Look for Massive Changes in the Oil Industry that will Turn it Upside Down, Shock the Economy

Unparalleled threats and opportunities are emerging in the oil industry that will define the nation’s economy next year, says Dr. Robert Robicheaux, Bruno Professor of Retail Marketing and director of the Hess Institute for Retailing Development at The University of Alabama. “2002 will rock!” Robicheaux says.

“High crude oil prices, refining and marketing expenses and attractive profit margins extracted by suppliers have caused the costs of virtually all business as well as the consumer price index to skyrocket in recent decades,” Robicheaux says. “Both consumer spending and confidence were rocked when the industry exercised its market power and extracted monopoly-like profits.”

“Massive changes will occur in 2002 that will turn the oil industry upside down and shock the world economy,” Robicheaux predicts. “First, President George W. Bush will announce in the second quarter that the United States will open much more of the Alaskan oil fields to development. Oil will begin to flow in massive amounts to U.S.-based refineries and gas prices charged to businesses and consumers will trickle down slightly.

“Second, in an attempt to energize its flagging economy, Mexico will increase its shipments of oil to the U.S. Soaring relations with the U.S. will facilitate new and modified Congressional policy initiatives that will add more fuel to the nation’s inventory. This will depress wholesale and retail prices further.

“Third, it will be announced by midyear that a major new oil field was discovered in the Caspian. Soon thereafter, Russia’s President Putin will announce a dramatic and creative joint venture agreement between Russia and one of the world’s largest European-based oil exploration, refining and marketing conglomerates. The goal will be to exploit quickly the new field’s potential. New oil will not flow immediately, but the world’s known supply will be transformed and business confidence will soar.

“Finally, the increased supply of oil to the west flowing by midyear from Alaska and Mexico will place unmanageable strains on OPEC. Bickering and infighting will intensify and lead to its total demise by year’s end. Political instability will intensify throughout the Arab oil-producing countries in the Middle East. Saudi Arabia and Egypt will emerge finally to exert proper influence and lead the region to a new era of peace, political stability and economic prosperity.”

Dr. Robert A. Robicheaux can be reached at 205/348-8919 (office), 205/987-2808 (home) or rrobiche@cba.ua.edu.