Oil price has gotten all of us used to the constant roller coaster. We have seen it dropping in price from $115 to $50 in just a little over 6 months. And then again dropping to an incredibly low around $30 the year after.
Many stated that the price at the beginning of 2014 was overpriced: they were probably right. Others claimed that oil was meant to be priced around $30. They were probably wrong. In fact, as of today, oil price is about to close 2019 at North of $60, yet still very far from $100.
Ever since I was a kid, there has always been some — more or less — expert predicting the end of oil. The doomsday scenario was often accompanied by imagery of burning wells and deforestation. Those who predicted that oil would have run out by 2010 were obviously very wrong.
But we know society, they believe what television says, hence a few images accompanied by some “expert” words worked well in creating the illusion and fulfil someone’s agenda.
What I have always found hard to believe was that oil is scarce. According to basic economics, a scarce good or commodity would eventually increase price and maintain the projection year after year.
How can a scarce commodity drop in price nearly 80 per cent in less than 2 years? Like it did starting from mid 2014. That spells clearly that oil is nowhere to run out anytime soon. I tend to agree with those who say that oil will never run out, and we will just grow out of it as we will find other sources to ‘power’ our lives.
In fact, as we can witness in Oman, gas has been the trend of the decade. Especially through technologies such as LNG, which allows to compact gas many times smaller than when its natural form, making logistics for gas ways simpler than the one for oil.
Although finding gas and extracting it can be a true hassle, especially in the Middle East, once it is out and compacted, shipping it around requires much less ‘back and forth’ on ships cruising around the globe.
The US leads the Natural Gas production with 3/4 of a million of million cubic metres — according to not so updated statistics — while Russia is the first runner up, at 3/5 of a million of million cubic metres. Then Iran and Qatar share the 3rd and 4th position with about 1/5 of a million of million cubic metres each.
Oman is currently 25th in the world and growing in terms of importance and predominance in the Natural Gas industry.
The US has also been topping the production of oil, with 18 million barrels per day, and Saudi Arabia coming second with 15 million barrels per day. Russia is close to 11 million barrels per day, while Iraq is about to cross the 4.5 million mark. Oman has increased capacity and production, crossing the 1 million mark — from 800 thousand barrels less than a decade ago — and entering the top 20 producers in the world.
2019 started at a low point in terms of price of oil, as low as $42. There was a sudden spike in price already in February, when the price shot to $50 in about a month, then cruised between 50 and 55 for a couple of months before heading to the highest point in 2019, well over $65 between May and June.
Then the trend reversed in July, when the oil price suddenly dropped back to around 50 to 55 and then performed a rollercoaster all the way until the end of the year, climbing up again towards the highest point of the year, above $60. Some attribute the growth to an ease in tension between China and the US, with the trade wars slowly settling and being more rational — as opposed to emotional.
When talking about oil it is inevitable to look at the environment and try to predict how trends would affect both price and consumption of oil. Maybe believe that given the popularisation of ‘green agenda’, oil will become slowly more and more redundant, while alternative ways of producing energy will take the lead.
Others, on the contrary, believe that renewable energy has somehow failed. Germany for instance is paying one of the most expensive costs for power in the world after going green, leaving a generation disillusioned on the actual benefits of green economy.
Hence, these predictions point in the direction of a return to oil, seeing a new peek of production and consumption in the decade to come.
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