What a difference 6 months make! Oil price expectations then & now
By Mike Killalea, editor & publisher
Attitudes of DC readers toward anticipated oil prices have turned upside down in just six short months. A survey conducted on 1 April of subscribers to eNews from DrillingContractor.org, DC’s electronic newsletter, found that two-thirds of our discerning readers (66.2%) believed oil prices would exceed $100/bbl by 1 April 2009. More than one in three (34.6%) were even more optimistic, and responded that the price of oil would exceed $120/bbl.
Maybe those predictions will prevail. But for now, the views of DC readers have decidedly moderated, according to a 21 Oct reprise of the original eNews survey. Currently, only 2.5% of respondents look to $120-plus oil by next April. More than one in ten are quite pessimistic, bracing for oil below $60/bbl at that time. That compares with 1.2% in the April survey.
While exuberance has faded like a week-old rose, close to half (44.9%) still believe oil will range from $80-$100/bbl.
In the earlier survey, expectations stair-case upward, from very low to very high prices. Such was the temper of those times. At the 2008 Offshore Technology Conference, people swung to the wildly exuberant. Predictions overheard for 2009 OTC oil price ran to a starry-eyed $250/bbl.
This despite clear signs even then that $145-plus oil was not justified. Economic drivers had run oil $80 or so, and the ever-present terrorism and political instability premium edged prices up further. Similarly the odd Gulf of Mexico big blow. But the journey deep into 3-digit territory was financially driven: the US dollar cratered, and producers, seeking optimum return on petroleum, raised prices, not illogically. Further, currency investors and speculators, dismayed by the soft dollar, bought commodities – not just oil, but also gold, silver and the like – accelerating the frenzied price rise and buoying already dazzled expectations.
So today we face the inevitable reality check. In our more recent study, the range of predictions is decidedly bell shaped, albeit slightly weighted to the glum side of the bell. While the median response anticipates oil prices in the mid-range of $80-$100/bbl, about one in four looked for a $60-$80/bbl range – where we are today – and better than one in 10 feared prices could fall further. By contrast, one in eight expect $100-$120 oil.
We were curious about our readers’ favorites in the US presidential race, so we ran a survey on this through eNews in late October. We wanted to see how opinions differed based on where a reader lives. By the time you read this, the election will be over. But if you are interested in the survey results, you can read them on www.DrillingContractor.org.
You can reach Mike Killalea at email@example.com.