At the beginning of this year, international oil price continued to plunge as last year. On Jan. 7^th, oil price fell below     $ 50 / barrel. Domestic and foreign media talks more about the ‘Era of Low Oil Prices’. However, analysis on various factors showed that ‘the Era of Low Oil Price’ is still far away and the current drop in oil price is merely a temporary phenomenon.

The drop in oil prices is due to superposition of several temporary factors, not a long-term trend. Among them, the imbalance between supply and demand fundamentals provides a basic background; and it was fueled by geopolitical factors and international speculative capital such as profit-driven speculation; also the dollar revaluation played an important role. However, the imbalance of supply and demand fundamentals would not sustain for a long time; the market will play a corrective role; and geopolitical factors cannot endlessly push international oil price fell.

The negative impact of low oil price on the world oil production has begun to show. In addition, the situation of major oil-producing regions is likely to get further instable. Ukraine crisis is "forcing" Russia to accelerate the adjustment of industrial structure deformity of excessive dependence on oil and gas exports and to accelerate "re-industrialization" process. Consequently, the global oil supply is likely to be reduced and a new balance between supply and demand is going to be established. Not for too long, the oversupply in world oil market is likely to reverse, booting rebound in oil price.

From the development trend of world energy, oil's status as the dominant energy is difficult to fundamentally shake, which determines that the ‘Era of Low Oil Price’ has not come yet.

First, major world economies are mostly on the basis of oil.

Oil accounts for more than one-third of the world's primary energy supply and almost all developed countries regard oil as the leading energy. Many developing countries except oil-producing countries remain in the ‘Coal Age’. Although the proportion of new energy to expand in the energy consumption structure is kind of an inevitable trend, its role of a substitute for oil will remain limited in quite a long time due to cost, technology, reserves, developing capabilities and other constraints. Fossil fuels are always getting fewer and more difficult to explore. Even if the developer has made new progress in technology, it would be less likely to change the trend of ever higher mining costs radically.

Second, the oil demand of developing economies will continue to increase for a long time.

The transition of industrial society, acceleration of urbanization, expansion of population and improvement of living level in developing economies have to base on the increase of oil consumption. Since developing countries take a large part in world population, the possibility of a ‘normal status’ that oil demand of world economies exceeds oil-producing capability cannot be eliminated.

Third, it shall be a long journey for world economy to become new-energy dominant.

The large-scale exploitation of new energy not only needs revolutionary breakthrough in technology but also requires fundamental transformation towards infrastructure, production equipment and transport. None of these are easy things. Moreover, the first goal of alternative energy should be coal, followed by oil. Thus, new energy cannot replace the dominant position of oil in decades.

The United States has a major influence on the world's energy and does not want to see the coming of ‘Era of Low Oil Price’. Despite the drop in oil price benefiting US consumers, it is not what the US oil giants controlling the world's major producer of oil are willing to see. And benefiting China and other emerging countries with lower oil price is not what the United States wished. The low oil price weighing on Russia today is entirely possible to turn to a high oil price weighing on China tomorrow. In short, the growth of international oil price will be a long-term trend. It shall be not wise to believe in the talks on the coming of ‘Era of Low Oil Price’.

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