Thursday, March 31, 2005

Investment bank predicts 'super spike' in oil prices

Investment bank Goldman Sachs released a report that predicts the next several years will be a period of exceptionally high oil prices with a possible spike to $105 a barrel. The report said that high prices are what is needed to encourage conservation and the development of new supply and that this will take several years.

The investment bank is not making the argument for a peak in world oil production as this quote from the report shows:
We believe oil markets may have entered the early stages of what we have referred to as a "super spike" period -- a multi-year trading band of oil prices high enough to meaningfully reduce energy consumption and recreate a spare capacity cushion only after which will lower energy prices return.
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