The cure for petro-angst.

The article discusses oil prices. In Alberta, the celebration of our new-found prosperity is being held back by the possibilities that pricey oil will plunge the world into a recession or supply will respond so rapidly as to swamp demand, thereby leading to a collapse of oil prices. The price of crude hit the US$50 a barrel mark at the end of September and is up about 70% over the past year. The rapid increase is largely a reflection of tight supply-and-demand conditions. Any unanticipated spike in demand or supply disruption could lead immediately to much higher prices. Barring an unforeseen global economic recession, higher prices are here to stay. The world's thirst for oil is significantly higher than previously expected. Strong economic growth in China and India has resulted in those countries dramatically increasing crude consumption. The Saudis will likely remain the only swing producer for the foreseeable future. They have the lowest cost to access reserves, and state ownership of oilfields provides tremendous production flexibility. But this is where fear enters the equation: Saudi Arabia is a terror target, and various reports have suggested that it remains vulnerable to significant output disruptions. The good news in all of this is that the present cost of crude is likely to moderate economic growth.