Sunday, April 17th was the designated moment. The world’s leading oil producers were expected to bring fresh discipline to the chaotic petroleum market and spark a return to high prices.
This recent forum was about how to transition away from fossil fuels, after the UN conference on climate change in Paris in November 2015.
A drop in oil prices means less money in the hands of oil producers but more money in the hands of oil consumers.
A person often reads that low oil prices–for example, $30 per barrel oil prices–will stimulate the economy, and the economy will soon bounce back. What is wrong with this story? A lot of things, as I see it…
A gradual switch to higher-cost energy products, in a sense, works in the opposite direction to a switch from beef to chicken.
The Peak Oil story we have been told is wrong. The collapse in oil production comes from oil prices that are too low, not too high.
Both the stock market and oil prices have been plunging. Is this “just another cycle,” or is it something much worse? I think it is something much worse.
The real situation is that we right now seem to be reaching peak energy demand through low commodity prices. I see evidence of this in the historical energy data recently updated by BP…
EIA, IEA, and BP forecasts miss the issue of low prices, and what they do to the possibility of future oil production. We get lulled into thinking that current prices are almost high enough, but they really are not. Companies really need to have enough funds on a cash flow basis, and on this basis they seem to need about $130 per barrel now, and more later. The likelihood of getting prices up to this high level seems very low.
For a long time, there has been a belief that the decline in oil supply will come by way of high oil prices. Demand will exceed supply. It seems to me that this view is backward–the decline in supply will come through low oil prices.
Many readers have asked me to explain debt. They also ask: Why can’t we just cancel debt and start over? if we are reaching oil limits, and these limits threaten to destabilize the system.
The world is in a dangerous place now. A large share of oil sellers need the revenue from oil sales.