In a presentation at Kuwait Economic Society, Mark Finley BP’s Energy Economist spoke about future prospects for the oil market. As to future price of oil, he noted that it is difficult for anyone to predict. This is determined by several factors: one is technological advances in prolonging the depletion of oil resources. The more technology reduces oil consumption, or helps in extracting more reserves, the more resources will be available; hence reducing energy prices. Another factor is market power of OPEC that allows it to influence prices. Finally higher taxes imposed on energy consumption will lead to higher prices. He mentioned how historically technology has played a major role (so if this trend continues and technology trumps once again then this points to lower long term prices).
The other interesting point he made, which is the hot topic nowadays, is how to combat the environmental consequences of energy consumption. He pointed out that people don’t really consume energy but light, heat and mobility. And the challenge is to achieve this in an environmentally friendly way. The two options on the table are carbon trade system and carbon tax. He prefers carbon trade system as it embodies a market mechanism which is the most efficient in allocating energy consumption. I enjoyed the lecture.. it was alota fun ;p