Oil price rises over the past 40 years have been truly spectacular, but the recent fall is probably here to stay, thanks to increasing production.
Roberto Aguilera and Marian Radetzki discuss these trends in their new book, The Price of Oil: They write:
“In our view, it is political rather than economic forces that have shaped the inadequate growth of upstream oil production capacity, the dominant factor behind the sustained upward price push.
Unlike the early 1970s – when Western economies suffered a violent oil price shock when OPEC members accounted for 50% of world oil ouput, OPEC now accounts for about 30% – due in large part to the explosion in US shale production.
This combination has forced down crude oil prices over the past 18 months.
But while crude oil prices have fallen from more than $110 a barrel in the summer of 2014 to less than $37 a barrel now due to oversupply and slowing demand, OPEC said last week that it expects oil prices to start on the recovery path in 2016 and to continue rising to $70-barrel by 2020.
See BUSINESS PROFILE in Scottish Energy News for full article: