The price of oil has been steadily declining in recent weeks, but the Organization of Petroleum Exporting Countries (OPEC) could triple the price in the next seven years, according to one analyst.
Charles T. Maxwell, the senior energy analyst at Weeden & Co, told CNBC’s “Squawk on the Street” September 9 the market is looking at oil prices reaching $300 a barrel by the year 2015, even though Maxwell sees a dip in prices in the short-term.
“That’s for the next six or seven years,” Maxwell said. “That would be a 2015 prediction. So for the moment, we are projecting $100 dollars, and then $95 and then probably $90. So, we’re looking for a consolidation here between $80 and $100.”
Gas prices have been steadily declining over the last two months, but the media still have a fascination with energy prices on the higher end of the spectrum. Journalists tend to report on gas prices by hyping rising costs and pointing to states with the highest prices like California.
Maxwell predicted OPEC would not allow oil to continue that drop below $90 a barrel. He said any action OPEC takes to cut production would be more effective than ever before because the market is more sensitive to any alteration in supply and demand.
“Well, for one thing – OPEC still has powerful options to cut production and they will, I think, do that if the price gets down below $90,” Maxwell said. “They’ll cut production and hold the price, which is something that they have tried in the past that hasn’t worked – that is now a much more powerful mode for them because we have no cushion of extra supply, so when they cut they really make us feel it and it will have a powerful effect and it will hold the price.”
He specifically blamed
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In February, Maxwell predicted gasoline would reach between $12 and $15 a gallon by 2015. That prediction led other analysts to make similar forecasts, including Management Information Services Senior Energy Advisor Robert Hirsch in a May appearance on CNBC’s “Squawk Box.”
Maxwell, described as the “Dean of Oil Analysts” in his biography on the Weeden & Co. Web site, said he “has been ranked by the U.S. financial institutions as the No. 1 oil analyst for the years 1972, 1974, 1977 and 1981-1986,” according to polls taken by Institutional Investor magazine.
“In addition, for the last 17 years he has been an active member of an Oxford-based organization comprised of OPEC and other industry executives from 30 countries who meet twice a year to discuss trends within the energy industry.”