by Michael Klare
As 2015 drew to a close, many in the global energy industry were praying that the price
of oil would bounce back from the abyss, restoring the petroleum-centric world of the
past half-century. All evidence, however, points to a continuing depression in oil
prices in 2016 -- one that may, in fact, stretch into the 2020s and beyond. Given the
centrality of oil (and oil revenues) in the global power equation, this is bound to
translate into a profound shakeup in the political order, with petroleum-producing
states from Saudi Arabia to Russia losing both prominence and geopolitical clout.
To put things in perspective, it was not so long ago -- in June 2014, to be exact -- that
Brent crude, the global benchmark for oil, was selling at $115 per barrel. Energy
analysts then generally assumed that the price of oil would remain well over $100 deep
into the future, and might gradually rise to even more stratospheric levels. Such
predictions inspired the giant energy companies to invest hundreds of billions of
dollars in what were then termed “unconventional” reserves: Arctic oil, Canadian tar
sands, deep offshore reserves, and dense shale formations. It seemed obvious then that
whatever the problems with, and the cost of extracting, such energy reserves, sooner or
later handsome profits would be made. It mattered little that the cost of exploiting
such reserves might reach $50 or more a barrel.
As of this moment, however, Brent crude is selling at $33 per barrel, one-third of its
price 18 months ago and way below the break-even price for most unconventional "tough
oil" endeavors. Worse yet, in one scenario recently offered by the International Energy
Agency (IEA), prices might not again reach the $50 to $60 range until the 2020s, or make
it back to $85 until 2040. Think of this as the energy equivalent of a monster
earthquake -- a pricequake -- that will doom not just many "tough oil" projects now
underway but some of the over-extended companies (and governments) that own them. . . .
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Lutz Kleveman, "The New Great Game," The
Guardian, October 20, 2003
Daniel Howden and Philip Thornton, "The
Pipeline That Will Change the World," The Independent, May 25, 2005
Michael T. Klare, "Is Energo-fascism in Your
Future?," TomDispatch.com, January 16, 2007
John Gray, "Control Oil and Water, Control
the World," The Observer, March 30, 2008
M K Bhadrakumar, "Russia, China, Iran Redraw
Energy Map," Asia Times, January 8, 2010
[things are going to get worse worldwide so everyone will suffer and is to 'blame'. The
original source is the US Federal Reserve and its ludicrous, artificial interest rates
caused by massive money printing which the world has copied. Throw in staggering debt
increases by the US government . . . and there will soon be hell to pay.--Pepe Escobar,
"Planet of
Fear," Asia Times, January 21, 2016]
Ambrose Evans-Pritchard and Mehreen Khan, "Opec pleads for Russian alliance to smash oil
speculators," Asia Times, January 27, 2016
[Today, the notion that oil is becoming scarce has all but vanished, and so have the
benefits of a new era of petroleum plenty being touted, until recently, by energy
analysts and oil company executives.--Michael T. Klare, "Energy Wars of
Attrition: The Irony of Oil Abundance," truthdig.com, March 11, 2016]
Robert Fisk, "Saudi efforts to
'modernise' its economy away from oil are just PR tactics," independent.co.uk,
April 29, 2016