the inflation.
Biggest fear: That our federal or provincial governments will institute fiscal and environmental policies that act as de facto energy policy ill suited to the geography, climate, economy and overall well-being of our country.
Biggest hope: I hope that the economic viability of finding, developing and producing new reserves of natural gas will come back into a healthy balance. Right now, costs are too high and prices are too low. Without improving fundamentals, expect volatile price swings to continue.
Best call: In January, I suggested that the seriousness of Iran's atomic ambitions had “not yet trickled down to the oil markets.” By spring, the reality had set in and oil prices were marching up. I made the call that the price of the benchmark West Texas Intermediate oil would exit this year at $70 (U.S.)a barrel. We're pretty close to that.
Worst call: I was bearish on natural gas prices, which was a correct call. However I was adamant that benchmark U.S. natural gas prices would not dip below $6 per mmBtu (million British thermal units). For seven weeks in September and October they averaged $4.88 mmBtu.
Biggest surprise: Can anyone in the energy industry suggest a bigger surprise than the sharp reversal of income trust policy? Maybe it needed to be done, but the move is likely to dash my biggest hope for next year.
Biggest fear: That our federal or provincial governments will institute fiscal and environmental policies that act as de facto energy policy ill suited to the geography, climate, economy and overall well-being of our country.
Biggest hope: I hope that the economic viability of finding, developing and producing new reserves of natural gas will come back into a healthy balance. Right now, costs are too high and prices are too low. Without improving fundamentals, expect volatile price swings to continue.
Best call: In January, I suggested that the seriousness of Iran's atomic ambitions had “not yet trickled down to the oil markets.” By spring, the reality had set in and oil prices were marching up. I made the call that the price of the benchmark West Texas Intermediate oil would exit this year at $70 (U.S.)a barrel. We're pretty close to that.
Worst call: I was bearish on natural gas prices, which was a correct call. However I was adamant that benchmark U.S. natural gas prices would not dip below $6 per mmBtu (million British thermal units). For seven weeks in September and October they averaged $4.88 mmBtu.
Biggest surprise: Can anyone in the energy industry suggest a bigger surprise than the sharp reversal of income trust policy? Maybe it needed to be done, but the move is likely to dash my biggest hope for next year.
posted by Ottawa Gas Prices | 5:22 AM
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