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Page added on May 23, 2016
Daniel Yergin: Oil Prices Won’t Top $100 a Barrel
Following a stunning decline, oil prices have clawed back near the $50 level this year. Production boomed in the U.S. but is now slumping. Globally, OPEC is in disarray and major producers can’t agree on steps to boost prices.
Daniel Yergin is the vice chairman of research firm IHS Inc. He has written two books on energy, including the Pulitzer-winning opus “The Prize: The Epic Quest for Oil, Money and Power,” which is essential reading for anyone interested in the subject.
Yergin recently talked to The Associated Press about oil prices, the shale revolution, the fate of coal, and the next big thing in energy. The answers have been edited for length.
Q. Where is the price of oil headed?
A. I think the worst of the collapse is over. Prices where they are today (around $48) are not going to provide a signal for the investment that will be needed to meet demand by 2020, so I think we will see higher prices. But unless there is some big surprise or disruption they wouldn’t go back to $100 a barrel.
Q. Have we seen the worst of the defaults and bankruptcies in the oil patch?
A. The pace of bankruptcies will slow with the price recovery, but companies that are heavily laden with debt continue to be vulnerable in this environment.
Q. Should we expect Saudi Arabia, with a new oil minister, to change its thinking about how much oil they produce?
A. They are not going to cut back in order to balance the market and enable other people to increase production. That is their new policy since the November 2014 OPEC meeting, and that is a big change. The tension between Saudi Arabia and Iran is a very decisive force in the oil market today. The Saudis do not want to reduce their number of barrels in order to make room for more barrels from Iran.
Q. Is the idea of a production freeze dead?
A. The Russians have floated the idea again for June, but the Saudis have made clear they are not going to join any freeze unless everybody joins. That means Iran, and Iran is saying ‘We’re not going to join a freeze because we want to get our production back to where it was.’
Q. U.S. production is falling. When will it recover?
A. The shale producers were quite amazing in terms of their resilience and innovation. For quite a number of months after prices fell they were continuing to increase production. The realities, the economics have finally caught up with them. Our estimate is that next year U.S. production will be down 1 million barrels from its peak in April 2015. At around $50 is where you would see U.S. production stabilize.
Q. What will our energy mix look like in 2040 or 2050?
Q. Hydrocarbons are still going to be dominant by 2040. Renewables are going to be a growing part. In terms of new-build in U.S. electricity, we think all the new capacity will either be natural gas or renewables.
Q. Will efforts to limit carbon emissions and climate change affect that?
A. I think people don’t understand how pervasive oil and gas is in our whole economy, not just in terms of transportation, not just in terms of fuel, but in everything from your cellphone to cosmetics. I think also the ironic thing is that if shale gas and shale oil hadn’t come along, we would be much more concerned about energy security, prices would be much higher, and our nation’s carbon footprint would be much larger because gas has been a key element in bringing down our CO2 emissions.
Q. Is coal’s decline inevitable?
A. Between coal (plant) retirements and reducing plants and the fact that all new plants will either be gas or renewables, coal’s share of electricity will continue to decline in the United States. I think it will grow in other parts of the world, particularly in Asia.
Q. What’s the next big innovation in energy?
A. The biggest energy innovation of the 21st century is shale, and I say that because wind and solar have been around for about 40 years. The shale breakthrough has had enormous impact, not only in terms of energy supply but in terms of foreign policy. There would not have been an Iranian deal (to lift sanctions over Iran’s nuclear program) without it because sanctions on Iranian oil probably would not have worked without the additional supply. And it has also made the U.S. much more competitive in the world economy. What’s next? The one to keep your eye on is what happens with storage of electricity — of renewables, of electricity. That could be the next game-changer. Another one would be some new way that is cost-competitive of capturing carbon. CCS, carbon capture and storage, is feasible but it’s expensive.
Q. What is your next book about?
A. I want to write about some of the major geopolitical issues around the world and how energy fits into them. Part of the book will deal with how the shale revolution is changing the position of the United States in the world. You listen to the political debates in the United States … people talk about the decline of the United States. This is an example of the rise of the United States. It is enhancing U.S. power and position in the world.
24 Comments on "Daniel Yergin: Oil Prices Won’t Top $100 a Barrel"
rockman on Mon, 23rd May 2016 6:23 am
“The biggest energy innovation of the 21st century is shale, and I say that because wind and solar have been around for about 40 years.’
FYI Danny Boy: the Eagle Ford Shale was first produced over 65 years ago and the Bakken over 50 years ago. And the tech to hz drill and frac the shales was developed 10 years before the “shale miracle”. Which, in reality, the real “miracle” was high priced oil…the miracle of the price increasing about 600% in less then 10 years.
platinumshore on Mon, 23rd May 2016 8:00 am
The next miracle will be if net energy weighted production still increase as actual physical production slows.
penury on Mon, 23rd May 2016 9:29 am
If Yergin is as correct as usual look for 15 dollar oil by Labor Day.
Central Research Systems on Mon, 23rd May 2016 9:48 am
Here are the Energy stocks hitting 52 weeks low today May 23, 2016. This list was created at 10.37am EST
AZUR
CJES
CRK
TPLM
If you want an End Of Day full list emailed to you daily after 4.00pm for one week, the cost is $60 per week Please let me know if you’re interested
Truth Has A Liberal Bias on Mon, 23rd May 2016 10:58 am
US power and position in the world is waning but Yergin thinks it’s rising. US is no longer a dominant power. It is a preeminent power but not a dominant power. That is a move downwards on the power and position in the world continuum. Yergin is so far out to fucking lunch it’s unfathomable. This guy needs to lay of the shrooms. He should go for a walk in some malls in Alabama or rural Midwest and see what a disgusting site awaits him. Fat, lazy, retarded ‘merikans picking their nose, pulling their credit cards out of their fanny pack and buying sneakers with lights in them. I suspect Yergin doesn’t even know what ‘Merika is at this point.
Speculawyer on Mon, 23rd May 2016 11:28 am
Not a fan of Yergin but it is a pretty safe bet that oil will remain below $100/barrel for quite a while. Demand is tepid, Iran is back on the market, Saudis & Russia are desperate for money, and the frackers are ready to get restarted as soon as oil gets up to $70 – $80.
Speculawyer on Mon, 23rd May 2016 11:32 am
“The biggest energy innovation of the 21st century is shale, and I say that because wind and solar have been around for about 40 years.”
LOL. In the last 40 years, solar PV prices have dropped by like 95%. It is not like they are stagnant!
Boat on Mon, 23rd May 2016 12:05 pm
Speculawyer,
Not to mention those 4,000 wells in the fracklog.
Dredd on Mon, 23rd May 2016 2:55 pm
Yergin, my gin, it has all been said before:
“Now the rainman gave me two cures
Then he said, “Jump right in”
The one was Texas medicine
The other was just railroad gin
An’ like a fool I mixed them
An’ it strangled up my mind
An’ now people just get uglier
An’ I have no sense of time
Oh, Mama, can this really be the end
To be stuck inside of Mobile
With the Memphis blues again”
Black guitars matter (Etiology of Social Dementia – 14).
J-Gav on Mon, 23rd May 2016 4:26 pm
Hey folks, it doesn’t matter what the price is if nobody can pay it. Everybody’s credit card is maxed out. Not a single fucking country on the planet is solvent. We’re all wallowing in debt and continue to pretend that the situation is ‘normal.’ This is an inextricable predicament. As in, NO WAY OUT! No comfortable way, in any case.
What’ll it be then? I won’t play Nostradamus, but it seems clear to me that some sort of Big Shift is not far off – paradigms do change when they’re worn out and ours shows all the signs of being close to terminal stupidity/corruption and general blindness to what ‘Nature’ actually is.
It doesn’t give a shit about us. Nor does the Universe. That doesn’t mean Nature or the Universe are ‘evil,’ they’re just what they are, get used to it.
green_achers on Mon, 23rd May 2016 4:55 pm
“Prices where they are today (around $48) are not going to provide a signal for the investment that will be needed to meet demand by 2020, so I think we will see higher prices.” Don’t understand the concept of causality too much, do he?
Apneaman on Mon, 23rd May 2016 7:00 pm
“Following a stunning decline”
Why?
Shit like has been written after the end of every oil boom and bust and every other resource boom and after every stock market crash.
Why does the world spend billions a year for all these analysts and economists when they always end up so fucking “stunned” & “who could have seen it coming” after every major crash and down turn?
In your personal life if you expected everything to go your way 100% of the time then you would be in for many “stunning declines” and the people who knew would would say – there he goes again all pissed off with those unreal expectations, but for some reason most keep listing to the Yergin’s and economist’s who are nothing but legitimizers of the system – High priests for the Captains of industry and their divine right to rule.
When ever things are going good it’s because of the masters of the universe are so special and competent, but when it goes to shit then it’s blamed on “market forces” or some bad guys overseas. No main stream economist has ever come out and said, oh we had a crash because the system and those who rule it are corrupt, lying, cheating, greedy bastards.
Back in ye olden days, when things were going good – bountiful crops, no plague, etc – the high priests would preach it was because the king had gods grace. When it went to shit the high priests all said – “The Lord works in mysterious ways”.
Why change a formula if it’s been working since time immemorial?
Anonymous on Mon, 23rd May 2016 8:53 pm
Danny Jerkin is the one of best oracles money can buy on this topic. He’ll always tell you exactly what you want to hear. Or think you want to hear. Or what you think you will want to hear, or know. And best of all, hes *never* wrong (except when he is).
JuanP on Mon, 23rd May 2016 9:49 pm
Speculawyer “Not a fan of Yergin but it is a pretty safe bet that oil will remain below $100/barrel for quite a while.”
Nailed it! I skipped the article because I don’t read Yergin. I gave up on the guy a long time ago. He wrote one excellent book a very, very long time ago, but he is nothing more than a paid clown now. It’s sad, if he were honest he could be really good.
Boat on Mon, 23rd May 2016 10:47 pm
ape,
Back in ye olden days, when things were going good – bountiful crops, no plague, etc – the high priests would preach it was because the king had gods grace. When it went to shit the high priests all said – “The Lord works in mysterious ways”.
Exactly. Billions came before us and maybe billions after us. None made to much impact then, now, or in the future. This is why no blame comes from me. Nothing can be done to scale that fixes anything. We were born to die. There were never words written that can change that. Time is long. Humans are short.
makati1 on Mon, 23rd May 2016 11:00 pm
another threat to our future is becoming more and more apparent. One not thought about by most Americans, but always in the minds of Filipinos.
“When there are major volcanic eruptions or major earthquakes in other parts of the globe, many Americans don’t seem to care too much because they don’t think that this rise in global seismic activity is any sort of a threat to them personally.
But the truth is that the entire west coast of the United States lies along the Ring of Fire, and virtually every other section of the Ring of Fire is roaring to life these days.
At some point, there will be historic earthquakes on the west coast.
At some point, there will be historic volcanic eruptions on the west coast.
Scientists assure us that these things are inevitable.
So let us certainly hope for the best, but putting our heads in the sand and pretending that these dangers do not exist is not going to help matters one bit.”
http://theeconomiccollapseblog.com/archives/40-volcanoes-are-erupting-right-now-as-the-crust-of-the-earth-becomes-increasingly-unstable
And consider this: Prevailing winds are West to East in the Us. Guess where all of that ash and gases are going to go?
Apneaman on Mon, 23rd May 2016 11:21 pm
Boat, it’s true that there have always been a tiny few with most of the power, but if your founding fathers and a bunch of the colonists were as willing to lay down and be a door mat for any and all abuses of power, like you are, then there would be no U.S.A.
Boat, are you the type that has never challenged authority your whole life?
orders get barked at you and you avert your eyes to the ground and do as your told?
Yes mommy
Yes daddy
Yes coach
Yes teacher
Yes boss
Yes officer
Yes authority – whatever you say.
Some people are not like that boat.
I’m not like that.
Apneaman on Mon, 23rd May 2016 11:25 pm
Boat is a modern day loyalist.
No matter what, he is unquestionably loyal to the
Kingsystem.Ya gots plenty of company boaty.
Apneaman on Tue, 24th May 2016 12:57 am
Just messing witcha boat.
Apneaman on Tue, 24th May 2016 1:08 am
Now the Frenchmen, jo moyenne, he don’t just lay down for the masters. It’s really hard to imagine any N Americans standing up like these guys. Americans are always bashing the French (who won the war of independence for you), but are all mouth when it comes down to it. The working man has been taking it the ass for 35 years and barley a whimper. Bunch of cowards compared to the French.
Petrol runs short as French labour reform protests block refineries
http://www.bangkokpost.com/news/world/985049/petrol-runs-short-as-french-labour-reform-protests-block-refineries
Can’t really lay this one directly on collapse, since these fuckers are always angrily protesting some shit – god love em.
Apneaman on Tue, 24th May 2016 1:24 am
Daily CO2
May 22, 2016
408.97 ppm
May 22, 2015
403.58 ppm
https://www.co2.earth/daily-co2
Apneaman on Tue, 24th May 2016 1:44 am
No Democrat’s-No Republican’s
Just puppets who use the language to get your vote.
Does not matter who “wins”
Sure billionaire Elon Musk prefers the D’s and the billionaire Koch’s prefer the repub’s, but BAU, the cancer, will not be interrupted no matter who or what. It will go until collapse or revolution.
Hillary Clinton’s Energy Initiative Pressed Countries to Embrace Fracking, New Emails Reveal
“emails obtained by The Intercept from the Department of State reveal new details of behind-the-scenes efforts by Clinton and her close aides to export American-style hydraulic fracturing — the horizontal drilling technique best known as fracking — to countries all over the world.
Far from challenging fossil fuel companies, the emails obtained by The Intercept show that State Department officials worked closely with private sector oil and gas companies, pressed other agencies within the Obama administration to commit federal government resources including technical assistance for locating shale reserves, and distributed agreements with partner nations pledging to help secure investments for new fracking projects.
The documents also reveal the department’s role in bringing foreign dignitaries to a fracking site in Pennsylvania, and its plans to make Poland a “laboratory for testing whether US success in developing shale gas can be repeated in a different country,” particularly in Europe, where local governments had expressed opposition and in some cases even banned fracking.
The campaign included plans to spread the drilling technique to China, South Africa, Romania, Morocco, Bulgaria, Chile, India, Pakistan, Argentina, Indonesia, and Ukraine.”
https://theintercept.com/2016/05/23/hillary-clinton-fracking/
Apneaman on Tue, 24th May 2016 1:56 am
As Lake Mead dwindles, can an interstate water war be far behind?
http://www.latimes.com/business/hiltzik/la-fi-lake-mead-water-20160523-snap-story.html
Anon on Wed, 25th May 2016 12:16 am