WASHINGTON, Aug. 26 /CNW/ -- Crude oil prices "could" fall below $100 per
barrel over the next 18 months on slowing worldwide demand and an increase in
oil production, Energy Information Administration (EIA) chief Guy Caruso said
Caruso made the comment to reporters at the Platts Energy Podium in
"I think [prices] could fall below $100 a barrel on slowing global demand
and rising production in the US, Brazil and Canada, and from OPEC states such
as Saudi Arabia and Angola," Caruso said.
While Caruso said "most of the risk is on the upside," and that it was
not the official EIA prediction, he added that a scenario of falling oil
prices is "now closer to 50-50" if worldwide spare production capacity
continues to increase from the current 1.5 million barrels per day (b/d) to
3-4 million b/d while global oil demand softens.
"That scenario is now more realistic than any time in the past five
years," said Caruso, who will leave EIA in September.
A decline in oil prices also "opens up the possibility of conflict in
OPEC" as the producers' group debates whether to trim output, Caruso said.
EIA earlier this month said it expected oil to remain at $120 to $130/b
in 2008. Crude oil prices reached a record $147.27/b on July 11. Prices have
fallen more than 20% since then on waning demand.
Caruso also reiterated that releasing oil from the Strategic Petroleum
Reserve, or the home heating oil reserve, would have little effect on prices.
"I think it would be more valuable to save it for real emergencies," he said.
House Speaker Nancy Pelosi and other Democrats, including Senator Barack
Obama, the presumptive presidential nominee, have urged releasing about 70
million barrels of crude oil from the nation's emergency reserve, about 10% of
the US supply, to cut gasoline prices.
Caruso said that even if oil prices continued to fall, it would be
unlikely that many policies, such as the Renewable Fuels Standard, which
requires the use of 9 billion gallons of biofuels in the US in 2008, might be
rolled back or reduced.
"There's no going back," he said. "We're near a tipping point here."
Caruso said that the debate in Congress over more drilling in the Outer
Continental Shelf and the Gulf of Mexico as well as reining in oil speculators
also had little to do with the decline in crude oil prices. Increasing oil "by
small increments over long periods of time doesn't have a lot of impact on
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