[FR] Factors affecting hydrocarbon prices

In less than a century, oil has become the dominant source of energy, but this dominance may well be coming to an end. After two centuries of abundant and cheap energy that fuelled significant economic growth, there are signs that we may be entering a phase of scarcer and more expensive energy. Indeed, hydrocarbon reserves are finite, oil prices are at record levels and energy demand continues to grow. Furthermore, it is clear that environmental issues are now closely linked to energy issues and that one of the major challenges of this century is to reconcile access to energy with the protection of the environment.

In this new complex, risky and uncertain context, renewable energies represent considerable potential that will be needed if we are to manage the effects of climate change in the long term. The development of their contribution depends on R&D efforts, the cost reductions that may result from these research efforts and the effectiveness of the public support policies put in place. In the future, energy balances will therefore have to be more diversified, with the share of renewable energies varying from country to country. This document analyses the determinants of oil prices as a benchmark for the economic competitiveness of other forms of energy. The role of alternative energies depends essentially on their competitiveness in terms of energy production costs compared to those of hydrocarbons and their prices. Unlike most goods and services, oil prices are not determined by a simple comparison of physical demand and physical supply. Other factors come into play for three main reasons:

• the concentration of production and reserves in the Middle East,
• the global economy’s heavy dependence on oil,
• and the economic and financial stakes of the oil economy, which are incomparable to those of other energy sources.