Fossil Fuel Use is Limited by Climate, if Not by Resources.
It is fair to say that the crash in oil price was not anticipated by most people who keep an eye on the oil supply situation, and accordingly, its cause is a matter of intense speculation, and the likely prognosis even more so. Among the various factors that have been brought culpable for ithttp://www.economist.com/blogs/economist-explains/2014/12/economist-explains-4, we may list: a slowing of the Chinese economy, and little recovery in Europe, so that demand has fallen, and that moreover, supply of crude oil has soared ahead of expectation. The latter is accounted for by supplies of oil returning from Iraq and Libya, and overwhelmingly, the ramping-up of oil-production in the U.S., principally released from impermeable shale-formations by hydraulic fracturing (“fracking”). While the U.S.is not a major exporter of oil, the increase in its own domestic production has reduced the amount of oil it needs to import, so leaving a bigger surplus on the global market. Saudi Arabia produces around 10 million barrels a day, or one third of the output from OPEC, which has refused to cut back on production primarily to avoid losing its market sharehttp://www.reuters.com/article/2015/01/08/us-opec-oil-idUSKBN0KH1HA20150108. Thus the result is overproduction against demand, leading to a glut of oil, and this has pushed the price down markedly.
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