Coming soon: high oil prices

Cue that disturbing background theme music from Jaws for this news item from the Guardian:

Saudi Arabia warned today that the world could be facing another oil shock, with prices back above the record highs of almost $150 a barrel within two to three years.

The comments from the Saudi oil minister at an energy summit in Rome were echoed by the IMF, both blaming lower prices and the global recession for hampering investment in new capacity.

Prices have fallen back from the peak they reached last year, largely because of the fall in demand in the downturn, and are hovering at about $60 a barrel.

"We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions," said the Saudi oil minister, Ali al-Naimi, ahead of an Opec meeting in Vienna on Thursday. "However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two to three years another price spike similar to or worse than what we witnessed in 2008."

He said low prices and weak demand had discouraged investment in energy projects. Those problems had been compounded by high development costs, tight credit markets and energy policies that are focused on alternative fuel sources.

IMF first deputy managing director John Lipsky said: "With long time-to-build lags, significant setbacks to oil investment today could set the stage for future sharp price increases."

Meanwhile, there is a growing worry that a fast recovery might lead to very rapid increases in the price of oil, which will then push us back into a nasty recession all over again. I think we are screwed!