Reflecting the 20% increase in world oil prices in April, the Department of Energy now predicts oil prices will average $110 per barrel in 2008, as oil demand outstrips growth in non-OPEC supply by 1 million barrels per day. Among OPEC nations, only Saudi Arabia has surplus capacity, and some analysts doubt the data flowing from the Saudis.
The 2007 average oil price was just $72 per barrel. If the department's 2008 prediction holds true, it would be an increase of 53%.
The department's Energy Information Administration predicted that pump prices would peak at an average of $3.73 per gallon of gasoline in June. That's almost 4% higher, and a couple months later, than its prediction from just a month ago, when it predicted gas prices would peak at $3.60 this spring.
It's expectations for 2009 were changed even more dramatically, with the expected average price of a barrel of oil increasing 11%, from $92.50 to $103.
"The oil supply system continues to operate at near capacity and remains vulnerable to both actual and perceived supply disruptions," the EIA reports.
In other words, we're using about all we've got.
The Department of Energy also summarized a recent Shell outlook for the future:
"Given the latest trends, what will the future hold? Shell's latest visit to its crystal ball concludes that the world is facing an unprecedented energy challenge, which the company sums up succinctly as 'more energy, less carbon dioxide.'
The company has developed two scenarios to describe how the future may unfold, the first being 'Scramble,' in which global policymakers pay little attention to efficient energy use until supplies are tight. The policymakers also avoid addressing greenhouse gas emissions until there are 'major climate shocks.' The near-term result is a global scramble for energy resources, followed by draconian measures to cut energy use, resulting in severe economic impacts.
The second scenario, which Shell describes as 'the best hope for a sustainable future,' is labeled 'Blueprints' and starts with local and regional actions to address energy challenges. These actions eventually link together to form national and international energy policies.
Shell declines to say which scenario is more likely, but aspects of both scenarios can be found in recent world energy news."
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