Average oil prices are expected to remain below $50 per barrel in 2009, although long-term economic growth eventually could push that price to between $60 and $80.
“Energy prices should remain moderate,” said Bill Sanderson, president of the Purvin & Gertz Inc. consulting firm in Houston. “Oil's probably not going to crash through $40 for any length of time.”
Oil's wild 2008-09 ride — peaking at $147 in July before falling to just under $40 in mid-February — partly resulted from a liquidation of non-commercial interest, Sanderson said. When these financial buyers exited their net-long positions, oil prices plummeted.
Overall oil production should decline by 3 million barrels per day during 2009 as demand remains soft.
“U.S. drivers reduced their travel miles by more than 3 percent in 2008 as gas prices rose,” Sanderson said. “Travel miles had fallen slightly in 2007, but they had grown 1-3 percent annually from 2000-06.”
Sanderson also pointed out that the retail price of gasoline in Texas climbed from an average of $2 per gallon in 2004 to an average of $3.50 in 2008. The percentage of U.S. sales of sport utility vehicles and light-duty trucks has dropped each year since 2004 as well.
In natural gas — used as a feedstock in most North American-produced polyethylene — prices that were above $12 per million Btu in mid-2008 now are less than $5. Prices for the remainder of 2009 should average “in the low $4 range,” Sanderson said.
North American natural gas production has increased in most areas, led by shale gas development.
However, in the long term, the region will need imports of liquefied natural gas to meet its needs. Sanderson said he expects average selling prices to start to climb in 2010, reaching an average level of around $9 per unit by 2015.