EIA Statement on High Oil Prices

EIA Statement on High Oil Prices
3 January, 2008
Prices have been rising and stocks falling over most of the second half of 2007, recently falling below the five-year average. This week, short-term factors such as cold weather, falling inventory levels in the US and elsewhere, together with rising geopolitical tensions and the usual 1 January flow of investment fund money – especially into commodities this year against the backdrop of a weakening dollar -- have edged us back to that milestone. $100/bbl may be just a symbolic figure but it is a strong reminder that consumers and governments have to implement measures that improve energy efficiency. Such measures are available now and provide the most effective short-term response.

In the longer term, greater investment in the upstream and downstream sectors is needed. The resources are there, but access to resources, aging infrastructure and chronic new project delays and cost inflation mean it will take time to also increase investment in alternative energy sources.