62.5 F
Wednesday, August 5, 2020 8:53am

Why The Death Of Oil Has Been Much Exaggerated

There was a certain inevitability that the coronavirus pandemic and its associated lockdowns would revive the claims that the oil era is all but over.

There is no doubt that the coronavirus was, and indeed remains, a massive shock to the global economy. It has led to a rethink of almost everything we do – including how we consume energy. But this does not mean the need for oil will disappear overnight.

The Economist was among the publications exploring this theme in recent weeks. It is familiar territory for the newspaper that first heralded “The End of the Oil Age” back in October 2003. Seventeen years later, the claim is no less tenuous.

That feature began with what has since become a much-quoted line from a former Saudi energy minister Sheikh Zaki Yamani, who said: “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.”

It is still questionable that peak oil demand is close and it is still unproven that we have already passed that point. The subdued demand for oil that has accompanied the great hiatus will eventually recover.

Let’s not forget that oil prices have been stable for more than two months with Brent hovering never too far away from the $40 marker. With such volatility everywhere else, across assets and economies alike, that feels remarkably stable.

That is partly explained by the fundamental truth that with or without the COVID-19 coronavirus, the world still needs oil – and will carry on needing it for many years to come.

The coronavirus was undoubtedly a violent shock to the global economy and it is changing the way the world works. But it is unwise to extrapolate too much from that without the evidence to show that the oil age is indeed over as many would now have us believe.

Original Post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Source link

Recent Articles

Houston latest city to fine maskless residents in effort to control coronavirus spread

Houston is the latest city to announce fines for residents who refuse to wear masks in an effort to control the spread of...

Ted Cruz slams Dems, claims they’re ‘facilitating’ riots, violence in major US cities

Good morning and welcome to Fox News First. Here's what you need to know as you start your day ...Ted Cruz slams Dems...

Noem says South Dakota proud to host Sturgis motorcycle rally

South Dakota Republican Gov. Kristi Noem praised the people of her state for working with her administration to both keep the coronavirus largely...

Trump description of Beirut blast as ‘attack’ is premature, some US officials say

Soon after President Trump called Tuesday’s massive explosion in Beirut an “attack” and “a bomb of some kind,” citing information from “some of...

Marlins blank Orioles in long-awaited return following coronavirus outbreak

BALTIMORE -- A season of delays produced another one for the Miami Marlins.The start of Miami's first game in nine days was delayed...

Related Stories