The volatility of the price of crude oil, as demonstrated in 2008-2009, raises a number of questions over how the price of oil is determined and the complex game of interdependencies between the physical and financial markets. It has also forced governments to recently take initiatives.
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Even former President George Bush had to admit that the US economy – like many others but even more so – is addicted to oil, which increasingly means imported oil. The question is do we continue to feed the addict no matter what the costs and consequences, or do we encourage the addict to kick the habit?
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Concerns about the economic, geopolitical, and national security consequences of U.S. imports of oil have triggered arguments for adopting policies to reduce oil imports. Many members of Congress have advocated “energy independence” for the United States.
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The quantity of available conventional petroleum is greater than often assumed, given the tendency to overlook unassessed areas and future reserve growth. Furthermore, volumes of unconventional resources are even more abundant than conventional resources. As a result, conventional and unconventional resources combined are likely to last far longer than many now expect.
As far as oil prices are concerned, many scenarios are possible. A jump to $300 per barrel or more in the near future may be the result of a geopolitical crisis in Iran, Venezuela, Saudi Arabia or elsewhere. Low price scenarios seem unlikely today but cannot be completely excluded. Another one which we consider of interest is a “dual-crisis” or “double-shock”. It would present a number of similarities with the development observed between 1973 and the end of the eighties.
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The Kremlin has only a limited ability to use Russian oil and gas as a “weapon.”
How expectations change. One year ago, talking about $100 oil was pure speculation. But as we reach the milestone, many are talking about why it won’t stop at $100. The fundamentals point in that direction. Continue reading »
Rising energy prices and mounting concerns about environmental depletion have animated fears that the world may be headed for a spate of ‘resource wars’ – hot conflicts trigerred by a struggle to grab valuable recources. Continue reading »
C. J. Campbell is the leading advocate of the peak-oil catastrophe theory, and one of the few to recognize its most startling prediction. If the theory (actually more of a hunch) is correct, oil production will peak quite soon, or possibly on November 24, 2005 according to Deffeyes, the smartest of the bunch. Once oil production declines, there will be no adequate replacement, and we will be doing a lot less driving around. This will dramatically reduce CO2 emissions which are half from oil, and that will fix the global warming problem. These guys are geologists and ignore economics. Continue reading »
On July 13, Gazprom, the Russian state-controlled gas company, and Total, the French oil and gas major, announced they had signed an agreement to co-operate in developing the Shtokman gas field in the Russian waters of the Barents sea. Continue reading »