Chevron Forecasts Dip in Oil Prices Until 1988
A Chevron economist said Friday that oil prices will slide for the next year or so before reaching a low of about $24 a barrel in 1987. After that, Chevron economist George Naniche said, oil prices could go as high as $50 a barrel, up from the current $26- to $27-a-barrel range.
Naniche, manager of the price division in Chevron’s economics department, said in a forecast that the price of crude oil will drop in the short run because the 13-member Organization of Petroleum Exporting Countries will continue to have problems staying within its 16-million-barrel-a-day production quota. OPEC members will meet in Vienna on July 5 to discuss pricing and production difficulties.
Naniche said that non-OPEC oil production will peak in 1987 at about 22.5 million barrels a day and that, as production declines, prices will rise. At the same time, OPEC production will increase to 20 million barrels a day in 1990 to 28 million barrels a day in 2000.
Naniche said oil prices will range between $29 and $50 a barrel by 2000 but will probably be closer to $38 or $40.
Naniche made his comments as the San Francisco-based oil company released its annual economic forecast, “World Energy Outlook: 1985 to 2000.” Naniche said the 1985 forecast is little changed from the 1984 version.
The 1985 forecast estimates that domestic crude oil production will drop to 6.9 million barrels a day in 2000. The 1984 forecast predicted that domestic crude production would be lower, at 6.5 million barrels a day. Current production is 8.8 million barrels a day.
Naniche said that the revision was “significant” but not enough to change Chevron’s forecast that the United States would rely on foreign oil for half of its oil needs by 2000. Naniche said the revision resulted from better-than-expected domestic exploration results.
Chevron said that domestic oil consumption would increase less than 1% annually between now and the end of the century, an estimate in line with private and government forecasts. The company said that total energy consumption will rise by only 1.3% a year until 2000 but that oil will supply a smaller part of domestic energy needs. By 2000, oil will supply 38% of domestic energy, compared to 42% in 1984.
Coal will increase in importance, Chevron said, supplying 27% of domestic energy needs, up from 22% in 1984. Natural gas use will decrease only slightly, from 23% of total energy use to 22%. Nuclear energy will supply 7% of domestic energy needs by 2000, an increase of 2%.
Chevron said the worldwide outlook is similar. World energy demand, led by Communist nations, is expected to increase 2% annually, with non-oil energy sources accounting for 75% of the increase.