High oil prices trouble Europe's economies

BERLIN, May 23 (UPI) -- First the high euro, now this: ever-rising oil prices have shocked observers, who fear Europe's export-driven economies will take a beating.

Anyone remember 2002? The New England Patriots won their first Super Bowl, Ben Affleck was dating Jennifer Lopez, and oil prices were at roughly $30 a barrel. An Iraq war, an Iranian nuclear crisis and some worrying global warming reports later, prices this week for the first time jumped above the $135 mark.

German industry, which is fueled by its exports, is worried:

"It is the sum of rising oil prices, strong euro, slower U.S. economic growth and the financial crisis that gets to companies," Matthias Kraemer, economic expert at the Federation of German Industries, or BDI, told the Berliner Zeitung newspaper.

KLM-Air France, Europe's biggest airline, already has warned of severe changes to be faced by the air travel industry in light of the high prices, and German carmakers like Volkswagen, Daimler, BMW and Porsche are worried that the high prices for gasoline may have a negative impact on sales of their most powerful cars. And German companies are already battling the effect of the weak dollar -- euro-valued goods are becoming increasingly expensive for customers in the United States, still the largest importer of German goods.

Of course, the strong euro also has its positives, because it was able to somewhat absorb the rising prices for oil, which is valued in dollars.

"That's why there is no cause for panic," Claudia Kemfert, energy analyst at the German Institute for Economic Affairs, a Berlin-based think tank, told United Press International Friday in a telephone interview. "The economic upswing in Asia continues, and German exports will benefit from that. … Only if energy prices remain on such a high level for the next six months or so, will we have to start worrying."

But that just may be the case: Analysts are revising their price forecasts, with some saying $140, and others $200, could be written on the tag for a barrel of crude in the future.

Analysts for the past months also have warned about possible oil shortages over the next years as production and new discoveries fail to keep up with rising demand.

The United States has just published weaker-than-expected weekly oil inventory data; Russia has failed to push forward with developing its oil fields in the Barents Sea; and as for the reserves of the OPEC countries -- no one knows what they are exactly. Saudi Arabia, the world's biggest oil producer, was expected to raise production levels from 12 million barrels to 15 million barrels a day, but that hasn't happened yet. Whether they can't, or they simply don't want to, remains a matter of speculation.

"Speculation" is one of the dark words in the oil business: Whether scalpers are the cause of high oil prices or simply the drying out of wells is a source for hot debates.

This has led several groups in Europe to warn that the oil age is coming to an end, with the peak of production already reached or at least imminent, they say. Add to that the growing thirst for oil in countries like China and India, and you know why some predict an oil shortage of as much as 15 million barrels a day by 2030.

Even the International Energy Agency, the Paris-based policy advisory group for industrialized countries, said earlier this week it was revising its new oil supply prospects, sparking yet another price hike in midweek trading.

Of course, the end of the oil age has been announced for years, and concerns about future supplies have always been there. Yet it seems inevitable for oil producers to increase their investments in prospective new fields to avert the oil shortage everyone is warning of.

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(e-mail: energy@upi.com)