HOUSTON - Even as oil prices ascended to more than $124 a barrel this week, many oil and gas industry executives say they expect the price to fall significantly by year-end, a survey shows.
Fifty-five percent of 372 petroleum industry executives surveyed by KPMG LLP said they think the price of a barrel of crude will drop below $100 by year-end. Twenty-one percent of respondents predicted a barrel of oil will end the year between $101 and $110, while 15 percent forecast the year-end price to be between $111 and $120 a barrel.
Nine percent said they expect the price to close the year where it's been this week - above $120 a barrel.
What's more, 44 percent of the executives said their companies plan to increase capital spending on exploration and production by 10 percent during the next year.
Meanwhile, light, sweet crude for June delivery rose 16 cents yesterday to reach a settlement record of $123.69 a barrel on the New York Mercantile Exchange.
The survey was conducted last month and scheduled for release today. Participants included executives for major oil companies, independent exploration, and production outfits and other energy companies.
At the pump, the average price of a gallon of regular gas nationwide rose 2.7 cents to a record $3.65, according to a survey of stations by AAA and the Oil Price Information Service. Diesel prices also rose, adding 0.9 cent to match a record national average of $4.25 a gallon.
Gas prices tend to lag oil futures, and with crude rising to a record near $124 a barrel Wednesday and likely headed higher, it's widely expected the average price of gas will soon rise as high as $4.
Of late, all eyes have been on crude prices, which have nearly doubled in the past year. The dollar's decline against the euro and other foreign currencies has helped spur the rise, attracting investors looking for a hedge against inflation.
Rising demand for oil from the rapidly developing economies of China and India has played a role too, as have concerns about tighter supplies. Indeed, 63 percent of survey participants said growing demand in emerging markets was the main factor in the historic rise in oil prices.
Asked what would most enhance US energy security, participants overwhelmingly said opening up more acreage for domestic drilling was the best option. In particular, 43 percent said the Arctic National Wildlife Refuge should be opened for drilling. Another 28 percent said more investment in renewable energy sources such as biodiesel would enhance US energy security the most.