If oil price stays low, how do we react to the ‘new normal’? | The National

If oil price stays low, how do we react to the ‘new normal’? | The National:



"At a gathering of the leading analytical stars in the HSBC firmament in Dubai recently, a near-apocalyptic vision of life in the new regime of lower oil prices was drawn: the “glorious decade” of cheap oil and high growth for the Arabian Gulf was over; the region would have to learn to live in the “post-abundance era” of reduced energy revenues, budget deficits and lower public spending.



The HSBC experts recognised that the region had certain advantages as they embarked on this new era of austerity, notably in the huge capital reserves that have been built up over the past decade of high oil prices (except for the blip in 2009). But overall, the message was that lower oil prices were here to stay and the region had better get used to it.



Most economists agree with the basic scenario that low oil is likely to be the norm for the foreseeable future. Capital Economics (CapEcon), the London research house that has spent the past year telling us that energy prices were due for a fall, is forecasting US$65 a barrel for the end of next year and $60 for the end of 2016."



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