Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on October 19, 2018
At $80 a barrel, BP says oil prices are “unhealthy for the world”
“The oil prices in the world are too high and it’s unhealthy for the world,” said Bob Dudley, the chief executive officer of British oil-and-gas giant BP.
Some emerging market economies such as South Africa, India, and Turkey were suffering from their highest-ever prices of gasoline because the market price of oil—which is traded in US dollars—has been rising while their currencies depreciated rapidly, Dudley said. “There’s a healthy price for oil and energy and I believe that balances producing countries and consuming countries,” he added. “In my mind, it’s somewhere between $50 and $65 a barrel. The world can live with this.”
The price of Brent crude, the European benchmark for oil, has increased by nearly 20% this year. Earlier this month, it topped $86 a barrel. Economic and geopolitical tensions, such as the US sanctions against Iran and Venezuela’s economic collapse, are among the reasons for the appreciation. It has prompted analysts to speculate that oil prices could return to $100 a barrel for the first time since 2014 (paywall).
Dudley was speaking yesterday (Oct. 18) at the One Young World summit in The Hague, a gathering of nearly 2,000 young people from all over the world who are working to drive social change, such as ending sexual violence, improving access to education, and holding governments accountable for human rights abuses. Execs from BP and Shell are here to speak about how they planned to increase access to energy.
In a Q&A session with attendees, Dudley said that oil prices were “artificially high” thanks to Venezuela “defying economic gravity” and the Iran sanctions. If these forces retreat, and the oil price is determined by fundamental measures of supply and demand, then the price should return to between $60 and $65 a barrel, Dudley said. But right now, he said that the Iran sanctions were affecting everything.
On the sidelines of the conference, Dudley added that BP wasn’t considering being part of the special purpose vehicle that the European Union, China, and Russia are setting up to circumvent US sanctions on Iran. The arrangement would allow payments with Iran to avoid touching the US financial system. “We aren’t going to try [it],” Dudley said. “I think it’s full of risk.”
At the summit, Dudley spoke mostly about the energy transition that was required to meet a low-carbon future, less than two weeks after a major UN report said there was only 12 years to avoid a climate-change catastrophe. Dudley is currently the chair of the Oil and Gas Climate Initiative, a collection of oil companies that are responding to climate change.
Dudley told the young people at the summit that the most important thing was to squeeze coal out of mix and replace it with natural gas. Coal still makes up about a third of the world’s energy supply. Natural gas emits far less carbon emissions but produces methane, a greenhouse gas. BP is working to find the right technology to reduce methane leaks. He also said fracking, a process that uses high pressure water and sand to extract gas from shale rock, has “been turned into the myth of the monster beneath.” After a seven-year hiatus, fracking has restarted in the UK amid local protests.
Dudley argued that there was still so much coal usage in the world because of government policy and economics. Governments need to put a price on carbon, he said, especially because renewable energy “can’t do it alone” when it comes to reducing emissions. “Even optimistic projections only see renewables making up around one third of the energy mix by 2040,” he said.
That means a combination of oil, natural gas, and renewables will feature in the future energy mix. Dudley said he expected oil demand to peak in 2042. “But when it does peak, it’s a long plateau,” he added. Technology will be the key to cutting carbon emissions down to zero at that point, and not just relying on renewable energy, he added.
15 Comments on "At $80 a barrel, BP says oil prices are “unhealthy for the world”"
twocats on Fri, 19th Oct 2018 8:38 pm
the mental acrobatics it must take these ghouls to get through a speech like this. it’s absolutely mind blowing how simultaneously evil and idiotic this guy sounds.
and you have to wonder if the youth are “woke” enough to see straight through this utter horse puckey.
print baby print on Sat, 20th Oct 2018 1:47 am
We are rotten to the bone
makati1 on Sat, 20th Oct 2018 3:13 am
The horseshit that is spewed out of the US MSM propaganda mills 24/7/365 have most Americans so dumbed down and brainwashed that they will believe anything that makes them “feel” good. They are “snowflakes” and don’t want to hear anything negative. They are about to connect with that big windshield called reality. SPLAT!
Blisters in the Sun on Sat, 20th Oct 2018 9:04 am
Yup, Americans are a gullible lot. Keep the BS short and simple, wrap it up in the flag if at all possible – oorah.
The human-dominated world seems quite sick these days and that is likely to capacity to diminish our collective capacity to keep coming up with short-term fixes. This blister is gonna pop soon me thinks.
Sissyfuss on Sat, 20th Oct 2018 9:06 am
And not a mention of EROEI to be found. Guess it doesn’t matter.
Davy on Sat, 20th Oct 2018 9:13 am
“Yup, Americans are a gullible lot. Keep the BS short and simple, wrap it up in the flag if at all possible – oorah.”
Wow, like you anglos are any better. There is 330MIL of us do you think we are all that way? Anglos love to blame everything on the US population. Makes them feel better and superior.
onlooker on Sat, 20th Oct 2018 9:23 am
Actually, this comment is quite true. For most consumers around the world $80 dollar oil is too expensive. The problem is unconventional oil reserves seem to require at least this price to be economically viable. Ah,the messy conundrums that we humans are immersed in now
onlooker on Sat, 20th Oct 2018 9:34 am
Actually, let’s not kid ourselves. Humans are gullible and tribal/nationalistic. You cannot just say it is American thing
I AM THE MOB on Sat, 20th Oct 2018 9:36 am
High oil prices cause inflation in 90 percent of all manufactured goods, commodity’s, food, and reduce consumer spending and confidence..
This is why global debt has exploded since 05 and the worlds central banks have had to hold interest rates at their lowest in history.
And once the oil shortage hits..That is the ball game for all of us..Anarchy will rule the world and it will be every man for himself..Even families will turn on one another..
Davy on Sat, 20th Oct 2018 10:04 am
Sure SLOB, keep thinking it is all about oil. What a dumbass simpleton. No wonder we don’t see you brag about your fake PHD in chemistry.
Sergio on Sat, 20th Oct 2018 12:54 pm
“$80 a barrel is unhealthy for the world”.
He seems not to know how unhealthy oil prices will be for the world in the future.
Davy on Sat, 20th Oct 2018 1:30 pm
“Perfect Storm” – The (Ominous) Problem With Global Liquidity”
https://tinyurl.com/y99faazk
“The metamorphosis of global liquidity In its recent quarterly report, the Bank of International Settlements, or BIS, raises three crucial points for global liquidity: Global outside-US dollar denominated debt has risen to a record. The role of non-bank institutions on providing funding has increased. The composition of international credit has shifted from bank loans to debt securities. Combined with the asset purchase programs of central banks (QE) these developments have far-reaching consequences for the global economy. Currently, non-banking institutions and households outside the US hold over 11.5 trillion worth of dollar-denominated debt—a record. The “shadow banking” sector could conceivably hold the same amount. This means that all policies affecting global dollar liquidity, will have a large effect on the global economy. The increased role of non-bank institutions in providing credit means that an increasing proportion of international finance comes from unregulated sources. Effectively, this means that these institutions, including money market funds, investments banks, etc., have unwittingly assumed even bigger risks in their lending practices than commercial banks. This also means that when the downturn comes, the share of non-performing and/or defaulted loans will grow higher than before. As we have noted several times (see, e.g., Q-reviews: 2/2013, 1/2016, 1/2017, 1/2018), the QE-programs of central banks have distorted prices and, therefore, underlying risks in the capital markets. Moreover, the artificial liquidity created by these programs has spread to stock, junk bond and even real estate markets (see Q-review 1/2018). However, QE-programs have had the biggest effect on government bond markets. The prices of sovereign bonds have been driven down (yields have risen) to unprecedented levels across the globe. This in turn has fueled the expansion of debt issuance in international credit markets and which has made it possible for non-bank sources to increase their role in the economy. There has also been a re-balancing towards more risky assets. Artificially-high asset prices have been supported by the intrusion of CBs in public capital markets, but this is now ending.”
“What follows the onset of global QT, which seems imminent, is a chaotic correction towards the true market pricing of risk (a crash). Because capital markets carry a larger burden of global finance than before (see Figure 2), their collapse would immediately eliminate funding for companies, households, and even governments globally. Such a dramatic reduction in global liquidity implies an instant recession. This would then be followed by a wave of bankruptcies by “zombified” companies (those with the weakest capital structures, dependent upon loose credit conditions for survival) further accelerating the world economy into a potential depression. The “perfect storm” The collapse of the ‘everything bubble’ created by central banks does thus directly threaten not just asset markets but also the real economy. If (when) the asset markets crash, we will see a dramatic fall in global liquidity which will paralyze both capital investment and consumption. A perfect storm in global capital markets, banking sectors and—most importantly—the real economy is likely to develop with frightening speed. What this means is that we might be heading to the largest economic crash in human history, whose aftermath would not spare any corner of the global economic order. This is truly a scenario from our worst nightmare, and we know the creators. Central bankers have set us up.
Harquebus on Sat, 20th Oct 2018 1:47 pm
“defying economic gravity”
Econobabble for “taking a reality hit.”
onlooker on Sat, 20th Oct 2018 1:55 pm
And this Debt blowup will only be made worse by real energy problems and discontinuities
Pete Bauer on Sat, 20th Oct 2018 6:35 pm
So basically they want to kick Coal out of the mix and still keep burning the dirty oil.
Very cunning fellow. Is he expecting Oil to continue to increase until 2042?
Oil production increased by only 0.23% last year and the consumption increased because of the increase in bio-fuels, natgas to liquids, coal to liquids etc.
If we subtract the coal to liquids from oil consumption and add it to coal consumption, then Coal is growing more than what is projected.
Chinese convert coal to Methanol and blend it in gasoline/petrol for use in automobiles.
Here is the link.
“As much as 10% of fuel in China’s transport sector is based on methanol.”
https://igpmethanol.com/2018/10/06/countrys-first-methanol-based-cooking-fuel-rolled-out-by-apl/
We do agree that oil production may increase, but not for long. Its already on the downtrend in power gen and heating, pretty soon it will face decline in petrochemicals and transport.