Petrol to hit $1 a litre and stay there: expert

Source: AAP | Published: Friday March 31, 1:15 PM

Petrol prices in Australian cities were set to reach about $1 a litre by mid-year and would not drop, despite a move by oil-producing nations to up production, an industry expert said today.

Professor Ron Oligney, of the oil firm OTEK Australia, said OPEC's decision earlier this week had not increased production sufficiently to ease the upward pressure on prices.

'The US and the rest of the world were really after an increase in production of about three million barrels per day, rather than the 1.7 (million) which OPEC agreed to,' he said.

'So while prices may drop in the short term, the reality is that demand is still greater than supply and they will go up to around the $35 per barrel in the next 12 to 18 months.

'Contrary to most media reports, yesterday's decision by OPEC in Vienna is only a slight and temporary concession to world pressure on oil prices.'

Professor Oligney said in April last year he had accurately predicted the petrol price increases at the beginning of this year.

'All this means that Australians can expect to pay up to $1 per litre in the months to come, not just in country areas, but in cities as well,' Professor Oligney told AAP from the United States.

He said when he first suggested such a price, about a month ago, he was accused of being 'bombastic' but 'now it's looking a little bit on the conservative side'.

Professor Oligney said he expected the $1 a litre price in Australia by about mid-year when increased demand in European and North American summers pushed the price up.

The only possible relief in sight was if oil companies resumed significant investment in oil exploration and drilling, based on the OPEC decision's effective confirmation that high prices were here to stay.

Nine of the 11 members of the Organisation of Petroleum Exporting Countries (OPEC) agreed after a stormy meeting in Vienna to restore output to its level a year ago, before the OPEC had cut production by 1.7 million barrels a day.

Iran said it could not support the deal because of its 'political' nature - the United States had been pressuring OPEC members to boost output

http://www.theage.com.au/breaking/0003/31/A41583-2000Mar31.shtml

-- Martin Thompson (mthom1927@aol.com), March 30, 2000