Columbia International Affairs Online: Working Papers

CIAO DATE: 07/2008

A New Era for Oil Prices

John V Mitchell

August 2006

Chatham House


This report highlights the short and long term effects of high oil prices.

Five or more years of oil and related energy prices averaging double (or more) their previous long-term average cannot fail to create a new long-term situation both in terms of economic behaviour and government policy. This will bring new competition which will simultaneously reduce the demand for energy, increase the supply of oil, and increase the substitution of other fuels for oil outside the transport sector. As these forces develop, oil prices will be unstable through the long term.