A previous post on oil prices generated a comment on why is this happening. As ever there are several factors, but the outlook for peak oil and ever increasing prices has really changed in the last few years.
Firstly, US production has increased hugely and is expected to further. Imports are down to 9 million barrels a day and production is forecast to grow. Plus growth of shale gas is helping to reduce the need for oil imports. In addition, Europe's slowing economy and changing supply mix is reducing demand. This does not quite offset growth in demand from developing Countries, but demand growth is 0.2 million barrels a day average over the year, which is basically 0.3% annual growth at the moment.
This is whilst Libyan and Iranian supplies are offline, amazingly Iraqi production averages are the same since ISIS invaded, Russia too has maintained output.
Whilst this macro level picture is of a world not flooded with oil, but stable nonetheless, there are a lot of micro factors at work. See today Ryanair buying 100 Boeing MAX 737's. These planes carry more passengers and are 18% more fuel efficient than the planes they replace. Ryanair spends €2 billion a year on jet fuel, so if they manage to replace their whole fleet its a €380 million saving. Equally it is 20 million less tons of jet fuel needed per year - equivalent to 150 barrels of oil per day - which is about 0.3% of global output of jet fuel. And this is just one company.
With the move towards more efficient engines, improved power stations and more renewables, plus the shale oil and gas revolution, it is likely than until war hits Saudi and Qatar, the oil price will remain weaker for some time to come.
3 comments:
That has to be right: biggest impact on vehicle energy use (+ related emissions) is the astonishing technical progress on the good old Internal Combustion Engine, & to hell with hybrids & electric cars
Excellent, so free-marketeers are proved right as again :-)
Praise be, the oil market is too big to regulate !
the electricity 'market', sadly, is too parochial to escape this fate under our present meddlesome masters
the gas market is somewhere in between but I believe (hope) it will escape too
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