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GM prepares for US$130-per-barrel oil

Donald Kemp, a General Motors Corp employee in Flint, Michigan, carries a flag at a demonstration in front of GM headquarters during the National Summit in Detroit, Michigan, on Tuesday. PHOTO: BLOOMBERG

General Motors (GM) is preparing for oil prices as high as US$130 dollars a barrel once the world economy recovers and will develop more electric cars and biofuels, GM’s top executive said on Wednesday.

“We’re planning for oil in the US$100 per barrel to US$130 per barrel range,” the bankrupt automaker’s chief executive, Fritz Henderson, said at an energy conference in Detroit sponsored by the Detroit Economic Club.

“This is a structural change,” he added, noting increased global demand.

Analysts said the sharp decline in crude inventories showed energy demand was picking up in the US, the world’s biggest energy consumer.

The weekly US Department of Energy report released on Wednesday showed crude stockpiles falling for the second week running, by 3.9 million barrels, far sharper than analysts’ predictions.

In Asian trade yesterday, oil prices were higher above US$71 a barrel following a sharp fall in US crude reserves and amid continued unrest in Iran and Nigeria.

New York’s main futures contract, light sweet crude for delivery next month, gained US$0.47 to US$71.50 a barrel. Brent North Sea crude for August delivery was up US$0.48 to US$71.33.

For GM to be competitive, the company had to look at “multiple paths” including electric cars and biofuels, he said, adding: “In the end, it’s the consumer that will drive us to make more efficient automobiles.”

Henderson said he was in daily contact with US President Barack Obama’s auto task force and was preparing for an upcoming hearing on whether GM should be sold to a consortium of investors including the US Treasury, the Canadian government, the company’s blue-collar retirees and creditors.

The new GM is expected to exit bankruptcy at the end of the summer.
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