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Consumer Nations Contemplate a "Magic Range" For Oil Prices and Energy's Future
Oil prices from Saudi Arabia are projected to rise toward $75 a barrel—a price, economists say, that will throw off the careful balance between the recovering world economy and healthy investment in gas in oil production. As International Business Times reports, the Organization of Petroleum Exporting Countries (OPEC) meets in Vienna on Thursday, and the G8 Energy Ministers were in Rome yesterday to discuss the implications of oil costs.
It’s a lesson in simple economics: Too low an oil price, while good for the economy, discourages investment in production and fuel technologies. Too high, and the economy dramatically struggles in overcoming the energy crisis. There exists a "magic range,” says Roberto Poli, president of Italian oil company Eni. "The experience of the last price cycle demonstrated that to ensure steady economic growth, prices should not rise higher than $75 per barrel," Poli said. "Oil price instability and unpredictability are the worst enemies of any well thought-out plan to build a different energy future."
The situation, however, is not meant to manufacture outrage. Saudi Oil Minister Ali al-Naimi is acknowledging the possibility for the spike, but urges that sooner or later the world economy will pick itself back up. When that happens, the demand for oil will still be there.
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