Oil prices have fallen 70% since hitting a record $147.27 a barrel in July, which means in just five months, crude has given up all the price gains it made in the past four years. After such a wrenching plunge, many analysts believe the outlook for the "black gold" remains bleak—and, in the short term, it does.
In the long run, however, dwindling supplies, resurgent demand, and a lack of investment will cause crude oil to double, triple, or even quintuple in price over the next few years. When the recessionary tide finally recedes, all of the factors that drove oil to its record high last summer will once again be exposed, and crude again will again soar to record highs.
In the meantime, however, low oil prices are crimping investment in new capacity, a reality that will lead to much higher prices down the road. The IEA predicts that, by 2015, a lack of investment and rising demand will create a "supply crunch" that will once again send oil prices up into the triple digits.
While it's probably true that the "era of cheap oil" is in our rearview mirror, a new question has arisen: Just how high do oil prices go? According to some analysts, the IEA's target price of $200 a barrel is far too conservative.