(en) Anarkismo.net: From peak oil to peak oil by Donato
Romito - Libertarian Alternative / FdCA (it, pt) [machine translation]
Scenarios of oil down ---- In June of 2014 the price per barrel was $ 115. Since then it
has steadily downhill, and now costs less than half. ---- The causes seem to be mainly
three: ---- 1. the world economy is consuming less oil than the markets had anticipated,
---- 2. OPEC produced more oil than expected by the markets, ---- 3. the lords of the
American Petroleum (North Dakota and Texas) have focused on shale-oil. ---- Of course the
three factors are intertwined. ---- From peak oil to peak oil? ---- In June of 2014 the
price per barrel was $ 115. Since then it has steadily downhill, and now costs less than
half. ---- The causes seem to be mainly three: ---- the world economy is consuming less
oil than the markets had anticipated, OPEC produced more oil than expected by the markets,
the lords of the American Petroleum (North Dakota and Texas) have focused on shale-oil.
Of course the three factors are intertwined.
Scenarios of oil down
Optimistic
The drop in oil prices could be a shot of adrenaline to the world economy. This is the
refrain of the market analysts. E 'was estimated that only $ 40 less per barrel in June
2014 they moved $ 1.3 trillion from producers to consumers. E 'was also calculated that an
average American motorist, who has spent $ 3,000 in 2013 for gasoline, it could have saved
$ 800 per year, equivalent to an increase of 2% of your salary (if you have it). Even
Italy might enjoy EUR 2bn of savings; if gasoline "served" to the pumps Italian had fallen
well below 1.3 per liter, once relieved from excise duty). A good economic -it says- of
which countries could enjoy big importers such as India, China, Japan, Turkey, Brazil and
to some extent also the area of the EU. For example, the financial resources that are
locked in sovereign funds for energy expenditure, could be used to increase GDP. The
inflation rate - already low - could decline further and thus encourage the central banks
monetary policies less restrictive. The Fed could then postpone the increase in interest
rates and the ECB could seriously fight deflation by buying government bonds directly.
Pessimists
There are those who do not rejoice. And 'the case of oil-producing countries whose wealth
was based on the high price per barrel. Russia is suffering a great deal with very serious
damage to its economy, especially with what the cost subsidies to the Crimea. Oil covers
in fact half of Russian exports and comprise 40% of the federal budget. Suffer imports: a
small example we give it the expected fall of 12% in 2014 Italian exports to Russia,
resulting crisis of companies that until a few months ago forced the extraordinary, as in
the furniture industry. Nigeria has been forced to increase the interest rate and devalue
the currency. Venezuela seems closer than ever to default on government bonds written down
and sees compromise investment in welfare that had benefited the poorer classes during the
Chavez government. Iran is in serious difficulties because of international sanctions and
oil production halved. OPEC is great agitation: 7 countries on 12 members are already
suffering, since below $ 100 per barrel their budgets into trouble.
The ECB, faced the collapse of the eurozone inflation rate from 3% in 2011 to 0.3% in
September 2014, attributes this fall to the price of oil and food by 80% and deflation
fears. But, ironically, the same producers of shale-oil, already in difficulty, could
easily succumb to a prolonged period of low prices: below the threshold of $ 50 a barrel
losses are deemed unsustainable.
Shale-oil: thus a bad deal?
A mad rush to easy money?
In fact, in the period 2010-2013, when the price was about $ 110 per barrel, the lords of
the American oil they put hand to extractions from shale formations (shale-oil),
previously considered inviolable. In their mania drilling rig, already in 2010, had
completed 20,000 wells, ten times more than those registered in Saudi Arabia. Which has
increased oil production in America by about 1/3, 9 million barrels a day. That is only 1
million barrels less of Saudi Arabia.
But the fall in the price per barrel is leading to a rapid depreciation of their actions,
as they climb steeply their debts. Even before the oil price falls, these companies
invested in the drilling of new wells more than what ricavavano from existing wells. Now
that their earnings are falling precipitously, looming bankruptcy risk and the bursting of
another bubble of derivatives. Shale-oil may no longer be a business that attracts
investment. And a decrease in investment (-20% if the price revolves around 65-70 dollars
per barrel) -to the light also of the short productive life of wells of shale-oil, which
can lose 60-70% in the first year- lead to a fall in output.
Salvation in technology?
However the mining of shale-oil seems to rely on a secure future. The technology of
fracking [water + sand + chemicals injected into shale] is relatively young and is
producing big gains as it is completed: in 2013 mining costs have increased from $ 70 to $
57 per barrel produced. In America you're starting to drill in Colorado (the Niobrara
formation) and the border between Oklahoma and Kansas (Mississippi Lime formation).
The geology of shale-oil is known in many places of the world, from China (which despite
obstacles geological and technological might in 2015 already produce 6.5 billion m3) to
the Czech Republic. Where lack the infrastructure conditions could reach investments aimed
exploration. Investments that seem to grow, albeit slightly in front, the inaccessibility
of deposits of crude oil untapped because located to great depths, or in the Arctic. For
example, the joint-venture Exxon (USA) and Rosneft (Russia) took two months and $ 700
million to drill a single well of crude oil in the Kara Sea north of Siberia. The oil they
found it, but it will take years and billions of dollars to produce. Instead of a well is
drilled in shale-oil kind in a week at a cost of a million and a half dollars. The sites
of shale-oil are known. Apparently it's just a matter of how many trivellarne depending
thirst for oil. And in 2015 the global demand for energy is expected to grow by 3%,
bringing the demand for crude oil to a + 2%, amounting to 94 million b / d. While the
price of Brent should average of $ 98 per barrel.
Saudi Arabia
The comparison between the lords of shale-oil and crude oil sheiks (but there are those
who think of a covert strategy combined in an anti-Russian and anti-Iran) has now tipped
for the scenario: a shortage of oil is switched to a surplus of black gold. Now much seems
to depend on the time factor, ie how long the prices will remain low.
Although many OPEC members - which produces 30% of world supply of oil - want to cut
production to make up prices, Saudi Arabia is pursuing another strategy. Mindful of when
in the 70s a big jump in oil prices led to massive investments in the opening of new wells
in the 80s (it was the case of Norway and the United Kingdom in the North Sea) which
followed a long decade of excess bid, now Saudi Arabia would aim to bring down the price
per barrel, holding below 70 dollars, to out of the market those who produce oil at high
costs, with the expected result of a compression of the offer, thus making the climb prices.
The strategy of Saudi Arabia already seems to produce effects on companies producing
shale-oil, as we have already seen.
Saudi Arabia - who said he could afford to tolerate low prices (the cost of production is
5-6 dollars a barrel!!) just to finance companies of shale-oil what they do with the rocks
fracking - thus pointing to the collapse of the shale-oil by 2015 and to block its
expansion into other countries. And with the Saudi royal family around the OPEC cartel.
But - unlike the other OPEC countries - Saudi Arabia, strong reserves amount to 900
billion dollars, can handle a low price and expect the world to buy its oil, once
producing shale-oil becomes unprofitable, resulting in slight increase of the price per
barrel. Thing that would finally others happy OPEC countries, but that paradoxically could
give vent to their lords of shale-oil.
Although the increase of 3 million barrels per day in the US, is a very small thing on a
global consumption of 90 million barrels a day, the challenge (technological and
financial) seems now launched and will not necessarily end up with a force loser.
Capitalism, as we know, knows no boundaries and making profits is legitimate, whatever the
prophet who ask the prayers.
Environment and wages
It goes without saying that a prolonged period (around 2015?) Low price would make very
little interesting investment on green energy technologies and alternative means of
transport, giving breath to supporters of fossil fuels. Once again the concerns and
complaints to the health of the planet because of climate change induced by emissions
could lose big media space that had recently conquered and see frustrated the hopes raised
by the social mobilizations that - in this respect - have crossed well 166 countries for
the People's Climate Change March.
More controversial issue on the slope wages. The savings attributable to the decline in
the price of fuels and refined products by the oil industry is not able to give the
aggregate demand that breath that perhaps the markets expect, hoping for an increase in
consumption and services and therefore production. In a situation of contraction of
earnings due to the generalized austerity policies (cuts in wages and pensions, blocking
of contracts, job insecurity and discontinuity wage, anti-union dismissals and reprisals)
worldwide, the savings on your energy bill does not change the conditions exploitation and
impoverishment of the working class worldwide. The incidental gifts offered by low oil
should not and can not make us forget the need for large trade union struggles and
organize unions to improve the pay and conditions of life of the proletariat, the working
men and women around the world.
(Sources: Deutsche Bank report, "The Economist" November, December 2014 and January 2015,
www.bloomberg.com, www.vineyardsaker.it, www.contropiano.it, www.corriere.it, etc.... )
http://www.anarkismo.net/article/27800
