The Peak Oil Crisis: In the Eye of the Storm

While waiting to find out how many million barrels of daily oil production OPEC says it will cut, it’s a good time to review the financial-energy situation as the two are now inextricably linked.

As is well known, the most prominent features of the landscape for the last few months have been plummeting oil prices and a deepening economic crisis. So far oil prices have been falling faster than the economy seems to be coming apart, thereby giving many the impression that cheaper gasoline will soon heal our economic woes and all will be well.
[…]

This recession, or whatever it ends up to be, is still in the first inning.

So where does all this leave the world’s oil supply – the life blood of our civilization? Recent reports say world production dropped rapidly in September. As stockpiles seem to be rising, we can presume OPEC will cut production again or be faced with much lower oil prices. Given that nearly all the world’s oil exporters have let their economies become accustomed to six years of steadily climbing oil revenues, they, as well as their customers, are in for some hard times.

The scariest factor at the minute are reports that smaller traders, that have been an essential part of moving oil across the globe, can no longer get financing for oil shipments – though Exxon, Shell, BP and WalMart don’t have to worry about such things. This lack of loans is forcing many traders to the sidelines leaving the market to only the largest participants.

Since no one really can foretell how all the myriad of forces at play are going to work out, it might be useful to look at a scenario or two to gain some insight into what the future could have in store for our oil supplies and prices.

Falls Church News Press