Energy: Oil Price Projections

Lord Sheldon Excerpts

Monday 28th January 2013 Lords Chamber

Asked By

[Lord Sheldon]

To ask Her Majesty’s Government what is their projection of the likely future of oil prices.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)]

My Lords, my department has generated a set of projections for oil prices to 2030. A supply and demand model is used to estimate growth rates, which are then applied to 2012 prices, calculated using year-to-date and future prices. These are then sense-checked against external forecasts. A range is captured by three scenarios: low, central and high. In DECC’s central scenario, oil prices are projected to rise, reaching $124 per barrel in 2020 and $135 per barrel in 2030.

[Lord Sheldon]

I thank the Minister. Despite the cold winter, we may have a future of warm weather, which could reduce demand in Europe. Although there has been an expectation in 2013, the latest prediction anticipates a slowdown in the global economy if warm weather can actually reduce demand. There can be a reasonable summer.

[Baroness Verma]

My Lords, while we encourage reduced use of oil in our country, the difficulty arises in emerging economies that have found greater demand for it, so it is about finding a balance between our own liberalised markets and the demand seen elsewhere. There has also been some slight uncertainty during the recent difficulties being faced in north Africa and the Middle East.