There have been many unfulfilled expectations and disappointments in the energy market during 2018. At the beginning of the year, I listed four issues for readers to watch.
• Renewables, despite continuing price falls, have failed to break through. Hydrocarbons remain entrenched as the dominant source of energy supply. • China’s shift to a lower carbon economy has slowed down. Coal use has increased again after two years of decline and, as a result, emissions have grown.
• The political situation in Saudi Arabia has not been stabilized and the killing of journalist Jamal Khashoggi in Turkey has only served to remind the world of the dangers of the concentration of power in the hands of Crown Prince Mohammed bin Salman.
• Perhaps the only true success story has been the continuing expansion of shale production in the US — lifting total US oil production by 2m barrels a day year on year, according to the latest official figures. That surge in output has contributed to the persistence of low prices — at just over $60 a barrel for Brent it is slightly lower than 12 months ago.
But another development deserves note. Nearly 20 years after Hugo Chávez came to power, Venezuela has continued to decline. Oil output is down from over 2.2m b/d in January to some 1.1m b/d in November. That represents a fall of over 68 percent from the country’s peak production of almost 3.5m b/d in 1998. The economy is shrinking but the country has so far refused to produce economic data on gross domestic product or inflation despite repeated requests and potentially a major default on Venezuela’s sovereign debt. The country’s inability to pay bondholders could lead to it losing over the next few months of one its main assets — the international trading company Citgo.