OREANDA-NEWS. January 16, 2007. Rising costs for oil companies will drive up prices for crude oil futures through 2016, keeping supplies struggling to keep up with growing oil demand. 

Oil companies finding and development costs, which averaged $11,38 per barrel of oil equivalent in 2003 through 2005, rose to $17,23/bbl for the 2004 through 2006 period, according to the U.S. Energy Information Administration (EIA) data. Those costs may jump another 50 percent by 2010, experts said. 

“Continuing cost increases being reported by companies for 2007 along with spotty reserve additions suggest that finding and development costs could quickly be headed toward $25 a barrel,” Deutsche Bank said in a report. 

On 2 January 2008, the front-month crude contracts hit an intraday record of $100,09/ bbl. Analysts said the rise in part reflects the rising costs energy companies must pay to pump oil in producer nations within and without OPEC (the Organization of Petroleum Exporting Countries).

Countries such as Venezuela and Russia, flush with profits from high oil prices, have tightened contract terms for access to their vast, low-cost energy source reserves.  In addition, mature fields are producing and requiring more investment to maintain output, while rising labor and material costs are also bolstering company expenses. 

Concerns about weak U.S. demand growth and the forecasted U.S. economic recession could prompt OPEC to keep a rein on production, supporting prices for crude, Goldman Sachs said.