Business Insight Zone

First, the price of a barrel of oil is, to put it mildly, high.

Crude closes above $75 on U.S. supply decline

What happens next? The closing paragraphs of the article suggest the range of possibilities:

Technically, the oil market is “overbought and if the crude-oil market continues to struggle with the $75 level, I would expect some kind of pullback in this market,” said Burt Schlichter, director of trading at New World Trading, in e-mailed comments.

Ray Carbone, president of Paramount Options, predicts “severe volatility” in oil prices but sees more gains ahead for crude oil. “We are one geopolitical event away from $100 oil; we are probably one hurricane away from $80-85 oil.”

This comes as an industry group — stocked with a Who’s Who of oil luminaries — concluded that energy supplies are going to be tight for a long time to come. Jad Mouawad has a detailed analysis here:

Oil report’s conclusion: Broad effort needed to satiate energy demand

After nearly two years, [former Exxon Mobil CEO Lee] Raymond has finally delivered his answer. The result is a colossal 476-page study entitled “Facing the Hard Truths About Energy” that involved 350 participants, suggestions from over 1,000 people, submissions by 19 foreign governments from Australia to Saudi Arabia, and dozens of subcommittees.

The report, which was made public in Washington on Wednesday, was billed as one of the most comprehensive analysis of the global energy challenge.

In answering Bodman’s question, it also provides a sobering picture of the energy problem facing the United States and the world. Most strikingly, some of the recommendations adopted by the petroleum council also probably far exceed what Bodman had in mind, or what the Bush administration is prepared to endorse.

Because the world’s population is growing and living standards are rising worldwide, energy consumption globally is expected to jump by more than 50 percent over the next 25 years. But finding supplies to match that growth is going to be increasingly tough, and will require massive new investments in coming decades.

If you’re looking for a bedtime reading, the entire report (along with press releases, etc.) is available from the National Petroleum Council. For counterpoint from critics of the NPC and its report, you might start here and here.