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Despite
persistently high levels of oil and gasoline
prices, world wide demand is surging, the
International Energy Agency (IEA) reported
this week, while supply, especially from
non-OPEC sources, is not keeping pace. The
likely impact on supply and demand, and
ultimately fuel costs, is troublesome, and
transportation and logistics managers should
plan accordingly.
The IEA, a research group supported by the
US and western European countries to keep
tabs on energy markets, said it expects
world consumption of oil to rise by $1.7
million barrels per day in 2007, an increase
of 2 percent. That increase is about 167,000
barrels per day more than the IEA had predicted
earlier. (See Oil
Market Report.)
Meanwhile,
oil production from non-OPEC countries is
expected to rise just 900,000 barrels per
day, down from previous projections. The
result: a market that has little or no excess
capacity, and which is subject to large
upward price swings if there is any hiccup
in global supply.
“We
would very much hope that OPEC production
is at its seasonal low at the moment...
We definitely do need more crude oil,”
an IEA spokesman said.
The report
estimated that world oil stocks could drop
by 1-1.5 million barrels a day in the third
quarter, which it said “would push
forward stock cover down towards the low
levels seen when prices accelerated higher
in 2004. That is, by itself, a concern.”
As a result,
the agency believes another round of price
increases is likely in the second half of
this year. With crude oil hovering around
$65 per barrel currently and gasoline prices
near $3.00 per gallon, supply chain costs
could be whacked again from resulting increases
in raw material, transportation and fuel
surcharge expense. |
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