Oil Shooting Back To $150 In A Year, Says McKinsey

McKinsey warns that unless efficiency measures are taken, we face another imminent oil super spike along the lines of what we saw last summer.

Green Inc.: Members of the group’s global energy and materials practice said that while global energy demand is expected to stagnate or even contract in the short term because of the downturn, growth in developing countries could mean that demand outpaces supply, risking a new spike in oil prices reminiscent of the $150-a-barrel prices seen last summer.

Such a spike could come as soon as 2010 to 2013, depending on the depth of the economic downturn, the report suggested.

How do we avoid it? Electric car, aren’t going to get it done. McKinsey suggests cutting subsidies to Saudi Arabia, Iran and Venezuela as the subsidies artifically keep fuel prices low. Also, they recommend increasing the use of alternative fuels like ethanol.

Enacting their recommendations, McKinsey believes, would reduce world consumption by 6 to 11 million barrels daily, which ought to get the world’s supply and demand back in balance.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.