AP
Survey says executives see oil prices falling
Friday May 9, 2:48 am ET
By John Porretto, AP Business Writer
Survey says many oil and gas industry executives forecast falling crude prices by year's end
HOUSTON (AP) -- Even as oil prices ascended
to new highs of more than $124 a barrel this week, many oil and gas
industry executives say they expect the price to fall significantly by
year's end, a new survey shows.Fifty-five
percent of 372 petroleum industry executives surveyed by KPMG LLP said
they think the price of a barrel of crude will drop below $100 by the
end of the year. Twenty-one percent of respondents predicted a barrel
of oil will end the year between $101 and $110, while 15 percent
forecast the year-end price to be between $111 and $120 a barrel. Nine percent said they expect the price to close the year where it's been this week -- above $120 a barrel. What's
more, 44 percent of the executives said their companies plan to
increase capital spending on exploration and production by 10 percent
during the next year. The survey was conducted last month and
scheduled for release Friday. Participants included executives for
major oil companies, independent exploration and production outfits and
other energy companies. "The expectation of increased investment
by U.S. energy companies shows oil and gas executives are deeply
concerned about energy security," said Bill Kimble, who oversees the
global energy institute at KPMG, the audit, tax and advisory firm. Of
late, all eyes have been on crude prices, which have nearly doubled in
the past year. The dollar's decline against the euro and other foreign
currencies has helped spur the rise, attracting investors looking for a
hedge against inflation. Rising demand for oil from the rapidly
developing economies of China and India has played a role too, as have
concerns about tighter supplies. Indeed, 63 percent of survey
participants said growing demand in emerging markets was the main
factor in the historic rise in oil prices. Widely watched oil
price prognosticator Goldman Sachs said this week oil prices could rise
to $150 to $200 within two years; others say crude could plummet to as
low as $40 or $50 a barrel during the same period. "To be sure,
the future does not unfold neatly in line with any projection, and the
time frame of the actual price surge has been remarkably short,"
Cambridge Energy Research Associates Inc. said in a report this week. Asked
what would most enhance U.S. energy security, participants
overwhelmingly said opening up more acreage for domestic drilling was
the best option. In particular, 43 percent said the Arctic National
Wildlife Refuge should be opened for drilling. Another 28 percent said
more investment in renewable energy sources such as biodiesel would
enhance U.S. energy security the most. However, even though many
of the executives support further investment in renewable energy
sources, the majority still don't view renewables as a serious
near-term solution to the energy supply equation. In last year's
survey, 60 percent of 553 petroleum industry executives said
large-scale production of renewable fuels was not a near-term
possibility, at least not in the next couple of years. In the most-recent survey, 54 percent gave the same response, though 2015 was the target date. | 
