When you ask an economist how is the wife, the response would be: compared to what? Or so goes the joke. This was the opening line of Prof. Paul Stevens of the Centre for Energy, Petroleum and Mineral Law and Policy –phew long name! - at the University of Dundee in Scotland speaking at Kuwait Economic Society. The subject matter was the price of oil and in his view the current price is high compared to historical levels –not the highest but still high- and will continue to be so for the near to medium future.
The prediction is for the price to be at the $50-60 level for the next 5 years or even longer. One reason for this is the insufficient investment in the oil sector to increase capacity. Remember Project Kuwait? (Development of Kuwait’s north oil fields) This project has gone nowhere due to political scrambling. This will have negative long term implications as the world will intensify its search for alternative energy with the aid of technology and move away from high geopolitical risk areas where oil reserves are concentrated. It would be worthwhile to remember that the Stone Age did not end for lack of stone.