The Increase in Oil Costs
Energy prices could soar over the next ten years as the era of cheap and readily-available oil comes to an end, a new report has warned.
According to the UK Energy Research Council (UKERC), there is a major risk that oil production could peak by 2020 as resources become harder to find. With the ten largest oil-producing fields in the world now in decline, the report claimed that even major new discoveries will not be enough to prolong supply.
The outlook may come as bad news for home heating oil customers, who are likely to see costs escalate as crude supplies become more difficult to find. Robert Gross, head of technology and policy assessment at UKERC, said oil prices will begin to increase once the world reaches peak production. “The age of easy and cheap oil is coming to an end,” he explained.
“It doesn’t suddenly come to an end, obviously it’s a gradual change, but we’re moving away from easy and cheap oil to increasingly difficult and expensive oil.” In early trading this morning, oil prices remained around $70 (£44) as US crude rose 74 cents to reach $70.31 by 07:12 BST, while London Brent crude gained 81 cents to $68.01.
The market also found support from a fall in the value of the US dollar, making crude oil cheaper for traders using foreign currencies.
According to Reuters, the EIA report predicts that global consumption could rise by 1.1 million barrels a day next year as the world economy begins to recover from the recession.
Home heating oil customers might therefore look to stock up on supplies of the domestic fuel sooner rather than later in order to avoid the effects of any potential increase in crude prices once demand begins to pick up.
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