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Add $5 to $10 to crude oil prices for the BP oil spill?
Published on July 2, 2010 by oilprices · No CommentsA recent Deutsche Bank analysis raised its long term price of crude oil by $5 to $10 a barrel, citing tighter global regulation (the US ban on deepwater drilling due to the BP oil spill in the Gulf) pushing up oil exploration and development costs.
“There’s no doubt we’ll see increased regulation with time” said RCM Director Christopher Wheaton. The US Interior Department’s Minerals and Management Service “is already asking for more from companies, you’ll see more complexity in equipments and certification.”
“Adding relief wells that aren’t already in place will be costly,” said John Kingston, Platts Global Director of News, “making some projects uneconomical and may slow the introduction of new oil.”
From extra equipment, higher insurance costs, expensive technology, to mandatory third party inspections, costly delays, and shifting investments, analysts say the price tag of regulation will be stiff and not confined to just the Gulf of Mexico.
The Gulf of Mexico oil spill is threatening to affect more than just crude oil prices. Investors in BP have been warned they could suffer in terms of both income and regulation if BP’s share price continues to fall and the dividend payment suspension continues beyond Q3 2010.
Tags: bank, BP, crude, deepwater, deutsche, oil, oil prices, spill