RESOURCE CRISIS: Oil prices keep going down, but this is not good news.
There is plenty of movement in the oil world: after five years of relatively stable prices, the legendary“barrel” is coming down from over $ 100 to under 90, and it looks like it will keep falling. What’s happening?Has anyone found new resources? Or is it Saudi Arabia using the “oil weapon” to bring down Russia, the heir of the old “evil empire”?
In reality, it is nothing like that. There are no major new discoveries of oil in the world and the Saudi oil weapon is much less fearsome than it is normally described in the media. But, then, why are prices going down? There are good reasons, but we need to understand them and, more importantly, to explain why thelikely future drop in oil prices would NOT be a good thing; indeed it could be a planetary disaster.
First of all, we should take into account that oil is a finite resource, but also that it is subject to the laws ofsupply and demand; it cannot escape the control of the entity we call “the market“. So, we are seeing twocontrasting trends in the oil market. One is the gradual depletion of the so-called “conventional” oil; that isliquid oil extracted at relatively low cost from wells. As a consequence, the production of conventional oil is static or declining almost everywhere. The other trend is the increase in the production of “unconventional” oil, that is combustible liquids which are obtained, for example, by treating oil sands, or biofuels, or “oilshale,” the kind you obtain by means of the “fracking” process.
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