An oil supply crunch may be looming

Vanek-Smith: So Simon, tell me what did you find in the report?

Taylor: Basically the evidence says that we are very close to a sort of maximum output of available oil onto the market. And that this has extremely big geopolitical consequences, and governments have neither acknowledged this, and neither have they seemingly put together any kind of policies that would seek to move us away from the potential crunch of having insufficient oil coming onto the market.

Vanek-Smith: What will that mean for the price of oil?

Taylor: I think when we had $147 last year, there wasn’t a shortage. We were very close to not having enough, but we still had enough. So imagine a world without enough to go around. We’re going to have further price spikes, which will have very serious economic consequences. But when there’s not enough to go around, we start to enter into the area of essential services that cannot do without oil. We’re not just talking about not going to Florida for your summer holidays. We’re talking about how do you move food around, how do you grow food, how do you conduct trade in the normal way? We are completely dependent on oil. And that’s really where the crunch comes in and has a big effect.

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