The oil glut and low prices reflect an affordability problem

10 03 2015

Our Finite World

For a long time, there has been a belief that the decline in oil supply will come by way of high oil prices. Demand will exceed supply. It seems to me that this view is backward–the decline in supply will come through low oil prices.

The oil glut we are experiencing now reflects a worldwide affordability crisis. Because of a lack of affordability, demand is depressed. This lack of demand keeps prices low–below the cost of production for many producers. If the affordability issue cannot be fixed, it threatens to bring down the system by discouraging investment in oil production.

View original post 1,470 more words

Advertisements

Actions

Information

3 responses

10 03 2015
mikestasse

I find this whole article utterly fascinating, because the ‘diminishing returns’ Gail describes is EXACTLY what’s going to happen to renewables too….

11 03 2015
Maponos

Also the other FFs as well!

11 03 2015
Anthony William O'brien

What is impressive is how Gail the Actuary (same Gail) predicted how this would come about when prices were high. This was not just an analysis of what is happening, but predicted by Gail before it happened.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s