This paper makes a number of observations on the present low price of oil. First it contrasts the present price (below $40/bbl for Brent) with the higher (and often considerably higher) price expectations implicit in current forecasts for global oil supply. The preponderance of such forecasts foresee either global oil supply as increasing only slowly (and that by increases in the production of the relatively expensive non-conventional oils, with production of conventional oil as flat out to the end of the forecast time horizons), or foresee global production of conventional oil (or indeed of ‘all-oil’, including non-conventional) as reaching a peak in the relatively near or medium term, and then declining. On the basis of such forecasts the current low price of oil looks unlikely to continue for long. The paper then speculates on the reasons for the present low price, and suggests that none of the explanations proposed so far seems fully satisfactory, and that the truth is possibly not yet fully known. Finally, the paper looks at some of the important implications of the present low price in terms of society’s understanding of future oil price risk.
Campbell, C. J. & Bentley, R. W. (2016) Observations on the Present Low Price of Oil The Oil Age 2 (1) 1-8.
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