A new report suggests global oil process will remain somewhat depressed for the next decade.
Global oil prices may stay low for the next 10 or even 20 years, according to Frank Wolak, who serves as the Holbrook Working Professor of Commodity Price Studies in the Department of Economics at Stanford University.
He states that the most likely medium-term price point for global oil prices over the next one to two decades is $50 to $70 per barrel.
And while geopolitical and environmental issues could unexpectedly arise that turn oil prices upward, Wolak said there are many elements pointing to lower oil prices for the foreseeable future, including slowing demand for oil in the industrialized world and ever-advancing technological change in the extraction and use of oil.
Record domestic oil production is adding to that downward price pressure as well.
According to the U.S. U.S. Energy Information Administration, crude oil production overall increased by 1.2 million barrels per day (bbl/d) to 8.7 million bbl/d during 2014 – the largest volume increase since record-keeping began in 1900, the agency said.
On a percentage basis, output in 2014 increased by 16.2%, the highest growth rate since 1940.
That’s a major reason why global crude oil prices fell from a high of $115 a barrel in June 2014 to a low of $45 in January of this year, Stanford’s Wolak said.
Although oil production is expected to rise in 2015 and again in 2016, the growth is not expected to be as strong as in 2014, EIA added.