November's average price of per barrel for locally-produced crude oil of $33.15 Canadian is a nine-year high, with October 1990 being the last time local producers were offered better money for their product.

Even though the price of oil has not been this high since the build up to the Persian Gulf War, the TSE's oil and gas index has seen a 20-per-cent drop in value over the past two months.

Part of the reason for this insecurity, says Viking Oils co-president Kerwin Mondor, is oil investors' fear OPEC may break its compliancy agreement and begin to over-produce.

Mondor explained there was nervousness in the market even as recently as last week as investors reacted badly to the Iraq's oil-for-food negotiations with the United States.

In response to the disagreement between the U.S. and Iraq, the WTI price per barrel dropped (in U.S. figures) from $26.30 to $25.96 on Nov. 29, and on Nov. 30, the price dropped from $25.60 to $24.59. On Dec. 1, WTI started back on its upward trend.

"That's how jittery the market is. The feeling is that the price of oil could go to $12 at the drop of a hat," said Mondor.

Despite the nervousness, Wilf Gobert, an oil industry analyst with Calgary-based Peters and Co., says the industry is looking forward to a strong year.

"The number of wells drilled in 1999 was 10,000, and that compares to an all-time high of 16,000 in 1997, and for the year 2000 we're predicting 14-16,000 wells will be drilled."

"From what I can see the investors have found another flavour of the week," said Tappit Resources Ltd. community relations officer David Owen.

Owen said investor confidence might not return to the industry prior to February or March, even though companies have adjusted to the previous downturn of the market and are positioned to operate in a much leaner market.

Saskatchewan Energy and Mines executive director Bruce Wilson says even though OPEC is hitting high levels of compliancy within its current production agreement, he also adds the current oil price per barrel is above the "optimum level."

"It's reasonably well understood the optimum price level for the main OPEC Nations is not $10 or $30 a barrel. if the price stays at the optimum level, demand stays at an appropriate pace. If oil is at $30 a barrel people start driving their cars less, demand drops and that's not good for international demand $18-$20US is probably optimal - where OPEC sees its interest being served," said Wilson.

PanCanadian communications director Alan Boras agreed with Wilson, saying the industry looks more for the $17- $21-US-per-barrel range.

"That's typically what it costs to go out and add reserves, because at the end of the day it all comes back to what does it cost to produce?"

Quoting from a Reuters article by Jeffrey Jones, Boras said recovery in demand and high OPEC compliancy has people expecting oil prices will remain high.

Alternately, Boras added: "The tech stocks are up what you have is this great attraction in the high-tech stocks; oil and gas is not in favour these days."

In the year 2000, Boras expects PanCanadian "will see a very strong year."