Author: ASPO-USA

Not long ago, I wrote Ten Reasons Why High Oil Prices are a Problem . If high oil prices can be a problem, how can low oil prices also be a problem? In particular, how can the steep drop in oil prices we have recently been experiencing also be a problem? Let me explain some of the issues: Issue 1. If the price of oil is too low, it will simply be left in the ground. The world badly needs oil for many purposes: to power its cars, to plant it fields, to operate its oil-powered irrigation pumps, and to act as a raw material for making many kinds of products, including medicines and fabrics. If the price of oil is too low, it will be left in the ground. With low oil prices, production may drop off rapidly. High price encourages more production and more substitutes; low price […]

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On Feb. 1, 2011, oil prices rose above $100 a barrel. For the next three years, they largely stayed there, with few of the dramatic ups and downs that oil markets are famous for. So when prices began falling slowly in June of this year, most industry experts shrugged. Hundred-dollar oil was here to stay, right? That attitude has made the vicious plunge in oil prices over the past few months all the more shocking. U.S. oil production has been rising for several years; more recently, Libyan oil output has surged, too. Those increases collided with a weak global economy this summer to create a glut of oil. Late last month, members of the Organization of the Petroleum Exporting Countries (OPEC) announced that they would not cut their own production to compensate and stabilize prices. Oil promptly fell below $70 a barrel, down 40 percent from its June peak. […]

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How Low Can Oil Prices Go? thumbnail The price of oil in global markets has plunged by nearly 40 percent over the past six months. As a result, the price of a gallon of regular gasoline in the U.S. has dropped from an average of $3.68 in June to $2.74 this week. In June, the U.S. Energy Information Administration had projected that a gallon of gas would average $3.48 per gallon this month. What happened, and where might oil prices go in the next two to five years? What’s going on is that the world is awash in crude oil while the world economy is slowing down. Demand for crude has dropped, yet supplies are increasing; the predictable result is lower prices. A huge part of the glut in global production stems from the fracking boom in the United States that has seen domestic oil production rise from a […]

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As everyone knows, oil prices have fallen sharply and “unexpectedly” over the last few months, though this is not really unexpected to anyone who believes in markets or technological progress. But confidence in markets and technology does rule out a lot of liberals and virtually all environmentalists. As such, it’s fun to recall his Krugmanness declaring four years ago that “peak oil” was here to stay. In “ Our Finite World ,” Krugman demonstrated that what’s finite is his intelligence and imagination: Oil is back above $90 a barrel. Copper and cotton have hit record highs. Wheat and corn prices are way up. Over all, world commodity prices have risen by a quarter in the past six months. So what’s the meaning of this surge? Is it speculation run amok? Is it the result of excessive money creation, a harbinger of runaway inflation just around the corner? No and […]

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What caused the recent crash in the oil price from $110 (Brent) in July to $70 today and what is going to happen next? With the world producing 94 Mbpd (IEA total liquids) $1.4 trillion has just been wiped off annualized global GDP and the incomes of producing and exporting nations. Energy will get cheaper again, for a while at least. The immediate impact is a reduction in global GDP and deflationary pressure. There is a lot of information to review and summarize and so this week and next we will present the story in stages culminating we hope with an oil market forecast scenario. Global Oil Production Figure 1 Global oil production has been split into three geo-political categories: 1) USA and Canada, 2) OPEC and 3) the Rest of the World (RoW). RoW production bears the hallmarks of having peaked in the period 2005 to 2010 and […]

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Remember "Peak Oil?" The world  was running out of oil , we were told: Prices would soon skyrocket, and we had better find other fuels. Well, that argument didn’t work out so well for environmentalists, did it? As oil reserves and those of other carbon fuels became scarce and prices rose, the law of supply and demand kicked in. The industry invested the profits from those higher prices in new technologies, and the oil barons found even more destructive ways to extract oil and gas—by exploiting the muck from tar sands, inventing hydro-fracking, and despoiling sources in developing countries. So now, oil is cheaper than it’s been in years, about $66 a barrel. Regular unleaded gasoline can be had for well under $3 a gallon. One of the few things sustaining U.S. consumer purchasing power in the face of dismal wages is close to $100 billion saved in energy […]

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“We don’t need to be flaring, and we can find an economic benefit to this natural gas.” These words were spoken by Mark Fox, chairman of the Three Affiliated Tribes — a group of Native American tribes from the Dakotas that joined together during the late 19th century after suffering massive population loss due to disease. The group recently bought land in some areas of North Dakota, including places where oil drilling has been prolific. Transform $1,000 Into A $238,960 Windfall With This Tiny Oil Stock! Since 2006, companies in the Bakken have drilled over 11,000 oil wells. Almost 40,000 miles of drilled space spiderwebs beneath the ground in the state. According to the  New York Times , if these well bores were dismantled and placed one after the other, they would circle the planet one and a half times. But a problem with all of the oil drilling has […]

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Years ago, at an international conference on peak oil, I met I had no way to check Ruppert’s statement, but, on the whole, it made sense to me. The CIA, after all, is an “intelligence” agency and their main purpose is to collect data. So, the fact that some CIA people were attending a meeting on peak oil didn’t mean that it was because they thought we were dangerous subversives. They were simply doing their job: collecting data about peak oil; a dangerous economic and political problem (or maybe both things….. Who knows?) Over the years, I have occasionally wondered about what the Central Intelligence Agency may know about peak oil. They surely have lots of data on the world of oil, including data that for us – common citizens – are not available. In principle, they could do a much better job than the ragtag group of geologists […]

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When an asset class takes a swan dive off the cliff, fortunes can be lost trying to call the bottom. It’s often impossible to tell whether the asset in question is on a suicide run or undergoing a short-term correction. And so it is with oil. Oil prices are down by a third since June and are less than half of their 2008 high of $147 (U.S.) a barrel. So time to buy? If I knew how to call bottoms, I would not be a miserable, ink-stained wretch; I would be filthy rich and living in a villa on the Amalfi Coast or Côte d’Azur, martini in each hand. But allow me to present four ideas of why the foundation for a compelling oil price bounce-back is being set even as prices tumble. I’m just not going to tell you when that might happen, because I have no clue. […]

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