Lower Oil Prices Carry Geopolitical Consequences
Summary
Editor’s Note: The recent drop in global oil prices is affecting economies around the world. This series examines the reasons behind the falling prices and their effects on major energy consumers and producers. Part One discusses the structural changes in the oil market, particularly the growth in supply and the decline in demand.
Part Two will examine the countries likely to be most troubled by price drops, while Part Three will look at the countries likely to gain the most.
Since mid-June, the price of Brent crude oil has fallen by nearly 25 percent — going from a high of $115 to about $87 a barrel — and structural factors are causing concern among global oil producers that oil prices will remain near current levels through at least the end of 2015. This concern has caused several investment banks to slash their oil price outlooks for the immediate future. Stratfor believes that oil supplies will stay high as energy production in North America increases and OPEC countries remain hesitant or unable to cut production significantly. Moreover, in the short term, the Chinese economic slowdown and stagnant European economy will limit the potential for growth in oil demand. These factors could make it harder for global oil prices to rebound to their previous levels.
Oil is the most geopolitically important commodity, and any structural change in oil markets will reverberate throughout the world, creating clear-cut winners and losers. Countries that consume large amounts of energy have been coping with oil prices above $100 per barrel since the beginning of 2011 as most of the developed world has been trying to emerge from financial and debt crises. A sustained period of lower oil prices could provide some relief to these countries. Major oil producers, on the other hand, have grown accustomed to high oil prices, often using them to underpin their national budgets. Sustained low oil prices will cause these oil producers to rethink their spending.
Comments
“North America’s tight oil production costs vary considerably from basin to basin, but so long as oil prices do not continue falling — and they appear to have bottomed out in the mid-$80 per barrel range — almost all tight oil production will remain profitable, and drilling will continue to increase. The U.S. oil rig count, a rough indicator of impending oil production, remains near record levels, indicating that the recent downturn in oil prices has not dampened interest in drilling.
In fact, in the short- to mid-term, production prospects outside North America will be rather bleak.”
Another US sponsored website and article. So basically, US and its allies will survive fantastically and US enemies will fall into ruin because their economy is in terrible shape. The the great and powerful US that is selling off its country to the highest bidders (if Guyana makes contributions to any one of the infamous American think tanks or establish a corporation in the US to benefit from Citizens United, it too can buy a piece of America), and borrowing from every Tom, Dick and Harry that will lend money to it to fight its endless wars (wars that have become wars of attrition against America) will survive with flying colors. You hear that folks. Let me help this website with its next article…the cow did jump over the moon, pigs will fly, unicorns do exist, and American is the land of talking donkeys and elephants…
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Here is the real story. Similar factual based analysis can also be found on this site and independent sites
“the financial Ponzi scheme behind the increase of US domestic oil output the past several years is about to evaporate in a cloud of fictitious smoke. […]The shale oil and gas bonanza of the past five years in the USA has been built on a foundation of zero Federal Reserve interest rates and huge speculative investment by hungry Wall Street firms and funds. Because of the ultra-rapid oil well depletion, when market oil prices collapse, the entire economics of lending to the shale oil drillers collapses as well. Money suddenly vanishes and debt-strapped oil companies begin real problems.[…] The end of the shale oil bubble would deal a devastating blow to the US oil geopolitics. Today an estimated 55% of US oil production and all the production increase of the past several years comes from fracking for shale oil. With financing cut off because of economic risk amid falling oil prices, shale oil drillers will be forced to halt new drilling that is needed merely to maintain a steady oil output.
http://www.globalresearch.ca/the-collapse-of-oil-prices-has-washington-just-shot-itself-in-the-oily-foot/5412265