KPMG LLP News
Majority of Oil and Gas Execs Say Price of Oil Will Fall Below $100 by End of Year, KPMG Survey Finds
In this year's KPMG survey, which polled 372 financial executives from oil and gas companies in
"The combination of traders moving resources into commodities and the weak dollar has had a significant role in the surge in pricing in recent weeks," said
Despite the fact that the majority of executives questioned expect the price of oil to fall below
"The expectation of increased investment by U.S. energy companies shows that oil and gas executives are deeply concerned about energy security," said Kimble. "The survey shows that all avenues, traditional and non-traditional, need to be supported in order to find a long-term solution."
In addition to increased investment domestically, given the state of the U.S. economy, 46 percent expect that there will be more foreign investment in/acquisition of U.S. energy companies in the coming year and 18 percent expect that it will increase significantly. Only 5 percent expect a drop.
When asked what would most enhance U.S. energy security, respondents overwhelmingly felt that opening up drilling domestically is the best option. More specifically, 43 percent said that the Arctic National Wildlife Reserve should be opened for drilling and 28 percent cited opening up drilling in the Rocky Mountain region. A further 28 percent said that investment in renewable energy (biodiesel, etc) will enhance U.S. energy security the most.
However, despite many oil and gas executives feeling that there should be more investment in renewable energy sources they still do not see it is a serious near-term solution in the energy supply equation. Last year, 60 percent said that it will not be viable to mass produce any alternative fuels by the year 2010. This year, 54 percent gave the same response when asked about the year 2015.
"While KPMG's survey showed that executives view alternative fuels as a long-term solution for the energy supply equation, they see other, existing clean air energy sources as more realistic in the next 20 years," said Kimble. "Almost all of the respondents stated that they expect natural gas to become a larger contributor to global energy supply."
When asked about natural gas' role in global energy supply, 54 percent said that it will grow significantly as a percentage of total energy supply and 37 percent it will grow somewhat. Seven percent felt that its percentage will stay the same and only one percent felt it will drop.
When asked which clean energy source will dominate in the next 20 years, gas led the field with 50 percent of respondents, followed by nuclear with 31 percent respondents. While only 4 percent cited wind, many expect growth in this area with 51 percent expecting U.S. wind energy capacity to grow by 10 percent next year and 24 percent expecting growth of 20 percent.
Other findings: — Indeed, a significant majority, or 63 percent, of oil and gas executives believe that growing demand due to accelerated demand in emerging markets is the major contributor to the high price of oil. The second highest contributor, according to 15 percent of the respondents, was the lack of access to new oil resources, and rising exploration and development costs. Ten percent attributed current pricing to growing demand in developed markets. — 62 percent believe that while global warming is occurring, it is a natural weather cycle; 29 percent believe that CO2/mankind-induced global warming is occurring; and nine percent believe that global warming is not occurring. These responses are largely in line with those from last year. — 25 percent of respondents believe that the issue of global warming should be addressed by the market and not government legislation; 11 percent say that the government should enforce mandatory carbon emission credits trading; and 16 percent say that the government should provide corporate tax incentives for investment in renewable energy sources. — 15 percent say it will be viable to mass-produce biodiesel by the year 2015; 12 percent say it will be viable to mass-produce ethanol; and 10 percent say it will be viable to produce cellulosic ethanol.
KPMG will be discussing these survey results during its Sixth Annual Global Energy Conference, the event for financial executives in the energy industry on
KPMG's Global Energy Institute (GEI) has been designed to provide an open forum where industry financial officers, risk officers, internal audit directors, and tax executives can share knowledge, gain insights, and access thought leadership about key oil and gas or power and utilities issues and emerging trends. It offers pioneering ideas and innovative tools that help organizations apply rigor to compelling, real-world business and energy issues. GEI interacts with their members through a variety of channels, including Web-based videocasts, podcasts, conferences, share forums, and a web portal, www.kpmgglobalenergyinstitute.com.
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SOURCE KPMG LLP
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