OPEC Sees Oil Price Below $100 a Barrel in the Next Decade

[tede02]

http://www.wsj.com/articles/opec-sees-oil-price-below-100-a-barrel-in-the-next-decade-1431347035

 

This was in yesterday's WSJ.  Type the title into google if you can't get access directly through the link.

 

I've been reading more about the fossil fuel markets and oil and gas industries generally in recent months.  I've learned how many variables drive the supply and demand factors (they are countless).  This may seem obvious to some, but I've also learned how close fossil fuel production and consumption are in terms of volume.  In other words, the world produces about 90 million barrels of oil a day and consumes about that.  The slightest imbalance can cause prices to rise or crash extremely quickly (as we've witnessed recently). 

 

I think some people have gotten overly excited with OPEC's proclamation.  Perhaps their policy is to keep oil prices under $100 per barrel.  But, from what I've learned, the volatility in oil prices (and fossil fuels generally) isn't going to change.  Changes in technology, world economics, politics, etc. are far more powerful than OPEC in their ability to disrupt supply and demand (especially quickly). 

 

From an observational standpoint, its just amazing to me how oil prices in 2008 nearly reached $150 per barrel only to drop under $40 within about 12 months.  And of course last year, prices went from over $100 to around $50 in about six months.  My view is this extreme volatility isn't going anywhere. 

[kfh227]

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/oil-and-the-us-dollar/msg215931/#msg215931

 

Unless the US dollar falls or all other currencies improve, we will have cheap oil for a while.