Posts Tagged ‘crude oil prices’

The rise and fall and rise of oil prices

December 21, 2014
gs-oil

Click to enlarge.

Source: Business Insider.

This chart, made by Goldman Sachs and reprinted by Business Insider, which I found on a Naked Capitalism link, shows the rise and fall and rise and (very probably) the impending fall of the price of oil on world markets.

It’s partly an example of the law of supply and demand in action.  When the price of something goes up, people use less of it, look for ways to produce more of it, and invent substitutes for it, and eventually that brings the price back down again.

But I think it shows something else, and that is the end of easy-to-get oil.  Hydraulic fracturing, deep water ocean drilling and Arctic drilling will increase the supply of oil over time, but oil will never be available as easily or as cheaply as from the historic oil fields in Texas and the Persian Gulf.

I don’t think oil will ever again be as cheap as it was during the years from 1880 to 1970—at least not for long.   And that’s probably a good thing in the long run.   So long as oil and other fossil fuels are cheap, we’ll keep on making new greenhouse gasses and burn up the planet.