Klare writes: "The plunge of global oil prices began in June 2014, when
benchmark Brent crude was selling at $114 per barrel. It hit bottom at $46
this January, a near-collapse widely viewed as a major but temporary
calamity for the energy industry."
Oil drilling rigs. (photo: Reuters)
Why an Oil Glut May Lead to a New World of Energy
By Michael Klare, TomDispatch
15 August 15
The plunge of global oil prices began in June 2014, when benchmark Brent
crude was selling at $114 per barrel. It hit bottom at $46 this January, a
near-collapse widely viewed as a major but temporary calamity for the energy
industry. Such low prices were expected to force many high-cost operators,
especially American shale oil producers, out of the market, while stoking
fresh demand and so pushing those numbers back up again. When Brent rose to
$66 per barrel this May, many oil industry executives breathed a sigh of
relief. The worst was over. The price had reached a bottom and it
doesnt look like it is going back, a senior Saudi official observed at
the time.
Skip ahead three months and that springtime of optimism has evaporated.
Major producers continue to pump out record levels of crude and world demand
remains essentially flat. The result: a global oil glut that is again
driving prices toward the energy subbasement. In the first week of August,
Brent fell to $49, and West Texas Intermediate, the benchmark for U.S.
crude, sank to $45. On top of last winters rout, this second round of price
declines has played havoc with the profits of the major oil companies, put
tens of thousands of people out of work, and obliterated billions of dollars
of investments in future projects. While most oil-company executives
continue to insist that a turnaround is sure to occur in the near future,
some analysts are beginning to wonder if whats underway doesnt actually
signal a fundamental transformation of the industry.
Recently, as if to underscore the magnitude of the current rout, ExxonMobil
and Chevron, the top two U.S. oil producers, announced their worst quarterly
returns in many years. Exxon, Americas largest oil company and normally
one of its most profitable, reported a 52% drop in earnings for the second
quarter of 2015. Chevron suffered an even deeper plunge, with net income
falling 90% from the second quarter of 2014. In response, both companies
have cut spending on exploration and production (upstream operations, in
oil industry lingo). Chevron also announced plans to eliminate 1,500 jobs.
Painful as the short-term consequences of the current price rout may be, the
long-term ones are likely to prove far more significant. To conserve funds
and ensure continuing profitability, the major companies are cancelling or
postponing investments in new production ventures, especially complex,
costly projects like the exploitation of Canadian tar sands and
deep-offshore fields that only turn a profit when oil is selling at $80 to
$100 or more per barrel.
According to Wood Mackenzie, an oil-industry consultancy, the top firms have
already shelved $200 billion worth of spending on new projects, including 46
major oil and natural gas ventures containing an estimated 20 billion
barrels of oil or its equivalent. Most of these are in Canadas Athabasca
tar sands (also called oil sands) or in deep waters off the west coast of
Africa. Royal Dutch Shell has postponed its Bonga South West project, a
proposed $12 billion development in the Atlantic Ocean off the coast of
Nigeria, while the French company Total has delayed a final investment
decision on Zinia 2, a field it had planned to exploit off the coast of
Angola. The upstream industry is winding back its investment in big
pre-final investment decision developments as fast as it can, Wood
Mackenzie reported in July.
As the price of oil continues on its downward course, the cancellation or
postponement of such mega-projects has been sending powerful shock waves
through the energy industry, and also ancillary industries, communities, and
countries that depend on oil extraction for the bulk of their revenues.
Consider it a straw in the wind that, in February, Halliburton, a major
oil-services provider, announced layoffs of 7% of its work force, or about
6,000 people. Other firms have announced equivalent reductions.
Such layoffs are, of course, impacting whole communities. For instance,
Fort McMurray in Alberta, Canada, the epicenter of the tar sands industry
and not so long ago a boom town, has seen its unemployment rate double over
the past year and public spending slashed. Families that once enjoyed
six-digit annual incomes are now turning to community food banks for
essential supplies. In a very short time our world has changed, and
changed dramatically, observes Rich Kruger, chief executive of Imperial
Oil, an Exxon subsidiary and major investor in Albertas tar sands.
A similar effect can be seen on a far larger scale when it comes to
oil-centric countries like Russia, Nigeria, and Venezuela. All three are
highly dependent on oil exports for government operations. Russias
government relies on its oil and gas industry for 50% of its budget
revenues, Nigeria for 75%, and Venezuela for 45%. All three have
experienced sharp drops in oil income. The resulting diminished government
spending has meant economic hardship, especially for the poor and
marginalized, and prompted increased civil unrest. In Russia, President
Vladimir Putin has clearly sought to deflect attention from the social
impact of reduced oil revenue by ¬whipping up patriotic fervor about the
countrys military involvement in Ukraine. Russia's actions have, however,
provoked Western economic sanctions, only adding to its economic and social
woes.
No Relief in Sight
What are we to make of this unexpected second fall in oil prices? Could we,
in fact, be witnessing a fundamental shift in the energy industry? To
answer either of these questions, consider why prices first fell in 2014 and
why, at the time, analysts believed they would rebound by the middle of this
year.
The initial collapse was widely attributed to three critical factors: an
extraordinary surge in production from shale formations in the United
States, continued high output by members of the Organization of the
Petroleum Exporting Countries (OPEC) led by Saudi Arabia, and a slackening
of demand from major consuming nations, especially China.
According to the Energy Information Administration of the Department of
Energy, crude oil production in the United States took a leap from 5.6
million barrels per day in June 2011 to 8.7 million barrels in June 2014, a
mind-boggling increase of 55% in just three years. The addition of so much
new oil to global markets -- thanks in large part to the introduction of
fracking technology in Americas western energy fields -- occurred just as
Chinas economy (and so its demand for oil) was slowing, undoubtedly
provoking the initial price slide. Brent crude went from $114 to $84 per
barrel, a drop of 36% between June and October 2014.
Historically, OPEC has responded to such declines by scaling back production
by its member states, and so effectively shoring up prices. This time,
however, the organization, which met in Vienna last November, elected to
maintain production at current levels, ensuring a global oil glut. Not
surprisingly, in the weeks after the meeting, Brent prices went into free
fall, ending up at $55 per barrel on the last day of 2014.
Most industry analysts assumed that the Persian Gulf states, led by Saudi
Arabia, were simply willing to absorb a temporary loss of income to force
the collapse of U.S. shale operators and other emerging competitors,
including tar sands operations in Canada and deep-offshore ventures in
Africa and Brazil. A senior Saudi official seemed to confirm this in May,
telling the Financial Times, There is no doubt about it, the price fall of
the last several months has deterred investors away from expensive oil
including U.S. shale, deep offshore, and heavy oils.
Believing that the Saudi strategy had succeeded and noting signs of
increasing energy demand in China, Europe, and the United States, many
analysts concluded that prices would soon begin to rise again, as indeed
they briefly did. It now appears, however, that these assumptions were off
the mark. While numerous high-cost projects in Canada and Africa were
delayed or cancelled, the U.S. shale industry has found ways to weather the
downturn in prices. Some less-productive wells have indeed been abandoned,
but drillers also developed techniques to extract more oil less expensively
from their remaining wells and kept right on pumping. We cant control
commodity prices, but we can control the efficiency of our wells, said one
operator in the Eagle Ford region of Texas. The industry has taken this as
a wake-up call to get more efficient or get out.
Responding to the challenge, the Saudis ramped up production, achieving a
record 10.3 million barrels per day in May 2014. Other OPEC members
similarly increased their output and, to the surprise of many, the Iraqi oil
industry achieved unexpected production highs, despite the countrys growing
internal disorder. Meanwhile, with economic sanctions on Iran expected to
ease in the wake of its nuclear deal with the U.S., China, France, Russia,
England, and Germany, that countrys energy industry is soon likely to begin
gearing up to add to global supply in a significant way.
With ever more oil entering the market and a future seeded with yet more of
the same, only an unlikely major boost in demand could halt a further price
drop. Although American consumers are driving more and buying bigger
vehicles in response to lower gas prices, Europe shows few signs of recovery
from its present austerity moment, and China, following a catastrophic stock
market contraction in June, is in no position to take up the slack. Put it
all together and the prognosis seems inescapable: low oil prices for the
foreseeable future.
A Whole New Ballgame?
Big Energy is doing its best to remain optimistic about the situation,
believing a turnaround is inevitable. Globally in the industry $130 billion
of projects have been delayed, deferred, or cancelled, Bod Dudley, chief
executive of BP, commented in June. Thats going to have an impact down
the road.
But what if weve entered a new period in which supply just keeps expanding
while demand fails to take off? For one thing, theres no evidence that the
shale and fracking revolution that has turned the U.S. into Saudi America
will collapse any time soon. Although some smaller operators may be driven
out of business, those capable of embracing the newest cost-cutting
technologies are likely to keep pumping out shale oil even in a low-price
environment.
Meanwhile, theres Iran and Iraq to take into account. Those two countries
are desperate for infusions of new income and possess some of the planets
largest reserves of untapped petroleum. Over the decades, both have been
ravaged by war and sanctions, but their energy industries are now poised for
significant growth. To the surprise of analysts, Iraqi production rose from
2.4 million barrels per day in 2010 to 4 million barrels this summer. Some
experts are convinced that by 2020 total output, including from the
countrys semiautonomous Kurdistan region, could more than double to 9
million barrels. Of course, continued fighting in Iraq, which has already
lost major cities in the north to the Islamic State and its new caliphate,
could quickly undermine such expectations. Still, through years of chaos,
civil war, and insurgency, the Iraqi energy industry has proven remarkably
resilient and adept first at sustaining and then boosting its output.
Irans once mighty oil industry, crippled by fierce economic sanctions, has
suffered from a lack of access to advanced Western drilling technology. At
about 2.8 million barrels per day in 2014, its crude oil production remains
far below levels experts believe would be easily attainable if modern
technology were brought to bear. Once the Iran nuclear deal is approved --
by the Europeans, Russians, and Chinese, even if the U.S. Congress shoots it
down -- and most sanctions lifted, Western companies are likely to flock
back into the country, providing the necessary new oil technology and
knowhow in return for access to its massive energy reserves. While this
wouldnt happen overnight -- it takes time to restore a dilapidated energy
infrastructure -- output could rise by one million barrels per day within a
year, and considerably more after that.
All in all, then, global oil production remains on an upward trajectory.
What, then, of demand? On this score, the situation in China will prove
critical. That country has, after all, been the main source of new oil
demand since the start of this century. According to BP, oil consumption in
China rose from 6.7 million barrels per day in 2004 to 11.1 million barrels
in 2014. As domestic production only amounts to about 4 million barrels per
day, all of those additional barrels represented imported energy. If you
want a major explanation for the pre-2014 rise in the price of oil, rapid
Chinese growth -- and expectations that its spurt in consumption would
continue into the indefinite future -- is it.
Woe, then, to the $100 barrel of oil, since that countrys economy has been
cooling off since 2014 and its growth is projected to fall below 7% this
year, the lowest rate in decades. This means, in turn, less demand for
extra oil. Chinas consumption rose only 300,000 barrels per day in 2014
and is expected to remain sluggish for years to come. [T]he likelihood now
is that import growth will be minimal for the next two or three years,
energy expert Nick Butler of the Financial Times observed. That in turn
will compound and extend the existing surplus of supply over demand.
Finally, dont forget the Paris climate summit this December. Although no
one yet knows what, if anything, it will accomplish, dozens of countries
have already submitted preliminary plans for the steps they will pledge to
take to reduce their carbon emissions. These include, for example, tax
breaks and other incentives for those acquiring hybrid and electric-powered
cars, along with increased taxes on oil and other forms of carbon
consumption. Should such measures begin to kick in, demand for oil will
take another hit and conceivably its use will actually drop years before
supplies become scarce.
Winners and Losers
The initial near collapse of oil prices caused considerable pain and
disarray in the oil industry. If this second rout continues for any length
of time, it will undoubtedly produce even more severe and unpredictable
consequences. Some outcomes already appear likely: energy companies that
cannot lower their costs will be driven out of business or absorbed by other
firms, while investment in costly, unconventional projects like Canadian
tar sands, ultra-deep Atlantic fields, and Arctic oil will largely
disappear. Most of the giant oil companies will undoubtedly survive, but
possibly in downsized form or as part of merged enterprises.
All of this is bad news for Big Energy, but unexpectedly good news for the
planet. As a start, those unconventional projects like tar sands require
more energy to extract oil than conventional fields, which means a greater
release of carbon dioxide into the atmosphere. Heavier oils like tar sands
and Venezuelan extra-heavy crude also contain more carbon than do lighter
fuels and so emit more carbon dioxide when consumed. If, in addition, global
oil consumption slows or begins to contract, that, too, would obviously
reduce carbon dioxide emissions, slowing the present daunting pace of
climate change.
Most of us are used to following the ups and downs of the Dow Jones
Industrial Average as a shorthand gauge for the state of the world economy.
However, following the ups and downs of the price of Brent crude may, in the
end, tell us far more about world affairs on our endangered planet.
Error! Hyperlink reference not valid. Error! Hyperlink reference not valid.
Oil drilling rigs. (photo: Reuters)
http://www.tomdispatch.com/post/176035/tomgram%3A_michael_klare%2C_big_oil_i
n_retreat/http://www.tomdispatch.com/post/176035/tomgram%3A_michael_klare%2C
_big_oil_in_retreat/
Why an Oil Glut May Lead to a New World of Energy
By Michael Klare, TomDispatch
15 August 15
he plunge of global oil prices began in June 2014, when benchmark Brent
crude was selling at $114 per barrel. It hit bottom at $46 this January, a
near-collapse widely viewed as a major but temporary calamity for the energy
industry. Such low prices were expected to force many high-cost operators,
especially American shale oil producers, out of the market, while stoking
fresh demand and so pushing those numbers back up again. When Brent rose to
$66 per barrel this May, many oil industry executives breathed a sigh of
relief. The worst was over. The price had reached a bottom and it doesnt
look like it is going back, a senior Saudi official observed at the time.
Skip ahead three months and that springtime of optimism has evaporated.
Major producers continue to pump out record levels of crude and world demand
remains essentially flat. The result: a global oil glut that is again
driving prices toward the energy subbasement. In the first week of August,
Brent fell to $49, and West Texas Intermediate, the benchmark for U.S.
crude, sank to $45. On top of last winters rout, this second round of price
declines has played havoc with the profits of the major oil companies, put
tens of thousands of people out of work, and obliterated billions of dollars
of investments in future projects. While most oil-company executives
continue to
insisthttp://www.ft.com/intl/cms/s/0/e7888f30-09f8-11e5-b6bd-00144feabdc0.ht
ml that a turnaround is sure to occur in the near future, some analysts are
beginning to wonder if whats underway doesnt actually signal a fundamental
transformation of the industry.
Recently, as if to underscore the magnitude of the current rout, ExxonMobil
and Chevron, the top two U.S. oil producers, announced their worst quarterly
returns in many years. Exxon, Americas largest oil company and normally one
of its most profitable, reported a 52% drop in earnings for the second
quarter of 2015. Chevron suffered an even deeper plunge, with net income
falling 90% from the second quarter of 2014. In response, both companies
have cut spending on exploration and production (upstream operations, in
oil industry lingo). Chevron also announced plans to eliminate 1,500 jobs.
Painful as the short-term consequences of the current price rout may be, the
long-term ones are likely to prove far more significant. To conserve funds
and ensure continuing profitability, the major companies are cancelling or
postponing investments in new production ventures, especially complex,
costly projects like the exploitation of Canadian tar sands and
deep-offshore fields that only turn a profit when oil is selling at $80 to
$100 or more per barrel.
According to Wood Mackenzie, an oil-industry consultancy, the top firms have
already shelved $200 billion worth of spending on new projects, including 46
major oil and natural gas ventures containing an estimated 20 billion
barrels of oil or its equivalent. Most of these are in Canadas Athabasca
tar sands (also called oil sands) or in deep waters off the west coast of
Africa. Royal Dutch Shell has postponed its Bonga South West project, a
proposed $12 billion development in the Atlantic Ocean off the coast of
Nigeria, while the French company Total has delayed a final investment
decision on Zinia 2, a field it had planned to exploit off the coast of
Angola. The upstream industry is winding back its investment in big
pre-final investment decision developments as fast as it can, Wood
Mackenzie reported in July.
As the price of oil continues on its downward course, the cancellation or
postponement of such mega-projects has been sending powerful shock waves
through the energy industry, and also ancillary industries, communities, and
countries that depend on oil extraction for the bulk of their revenues.
Consider it a straw in the wind that, in February, Halliburton, a major
oil-services provider, announced layoffs of 7% of its work force, or about
6,000 people. Other firms have announced equivalent reductions.
Such layoffs are, of course, impacting whole communities. For instance, Fort
McMurray in Alberta, Canada, the epicenter of the tar sands industry and not
so long ago a boom town, has seen its unemployment rate double over the past
year and public spending slashed. Families that once enjoyed six-digit
annual incomes are now turning to community food banks for essential
supplies. In a very short time our world has changed, and changed
dramatically, observes Rich Kruger, chief executive of Imperial Oil, an
Exxon subsidiary and major investor in Albertas tar sands.
A similar effect can be seen on a far larger scale when it comes to
oil-centric countries like Russia, Nigeria, and Venezuela. All three are
highly dependent on oil exports for government operations. Russias
government relies on its oil and gas industry for 50% of its budget
revenues, Nigeria for 75%, and Venezuela for 45%. All three have experienced
sharp drops in oil income. The resulting diminished government spending has
meant economic hardship, especially for the poor and marginalized, and
prompted increased civil unrest. In Russia, President Vladimir Putin has
clearly sought to deflect attention from the social impact of reduced oil
revenue by whipping up patriotic fervor about the countrys military
involvement in Ukraine. Russia's actions have, however, provoked Western
economic sanctions, only adding to its economic and social woes.
No Relief in Sight
What are we to make of this unexpected second fall in oil prices? Could we,
in fact, be witnessing a fundamental shift in the energy industry? To answer
either of these questions, consider why prices first fell in 2014 and why,
at the time, analysts believed they would rebound by the middle of this
year.
The initial collapse was widely attributed to three critical factors: an
extraordinary surge in production from shale formations in the United
States, continued high output by members of the Organization of the
Petroleum Exporting Countries (OPEC) led by Saudi Arabia, and a slackening
of demand from major consuming nations, especially China.
According to the Energy Information Administration of the Department of
Energy, crude oil production in the United States took a leap from 5.6
million barrels per day in June 2011 to 8.7 million barrels in June 2014, a
mind-boggling increase of 55% in just three years. The addition of so much
new oil to global markets -- thanks in large part to the introduction of
fracking technology in Americas western energy fields -- occurred just as
Chinas economy (and so its demand for oil) was slowing, undoubtedly
provoking the initial price slide. Brent crude went from $114 to $84 per
barrel, a drop of 36% between June and October 2014.
Historically, OPEC has responded to such declines by scaling back production
by its member states, and so effectively shoring up prices. This time,
however, the organization, which met in Vienna last November, elected to
maintain production at current levels, ensuring a global oil glut. Not
surprisingly, in the weeks after the meeting, Brent prices went into free
fall, ending up at $55 per barrel on the last day of 2014.
Most industry analysts assumed that the Persian Gulf states, led by Saudi
Arabia, were simply willing to absorb a temporary loss of income to force
the collapse of U.S. shale operators and other emerging competitors,
including tar sands operations in Canada and deep-offshore ventures in
Africa and Brazil. A senior Saudi official seemed to confirm this in May,
telling the Financial Times, There is no doubt about it, the price fall of
the last several months has deterred investors away from expensive oil
including U.S. shale, deep offshore, and heavy oils.
Believing that the Saudi strategy had succeeded and noting signs of
increasing energy demand in China, Europe, and the United States, many
analysts concluded that prices would soon begin to rise again, as indeed
they briefly did. It now appears, however, that these assumptions were off
the mark. While numerous high-cost projects in Canada and Africa were
delayed or cancelled, the U.S. shale industry has found ways to weather the
downturn in prices. Some less-productive wells have indeed been abandoned,
but drillers also developed techniques to extract more oil less expensively
from their remaining wells and kept right on pumping. We cant control
commodity prices, but we can control the efficiency of our wells, said one
operator in the Eagle Ford region of Texas. The industry has taken this as
a wake-up call to get more efficient or get out.
Responding to the challenge, the Saudis ramped up production, achieving a
record 10.3 million barrels per day in May 2014. Other OPEC members
similarly increased their output and, to the surprise of many, the Iraqi oil
industry achieved unexpected production highs, despite the countrys growing
internal disorder. Meanwhile, with economic sanctions on Iran expected to
ease in the wake of its nuclear deal with the U.S., China, France, Russia,
England, and Germany, that countrys energy industry is soon likely to begin
gearing up to add to global supply in a significant way.
With ever more oil entering the market and a future seeded with yet more of
the same, only an unlikely major boost in demand could halt a further price
drop. Although American consumers are driving more and buying bigger
vehicles in response to lower gas prices, Europe shows few signs of recovery
from its present austerity moment, and China, following a catastrophic stock
market contraction in June, is in no position to take up the slack. Put it
all together and the prognosis seems inescapable: low oil prices for the
foreseeable future.
A Whole New Ballgame?
Big Energy is doing its best to remain optimistic about the situation,
believing a turnaround is inevitable. Globally in the industry $130 billion
of projects have been delayed, deferred, or cancelled, Bod Dudley, chief
executive of BP, commented in June. Thats going to have an impact down the
road.
But what if weve entered a new period in which supply just keeps expanding
while demand fails to take off? For one thing, theres no evidence that the
shale and fracking revolution that has turned the U.S. into Saudi America
will collapse any time soon. Although some smaller operators may be driven
out of business, those capable of embracing the newest cost-cutting
technologies are likely to keep pumping out shale oil even in a low-price
environment.
Meanwhile, theres Iran and Iraq to take into account. Those two countries
are desperate for infusions of new income and possess some of the planets
largest reserves of untapped petroleum. Over the decades, both have been
ravaged by war and sanctions, but their energy industries are now poised for
significant growth. To the surprise of analysts, Iraqi production rose from
2.4 million barrels per day in 2010 to 4 million barrels this summer. Some
experts are convinced that by 2020 total output, including from the
countrys semiautonomous Kurdistan region, could more than double to 9
million barrels. Of course, continued fighting in Iraq, which has already
lost major cities in the north to the Islamic State and its new caliphate,
could quickly undermine such expectations. Still, through years of chaos,
civil war, and insurgency, the Iraqi energy industry has proven remarkably
resilient and adept first at sustaining and then boosting its output.
Irans once mighty oil industry, crippled by fierce economic sanctions, has
suffered from a lack of access to advanced Western drilling technology. At
about 2.8 million barrels per day in 2014, its crude oil production remains
far below levels experts believe would be easily attainable if modern
technology were brought to bear. Once the Iran nuclear deal is approved --
by the Europeans, Russians, and Chinese, even if the U.S. Congress shoots it
down -- and most sanctions lifted, Western companies are likely to flock
back into the country, providing the necessary new oil technology and
knowhow in return for access to its massive energy reserves. While this
wouldnt happen overnight -- it takes time to restore a dilapidated energy
infrastructure -- output could rise by one million barrels per day within a
year, and considerably more after that.
All in all, then, global oil production remains on an upward trajectory.
What, then, of demand? On this score, the situation in China will prove
critical. That country has, after all, been the main source of new oil
demand since the start of this century. According to BP, oil consumption in
China rose from 6.7 million barrels per day in 2004 to 11.1 million barrels
in 2014. As domestic production only amounts to about 4 million barrels per
day, all of those additional barrels represented imported energy. If you
want a major explanation for the pre-2014 rise in the price of oil, rapid
Chinese growth -- and expectations that its spurt in consumption would
continue into the indefinite future -- is it.
Woe, then, to the $100 barrel of oil, since that countrys economy has been
cooling off since 2014 and its growth is projected to fall below 7% this
year, the lowest rate in decades. This means, in turn, less demand for extra
oil. Chinas consumption rose only 300,000 barrels per day in 2014 and is
expected to remain sluggish for years to come. [T]he likelihood now is that
import growth will be minimal for the next two or three years, energy
expert Nick Butler of the Financial Times observed. That in turn will
compound and extend the existing surplus of supply over demand.
Finally, dont forget the Paris climate summit this December. Although no
one yet knows what, if anything, it will accomplish, dozens of countries
have already submitted preliminary plans for the steps they will pledge to
take to reduce their carbon emissions. These include, for example, tax
breaks and other incentives for those acquiring hybrid and electric-powered
cars, along with increased taxes on oil and other forms of carbon
consumption. Should such measures begin to kick in, demand for oil will take
another hit and conceivably its use will actually drop years before supplies
become scarce.
Winners and Losers
The initial near collapse of oil prices caused considerable pain and
disarray in the oil industry. If this second rout continues for any length
of time, it will undoubtedly produce even more severe and unpredictable
consequences. Some outcomes already appear likely: energy companies that
cannot lower their costs will be driven out of business or absorbed by other
firms, while investment in costly, unconventional projects like Canadian
tar sands, ultra-deep Atlantic fields, and Arctic oil will largely
disappear. Most of the giant oil companies will undoubtedly survive, but
possibly in downsized form or as part of merged enterprises.
All of this is bad news for Big Energy, but unexpectedly good news for the
planet. As a start, those unconventional projects like tar sands require
more energy to extract oil than conventional fields, which means a greater
release of carbon dioxide into the atmosphere. Heavier oils like tar sands
and Venezuelan extra-heavy crude also contain more carbon than do lighter
fuels and so emit more carbon dioxide when consumed. If, in addition, global
oil consumption slows or begins to contract, that, too, would obviously
reduce carbon dioxide emissions, slowing the present daunting pace of
climate change.
Most of us are used to following the ups and downs of the Dow Jones
Industrial Average as a shorthand gauge for the state of the world economy.
However, following the ups and downs of the price of Brent crude may, in the
end, tell us far more about world affairs on our endangered planet.
http://e-max.it/posizionamento-siti-web/socialize
http://e-max.it/posizionamento-siti-web/socialize
