Oil prices would soar to $225 a barrel by 2012 and gasoline prices would hit $2.25 a liter as scant supply growth would lead to an “age of scarcity,” said CIBC World Markets chief economist Jeff Rubin. US crude oil futures settled $2.46 higher at $118.52 a barrel on Friday. It hit a session peak of $119.55, near Tuesday's all-time time of $119.90 on supply disruptions in Nigeria and the North Sea and fresh tensions between the United States and Iran. London Brent crude gained $2 to settle at $116.34 a barrel, after hitting a record $117.56 earlier. “Our latest review of probable supply suggests oil production will hardly grow at all, with average daily production between now and 2012 rising by barely more than a million barrels per day. “Despite the recent record jump in oil prices, the outlook suggests oil prices will continue to rise steadily over the next five years, almost doubling from current levels,” Rubin said in his report, titled “The Age of Scarcity.” He said there has been no growth in oil supply over the past two and half years, contrary to popular misconception. Whereas total output has grown to an estimated 86 million barrels a day, the growth has been in related products known as natural-gas liquids, such as butane, used in cigarette lighters. But those liquids - other than lightly used propane -are not transportation fuels, which now account for half of the world's oil use and more than 90 percent of demand growth in recent years. With many oil-producing countries subsidizing gasoline prices, demand has surged in the developing world as new affluence drives auto purchases. However, demand is destined to fall as prices soar in countries belonging to the Organization for Economic Cooperation and Development, where consumers not only pay full prices but excise taxes as well. “The point of the fact is that for every extra driver that gets a car and goes on the road in those (developing) countries in the next five to six years, somebody's having to get off the road in the OECD countries,” Rubin said. That situation will only be exacerbated by major oil-producing countries consuming more oil themselves.
