|SAs we look ahead, the issue is timing.
|SWe have continued demand growth expected – but
|SExtra crude oil production capacity will
eventually emerge – but how fast will extra
|SAnd geopolitical risk remains. In 2004, I argue that the geopolitical
uncertainties affecting supply have been greater than they were in the middle
of 2003. After the strike in
Venezuela, many people initially felt the country would return to normal
operations faster than occurred. After
the war in Iraq, many felt that the country would return to producing oil on
a regular basis faster than has occurred. And last, Russian oil supply
security was not an issue.
|SThe balance can swing to where prices relax
back somewhat, but with current world demand growth and production
expectations, it is unlikely we would
see prices drop into the $20-$30 range again soon. Will they stay at $40 or higher? Or will
they drop closer to $35? That is
outside of our crystal ball accuracy.