Kemp: Forecasts For Higher Oil Prices Misjudge The Shale Boom
John Kemp is a Reuters market analyst. The views expressed are his own
LONDON, July 28 (Reuters) - "The world of energy may have changed forever," according to Professor James Hamilton of the University of California. "Hundred dollar oil is here to stay."
Hamilton, who is one of the most respected economists writing about oil, made his bold prediction in a paper on "The Changing Face of World Oil Markets", published on July 20.
"Old hands in the oil patch may view recent developments as a continuation of the same old story, wondering if the high prices of the last decade will prove another transient cycle with which technological advances will eventually catch up," he wrote. "But there have been dramatic changes over the last decade that could mark a major turning point."
The shale revolution will turn out to be only a pause in the upward trend in prices, Hamilton argues, as growing demand from emerging economies and stagnant supplies from conventional oil fields push prices higher in the long term.
"Rather than a force pushing oil prices back to historical lows, it seems more accurate to view the emerging tight oil plays as a factor that can mitigate for a while what would otherwise be the tendency for prices to continue to rise."
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