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Colin Welsh

?Conventional Energy Wisdom" ? Dec 2004. Demand falls as energy costs riseDemand increases are due to Chinese growth which cannot be sustainedThere is no shortage of oil reserves, so why worry?Oil prices will inevitably fall back to $18-$20 per barrel historic averagesAlternative energy sources

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Colin Welsh

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    2. �Conventional Energy Wisdom� � Dec 2004 Demand falls as energy costs rise Demand increases are due to Chinese growth which cannot be sustained There is no shortage of oil reserves, so why worry? Oil prices will inevitably fall back to $18-$20 per barrel historic averages Alternative energy sources will drive down the future price of oil

    3. Simmons View In 2004 Demand is a �runaway train� Global energy production may be close to peaking There has been a paradigm shift in the pricing of energy (which the market has yet to recognise) Potential for physical shortages

    4. Where Were We In Dec 04?

    5. Where To Next?

    6. Hurricanes Katrina & Rita

    12. Conclusion The principles of supply and demand dictate that lack of refinery capacity will result in an inability to satisfy the worlds increasing demands for refined products. So we can expect significantly higher refined product prices � US gasoline prices have risen by 30%, but more significantly we can expect physical shortages. That will be good news for investment in alternative energy and new technologies � unconventional oil, GTL, clean coal and natural gas. But it may be bad news for the world economy as spiralling transportation costs drive inflation and dampens demand. So predictions for next year:- Continued high commodity prices, Very high petrol, diesel and heating oil prices, Record investment in the sector.

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