The IMF has warned that global oil prices could double by 2022.
The internal research team at the IMF has warned that global oil prices could double by 2022 which could adversely affect global trade.
The report warns “This is uncharted territory for the world economy, which has never experienced such prices for more than a few months”.
Increases in global oil prices would also affect wholesale gas prices and fuel costs and therefore we could see much higher business gas prices and electricity prices.
The International Energy Agency reported recently that oil consumption is set to increase for the rest of 2012 as the economy recovers. Crude oil prices on the world market are still at high levels at around $113 a barrel. The agency says prices will remain high this year as a result of tensions between Iran and the West.
There have been concerns for some time that we have reached or will shortly reach peak oil, when there’s no more oil available to be extracted and it’s no longer possible to increase production. However, the report for the IMF entitled, The Future of Oil: Geology v Technology says “While our model is not as pessimistic as the pure geological view that typically holds that binding resource constraints will lead world oil production on to an inexorable downward trend in the very near future, our prediction of small further increases in world oil production comes at the expense of a near doubling, permanently, of real oil prices over the coming decade”.
The report continues by saying “Our empirical results also indicate that if the model’s predictions continue to be accurate as they have been over the last decade… the future will not be easy”.