WASHINGTON — Crude oil could drop to $57 a barrel by 2016 (in 2006 dollars) or triple that 15 years later, says the U.S. Energy Information Administration.

In a report last week, the EIA predicted that expanded investment in exploration and development brings new supplies to the world market, along with new alternative technology reducing dependence on foreign oil, would reduce prices, relatively, in the next eight years.

Even if the prediction comes true, it’s little consolation to truckers and drivers today as they watched oil per barrel hit all-time record at $109. And prices are expected to rise significantly above that when summer demand peaks.

In testimony before Congress last week, EIA Administrator Guy Caruso admitted that his agency’s predictions of oil prices have tended to be too low over the past four or five years.

New fuel economy standards will reduce US
crude demand by 12 percent, according to the EIA.

Caruso said the new fuel economy standards of 35 miles per gallon by 2020 for cars and trucks, with required increases afterward, would cut U.S. oil demand by 2.5 million barrels of day by 2030, or about 12 percent of today’s demand.

“Current oil prices are above EIA’s reference case estimate of the long-run equilibrium price, driven by recent strong global economic growth, shortages of experienced personnel, equipment, and construction materials in the oil industry, and political instability in some major producing regions,” says Caruso’s written testimony. “Geopolitical trends, the adequacy of investment and the availability of crude oil resources and the degree of access to them, and the market behavior of key OPEC producers are all inherently uncertain. To evaluate the implications of uncertainty about world crude oil prices, the AEO2008 includes alternative high and low price cases.”

In that alternate price chart, the projection for prices higher than the EIA’s reference prediction show a barrel of crude in 2030 at about $120 in 2006 prices, or an expected $185 per barrel in 2030 dollars.

In developing its oil price outlook, EIA considered four factors: (1) growth in world liquids consumption, (2) the outlook for conventional oil production in countries outside the Organization of the Petroleum Exporting Countries (OPEC), (3) growth in unconventional liquids production, and (4) OPEC behavior.