Total CEO: Oil Relatively Cheap; Less Expensive Than In 1974 [View All]

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Total CEO: Oil Relatively Cheap; Less Expensive Than In 1974

Thursday May 22nd, 2008 / 12h48

PARIS (AFP)--Oil, now costing around $134-$135 a barrel, is in fact a relatively cheap energy source, with a barrel of crude less expensive today than in 1974 in terms of purchasing power, the head of French oil giant Total SA (TOT) said in an interview to appear Friday.
Christophe de Margerie also told the weekly Revenu that given production complications oil was unlikely to fall very much below $80 a barrel.

"I know that this can be surprising: oil is not a particularly costly form of energy when compared with other consumer goods," Margerie said. "In terms of purchasing power a barrel costs less than it did in 1974.
"If the price appears unable to discourage demand in China and in other emerging market countries it's because new consumers in these countries do not have our memories of earlier price levels," he said.
"We see rising costs of new high-tech projects, such as deep-water offshore operations or those that have environmental difficulties, such as the oil sands that Total is developing in...Canada," he said. "And that explains why the price of a barrel is unlikely to fall very much below $80.
"All the demands for growth, security and environmental protection contribute to the cost of these projects," Margerie said.

Thursday May 22nd, 2008 / 12h48 Source : Dowjones Business News