{"id":62651,"date":"2022-05-16T06:12:38","date_gmt":"2022-05-16T11:12:38","guid":{"rendered":"https:\/\/olduvai.ca\/?p=62651"},"modified":"2022-05-16T06:12:38","modified_gmt":"2022-05-16T11:12:38","slug":"just-a-hint-from-the-mainstream-that-limits-precipitate-rising-oil-prices","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=62651","title":{"rendered":"Just a hint from the mainstream that limits precipitate rising oil prices"},"content":{"rendered":"

Just a hint from the mainstream that limits precipitate rising oil prices<\/a><\/h3>\n
\n

Last week a Bloomberg writer at the very end of an article explained that\u00a0the “only solution” to high gasoline and diesel prices is recession<\/a>. While I would not accuse the writer of advocating degrowth\u2014this would be too radical for a mainstream business publication\u2014his analysis points to a key and obvious cause of today’s high prices for oil and other commodities: There isn’t enough of them to go around.<\/p>\n

There’s an old saying in the oil industry that the solution to high prices is high prices. The logic is that high prices will do two things: 1) Reduce demand as those who cannot afford oil products at high prices will cut back and 2) incentivize more exploration and production as companies seek to increase production to take advantage of high prices.<\/p>\n

The big question today is whether the second mechanism can actually ramp up oil production enough to bring down prices. In a recent survey\u00a0a large number of oil executives said their production plans do not depend on current prices<\/a>. Many cited the desire of investors in publicly traded companies to receive larger dividends and benefit from the corporate buyback of shares (which tends to increase the stock prices as fewer shares are available for trading).<\/p>\n

<\/a>It’s instructive that 9 percent of those responding to the survey cited an oil price of $120 per barrel as the level at which they would consider raising production. And keep in mind that they are NOT talking about $120 per barrel for a few months, but as an average price over many years\u2014since it can take many years to bring large projects into production and those projects can produce for many years after production begins…<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Just a hint from the mainstream that limits precipitate rising oil prices Last week a Bloomberg writer at the very end of an article explained that\u00a0the “only solution” to high gasoline and diesel prices is recession. While I would not accuse the writer of advocating degrowth\u2014this would be too radical for a mainstream business publication\u2014his […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[83,2019,4752,8150,496,592,13351,4967,4053],"class_list":["post-62651","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-bloomberg","tag-demand-destruction","tag-kurt-cobb","tag-limits","tag-mainstream-media","tag-oil-price","tag-price-inflation","tag-resource-insights","tag-shortages"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/62651","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=62651"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/62651\/revisions"}],"predecessor-version":[{"id":62652,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/62651\/revisions\/62652"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=62651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=62651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=62651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}