On the price of oil, why still no upload of new?

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Photo: Tsuda (Flickr) CC BY SA

From 2014 the high price of the barrel have been falling, from over $ 100 to just under 30 in a few days of 2016. Right now the price of the barrel fails to overcome the barrier of 50 dollars (resistance), and thus leads 12 calendar months.

¿why do the prices not go up? From the point of view of the offer, Iran has benefited from the end of the policy of international sanctions, to have open the scheme to a greater cooperation with the outside world. They are pumping a lot of oil, about two million barrels each day.

The Persian country aims to reach 5.8 million barrels per day in 2021, and the difficulty of selling crude oil, there will be a new refinery in Spain with an investment of iran. In this way, you will be able to output more products already refined, which have a higher value and generate more capital gains.

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Refinery “La Rabida” in Palos de la Frontera (Huelva)

Iraq is another country, foot-stomping, with a daily production of 4.25 million barrels. The total, OPEC is producing 31.5 million barrels daily, more than I should, since the low price of the barrel forces it to pump more so that their economies don’t continue losing so much money.

Meanwhile, in united States, the industry fracking (or hydraulic break) has not collapsed due to low prices, with a daily production of more than 9 million barrels. Although the profitability of some small wells has faded, it is avoiding the import of a lot of oil of foreign origin. The bet of the OPEC to sink the competition has not given result.

From the first notice of 1973, when OPEC multiplied the price by three, the western countries have been reducing the dependency on oil and diversifying its sources. right Now the united States is less dependent on the blackmail of OPEC to have opted more for the own production. The half a million barrels a day that have ceased to produce were offset by the pumped by Iran and Iraq.

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Photo: Jose Antonio Cotallo López (Flickr) CC BY

Not only that, the holding costs have come down, both in the industry fracking as the conventional petrochemical. The big companies have adjusted to a scenario of moderate prices, cutting back on investments, and also have lowered the prices of the companies that operate the oil rigs, boats, maintenance, etc., The bills begin to come out again. Instead of betting on new deposits, take advantage of more of the existing farms.

therefore, it is not necessary that the barrel re-70-100 dollars for the business to again be so profitable. The companies that service the oil are most-downloaded work and have been able to adjust prices, thereby reducing costs. Yes, the economies dependent on the export if they wish to return to the previous situation (2011-2014), such as Russia, Venezuela, Nigeria, etc

with Respect to the demand, although it grows, does so in a way more moderate. China, one of the main energy consumers in the world, is slowing its growth, that was too high year after year, and then stabilized. Is happening what needs to happen in a developed country, so that their demand is not so important now.

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emission Limits media -and consumption – planned for Europe, China, the united States and Japan for the next 10 years

Also keep in mind that the energy saving measures are beginning to take effect in the more developed countries, and gradually the specific gravity of the oil is losing its importance. In fact, it is estimated that electric cars will bring about the next decade an appreciable impact on energy consumption.

While OPEC estimated that in 2040 the internal combustion engine will remain dominant in the transport sector, other forecasts point to the contrary, a progressive loss of share to the imposition of the alternatives: hydrogen fuel cell, electric, plug-in hybrids, second generation biofuels, synthetic fuels, and natural gas.

The drop in prices is strengthening the position of the stronger producers, and harming the weak. Unless there is a drastic reduction of the offer, the more likely scenario is the price of a barrel below $ 70 in the rest of the decade, so that it is unlikely to return to $ 100 or more, and that we have to pay for gas to more than € 1.50/litre, and diesel to almost 1.40 euros/liter.