This is an excerpt from EERE Network News, a weekly electronic newsletter.
EIA: Oil Prices to Stay Above $40 per Barrel Through 2006
Oil prices for the first quarter of 2005 are expected to average $46.70 per barrel, according to DOE's Energy Information Administration (EIA). The EIA's latest "Short Term Energy Outlook," released on February 8th, projects oil prices to remain above $40 per barrel throughout this year and next, despite increased oil inventories in industrialized countries and slower growth in oil demand. See the EIA's "Short Term Energy Outlook."
While oil supplies appear to have stabilized, at least for the short term, the Royal Dutch/Shell Group of Companies continues to adjust its estimates of available oil and gas supplies. Shell announced on February 3rd that it is again cutting its estimate of proved oil and gas reserves by 10 percent—the equivalent to 1.4 billion barrels of oil—to the equivalent of 12.95 billion barrels of oil. A year ago, the company cut its oil and gas reserves by 20 percent, the equivalent of 3.9 billion barrels of oil. The petroleum company also continues to struggle with replacing its oil and gas production with new oil and gas reserves. Most companies aim to replace 100 percent of their production with new reserves, a percentage known as the reserves replacement ratio (RRR). Not counting divestments, Shell's RRR for 2004 is in the range of 31 to 41 percent. However, the company claims that it is still targeting a 100 percent RRR for the 2004 to 2008 period, with much of its new proved reserves added in the latter part of the five-year period. See Shell's "Fourth Quarter and Full Year Results 2004."