Some oil executives worry prices may fall By Jad Mouawad The New York Times SUNDAY, DECEMBER 4, 2005
NEW YORK Hold on to your gas guzzlers: Cheap oil may once again be just around the corner. Even as consumers worry about high gasoline prices and rising heating bills, oil executives in London, Texas and Saudi Arabia seem to be concerned about a prospect of falling oil prices. In a recent speech in Singapore, John Browne, the chief executive of BP, spoke of a possible sharp drop in prices and called current levels "unsustainably high." John Hofmeister, head of Shell Oil in the United States, said during an interview, "This high price cycle is artificially inflated." The notion of a steep falloff in energy prices may seem far-fetched. After all, in the past year, the market has experienced crude oil prices that touched $70 a barrel; huge disruptions in the Gulf of Mexico; strong demand from the United States and from the world's fastest-growing market, China; continuing problems in producing Iraqi oil for export; and mounting tensions with Iran, a large OPEC exporter. If anything, most of those situations would point to a sustained period of high energy prices. Most analysts said they expected crude oil prices to remain above $40 a barrel for the foreseeable future. But the oil business has witnessed a succession of booms and busts, and oil companies have found it impossible to balance their future production with the world's need for oil. Too much capacity, and prices fall; too little, and they rise.
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