One overlooked reason for this madness is the push to make fossil fuel prices sky high in order to make alternative energy sources more competitive, which supposedly will stave off the myth of the impending climate catastrophe.
Tom Watson
1 year ago
I remember around the time all this started, an unnamed Obama-era official was quoted as saying “Russia is incredibly unimportant in the world economy apart from oil and gas,” which even then seemed to me like the sort of thing only a person in love with his own intelligence would be foolish enough to think.
I suppose in a few months we’ll be treated to the revelation that Germany’s inevitable claims of having weaned itself off Russian oil will were based on importing ‘Hungarian’ oil instead.
Matthew Powell
1 year ago
We’ve been telling OPEC that we’re going to put them out of business as soon as we can. I don’t think we should expect any favours from them.
Henry Cunha
1 year ago
Predicting future oil prices is a mug’s game. There are too many imponderables. But some trends and facts stick out:
The growth in consumption 1980-2016 was from 23 billion barrels/yr to 35 bb/y. That’s 52% over 36 years, or 1.44% per year. That’s almost exactly the same as growth in world population. But oil has declined as a source of energy per capita from some 40% to 30%. In other words, other sources of energy (natural gas, renewables) have been replacing oil.
There are too many oil producers for anyone — even OPEC — to corner the market over more than 2-3 years. The average price of oil since 2000, through all the ups and downs, was around $65 per barrel. $100 in 2011 down to $40 in 2016, for example.
Russian situation has its peculiarities. Alternative export outlets (China, India) have serious limits (pipeline or water-borne capacity) for a while. This raises prices immediately, but forces Russia to discount. OPEC will react to market loss by either cutting prices or increasing sales to Europe. Russia can’t really shut down wells, which won’t come back, and has little spare stock capacity, so it has to keep producing and selling.
I wouldn’t worry about oil prices. All disruptions are temporary. Eventually, we’ll be back to the average.
Jacques Rossat
1 year ago
Brilliant but irrealistic : OPEC loves high prices as much as Russia does. Their ambiguous courting of both Russia and the US, coupled with the fear of the latter to alienate the cheiks will lead again and again to wishy-washy half and useless measures.
J Bryant
1 year ago
There’s also the issue of refining capacity. I’ve read that there simply isn’t enough refining capacity in the US (I don’t know about elsewhere) to produce a lot of gasoline etc rapidly even if crude oil output increases substantially.
Politicians have a few more months to grandstand but then autumn, and soon winter, will arrive and energy demands will spike. Then Europeans’ willingness to sacrifice for Ukraine (or maintain a proxy war against Russia) will be tested.
Absolutely the case, as is with electricity. We simply don’t have the capacity to produce what is needed at the moment. That’s why suddenly injecting $5 trillion into any economy causes inflation.
One overlooked reason for this madness is the push to make fossil fuel prices sky high in order to make alternative energy sources more competitive, which supposedly will stave off the myth of the impending climate catastrophe.
I remember around the time all this started, an unnamed Obama-era official was quoted as saying “Russia is incredibly unimportant in the world economy apart from oil and gas,” which even then seemed to me like the sort of thing only a person in love with his own intelligence would be foolish enough to think.
I suppose in a few months we’ll be treated to the revelation that Germany’s inevitable claims of having weaned itself off Russian oil will were based on importing ‘Hungarian’ oil instead.
We’ve been telling OPEC that we’re going to put them out of business as soon as we can. I don’t think we should expect any favours from them.
Predicting future oil prices is a mug’s game. There are too many imponderables. But some trends and facts stick out:
I wouldn’t worry about oil prices. All disruptions are temporary. Eventually, we’ll be back to the average.
Brilliant but irrealistic : OPEC loves high prices as much as Russia does. Their ambiguous courting of both Russia and the US, coupled with the fear of the latter to alienate the cheiks will lead again and again to wishy-washy half and useless measures.
There’s also the issue of refining capacity. I’ve read that there simply isn’t enough refining capacity in the US (I don’t know about elsewhere) to produce a lot of gasoline etc rapidly even if crude oil output increases substantially.
Politicians have a few more months to grandstand but then autumn, and soon winter, will arrive and energy demands will spike. Then Europeans’ willingness to sacrifice for Ukraine (or maintain a proxy war against Russia) will be tested.
Absolutely the case, as is with electricity. We simply don’t have the capacity to produce what is needed at the moment. That’s why suddenly injecting $5 trillion into any economy causes inflation.