Weary Americans will likely see prices at the pump continuing to soar, according to a survey of 550 energy industry executives, though not necessarily to the record levels of mid-2008.
Nonetheless, with 64% anticipating crude oil will reach $121 a barrel this year – about 20% more than it’s been trading at lately – that will almost certainly mean more pain at the pump, where U.S. motorists are now paying an average of around $4 per gallon for self-serve regular.
As might be expected at a time when the Mideast is in turmoil, Western economies are showing new signs of instability, and emerging markets are demanding a bigger share of the barrel, oil prices are more unstable than they have been in years – a fact reflected in the results of the survey by the KPMG Global Energy Institute.
While a third of the executives predicted oil prices will peak between $121 and $130 a barrel, another third see even higher prices coming. A full 17% foresaw a high of as much as $140, while 9% thought oil would reach a peak of $150. On the fringe, 6% thought crude would go even higher.
Meanwhile, only a third thought the figures we’re seeing now will be sustained, with a possible peak of no more than $120.
“While we have seen some very recent declines due to selloffs, these variations reflect persistent instability, and our survey findings confirm that we may have not seen peak levels on crude,” said John Kunasek, national leader of the KPMG U.S. energy practice, and executive director for the KPMG Global Energy Institute. “Energy leaders tell us continued volatility will be driven by underlying issues such as regulation, geopolitical concerns and supply disruptions, as well as escalating energy demand.”
High fuel prices has created a variety of problems, especially in the U.S., where the White House and Congressional lawmakers are facing pressure to help consumers. Despite frustrations about huge oil industry profits, however, Congress has decided – at least for now – not to cut the multi-billion-dollar incentives for the oil industry.
The survey suggests that largesse – ostensibly aimed at promoting more drilling — might not be necessary, however.
“The good news is that energy executives tell us they are significantly increasing investment in a range of alternative energy sources and see shale factoring strongly into meeting the world’s future energy needs,” said KPMG’s Kunasek.
More than a third of the execs surveyed said they expect an increase in their company’s spending on alternative energy R&D in 2011. A year ago, a similar story found only 15% of the executives predicting an increase.
The survey finds that spending will go up in more traditional areas, as well, 33% of those asked predicting overall capital spending will rise by more than 10%. And 49% expect to see their companies putting out the Help Wanted sign, increasing total employment over the next 12 months.