If you’re worried about gas prices in the long term, this Weekly Standard article from Max Singer offers food for thought.
Singer toots his own horn in the opening paragraph, reminding readers that he accurately predicted back in 1980 that the following decade would be characterized by falling oil prices.
Now he reminds us that current prices depend upon more than just the oil supply in the ground:
Even if demand doesn’t increase at all, new wells must be drilled to replace older wells with decreasing production. Therefore an oil shortage can occur with no increase in demand. The world now has high oil prices using about 84 million barrels per day. We could reduce our use to 60 million barrels a day and again have high prices if a lack of investment failed to maintain production capacity. Or, as I predict, a few years from now we will have ample production capacity and lower prices at a consumption rate of 90 million barrels a day.
No matter how much oil is consumed–whether the amount is more or less than today–we can have high prices and shortages if there is not enough production equipment. Or, if enough equipment has been produced, we can have a favorable balance of supply and demand and moderate or low oil prices. This will be true until there is not enough oil in the ground–but there is no hard evidence of such a shortage, only theories.
As for predictions:
The basic price of oil for the next 50 years will be about $30 a barrel. Some of the time it will be higher, but I would bet that a lot of the time it will be lower. The key point is that any investments made in oil or oil substitutes that depend on oil prices staying well above $30 a barrel stand a good chance of losing money. They are imprudent, risky investments–although nobody can say for sure that they won’t pay off.
