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PETROLEUM PRICES FORECAST 2007
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The temporal cycles of petroleum prices

figure 0
The temporal cycles of oil prices,
oil price diagram.


The time cycles of oil prices. Figure 0.

It can be counted, that the tendency has began from 10 USD per barrel in 1998. During the last two years (2005-2006) petrol price-wave has had period:

  • between maximums from 2.8 to 4.5 months,
    at an average 3.4 months
  • between minimums from 2.0 to 4.4 months,
    at an average 3.3 months.
Petrol price difference between minimum and maximum is from 11 to 17 USD/barrel, an average price is 12.8 USD/barrel.

On the figure 0 is showed forecasted time of petrol prices minimums and maximums. Minimums are showed with green dotted lines, maximums are showed with red dotted lines.

According to the graph and average cycle length on it, the last minimum was in the middle of September 2006, and maximum must be in the begining of November 2006.

oil price history

 >>   1973 oil crisis
Chronology and oil price diagram 1970 - 2003. Role of OPEC cartel.

 >>   Oil price increases of 2004-2006

 

Petrol prices forecast - 2007: Variant I

figure 1
Petrol prices forecast: Variant I
("hackneyed")

Petroleum prices forecast: Variant I. Figure 1.

With fuchsia line is shown two years linear component of oil prices rising. The time of the first forecasted price minimum is as possible maximal (4.4 months from the last minimum). Another chose of first minimum time is unreal.

After the unprecedented oil price falling (from August to October 2006) it's possible to get back to the forecasted fuchsia line only if:

  • first following time cycles will be maximal short (minimums 2.0 months, maximums 2.8)
  • oil price difference between minimum and maximum will be maximal (17 USD per barrel).

probability of the petrol prices forecast Variant I
By the forecasted drop in consumption of the fossil fuels and actual presence of production potentialities redundancy in extractive industry, Variant I for petrol prices is possible only in case of catastrophic events in the oil and natural gas extractive planet regions and of global cataclysm. Such events could be:

  • block of the Persian gulf
  • mass terrorist attacks to the oil and natural gas extractive industry and oil transportation
  • organizing of political instability or local nuclear wars in oil extractive industry regions
  • global climate changes (sharply)
  • distruction of the oil and natural gas infrastructure by the nature cataclism.

 

Petrol prices forecast - 2007: Variant II

figure 2
Petrol prices forecast: Variant II
("fundamental change")

Petroleum prices forecast: Variant II. Figure 2.

General tendency change its sign (from plus to minus), it's taking place symmetrical falling of oil cost. Time to the next forecasted oil price minimum is maximal long (4.4 months), after that it's taking place maximal price raising - 17 USD per barrel.

probability of the petrol prices forecast Variant II
By the forecasted drop in consumption of the fossil fuels (exept China, which is not in full measure an market oil consumer) and actual presence of production potentialities redundancy in extractive industry, Variant II is quite possible.

Probably, OPEC cartel will seek to hold the oil prices at least on this tendency.

 

Petrol prices forecast - 2007: Variant III

figure 3
Petrol prices forecast: Variant III
("heart-rending")

Petroleum prices forecast: Variant III. Figure 3.

First maximum (in sum total with general tendency to the petrol prices falling, fuchsia line) will be passed in the begining of November 2006. In this case periods of petrol price rise take the form of slower price falling.

By this variant mineral oil price will return to "normal level" (15-20 dollars per barrel). And this variant is not unprecedented. Approximately such a situation was in 1985-1986.

probability of the petrol prices forecast Variant III
Variant III is possible by absolute drop in petrol consumtion, by placid political situation. A note should be taken, that during last 7 years of oil price rising the society has stored potential for using energy saving technologies (which inevitably should be practised).

 

tourism market situation: Variants I-III

Variant I: petrol price rising

High kerosene-type aviation fuel and auto fuel prices decrease number of traveling to the long distances. Also decreas part of tourist deals, which are bounded with great fuel expenditure: avia excursions (especially with helicopter), sky diving, individual motorboat voyages etc.

The terrorist dangers in tourist places and in transport is also great: financial resources of terrorist organization increase, they have ambitions to increase political influence.

High fuel prices and terrorist danger increase part of the tourism to the short distances; and relatively to total number of flights increase the part of charter (as cheaper) flights. In general, tourist market decrease, especially for the independent tourism.

Variant II: smooth oil price falling

Perhaps, unimportant price falling in the first half-year of 2007 won't cause great changes in tourist market.

Some oil extractive industry competitors will strive to organize political instability in the oil extractive countries. Terrorism financial resources will unimportant decrease, but will be enough to carry out theirs attacks in oil extractive regions. In tourist centers and on the passenger transport attacks are hardly probable (if there are not bound with terrorist related competitors bands fight), as mass terrorist attack will decrease buisness activity and oil consumation (and consequently decrease terrorist profits on account of oil prices decrease).

Smoth fuel price falling and decrease of the terrorist danger will increase part of tourism on the long distances. In general tourism market will grow larger, part of independent tourism will grow insignificantly.

Variant III: intensiv falling in petrol prices

Considerable fuel price falling calls increasement of the forecasted number of travels to the long distances, number of regular flights increase. The tourist attractions market grow larger. Especially for the high powerconsuming and fuelconsuming attractions.

Considerable contribution to increasement of this sigments make also suspended demand (in the period of high oil prices) and supply potential.

Terrorist financial base decrease, terrorism organizators are seeking to settle theirs finances in the legal realms. That decrease financial possibilities of terrorist attacks organization. But there are possible terrorist attacks with purposes to provoke retaliatory measures against the oil extractive countries. Also possible are attacks against the competitors. And, as "defence", are possible direct attacks to oil extractive regions and oil transportation.

Fuel prices falling and decrease in terroris danger will increase considerable the part of tourism to the long distances. In general tourism market will grow larger, part of independent tourism will increase, in spite of some general economical recession.

Luke Balkemann
October 30, 2006
This article (including the graphs) is only the author's private opinion


 
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