From the mid-1980s to September 2003, the price of crude oil barrel adjusted for inflation in NYMEX was generally below US $ 25/barrel. During 2003, prices rose above $ 30, reaching $ 60 on August 11, 2005, peaking at $ 147.30 in July 2008. Commentators attributed this price increase to many factors, including Middle East tensions, surging demand from China, the decline in the value of the US dollar, reports showing a decline in petroleum reserves, concerns over peak oil, and financial speculation.
For the time being, geopolitical events and natural disasters have strong short-term effects on oil prices, such as North Korea's missile tests, the 2006 conflict between Israel and Lebanon, concerns over Iran's 2006 nuclear plan, Hurricane Katrina, and other factors. In 2008, such pressure appeared to have an insignificant impact on oil prices given as the start of a global recession. The recession caused energy demand to shrink by the end of 2008, with oil prices falling from highs in July 2008 from $ 147 to December 2008 lows of $ 32. Oil prices stabilized in August 2009 and generally remained in a broad trading range between $ 70 and $ 120 to November 2014, before returning to pre-crisis level 2003 early 2016.
Video 2000s energy crisis
New inflation-adjusted peak
The price of crude oil in 2003 traded in the range of $ 20- $ 30/bbl. Between 2003 and July 2008, prices continued to rise, reaching $ 100/bbl at the end of 2007, nearing the peak of previous inflation set in 1980. The sharp rise in oil prices in 2008 - also reflected by other commodities - peaked at an all-time high of $ 147 , 27 during trading on July 11, 2008, more than a third above the height adjusted for previous inflation.
High oil prices and economic weakness contributed to the contraction in demand in 2007-2008. In the United States, gasoline consumption declined 0.4% in 2007, then fell 0.5% in the first two months of 2008 alone. Recording oil prices in the first half of 2008 and economic weakness in the second half of the year prompted a 1.2 Mbbl (190,000 m 3 )/day contraction in US oil product consumption, representing 5.8% of total consumption USA, the largest annual decline since 1980 at the height of the 1979 energy crisis.
Maps 2000s energy crisis
Possible cause
Request
World demand for crude oil grew an average of 1.76% per year from 1994 to 2006, with a high of 3.4% in 2003-2004. World demand for oil is projected to increase by 37% compared to 2006 levels by 2030, according to the 2007 annual Energy Information Agency (EIA) report. In 2007, the AMDAL forecast demand to reach the highest at 118 million barrels per day (18.8 ÃÆ'â € " 10 m 3 /d) , from 86 million barrels in 2006 (13,7 ÃÆ'â € 10
Transportation consumes the largest proportion of energy, and has experienced the greatest demand growth in recent decades. This growth comes largely from new demand for cars and other personal vehicles powered by internal combustion engines. The sector also has the highest consumption rate, accounting for about 55% of worldwide oil usage as documented in the Hirsch report and 68.9% of the oil used in the United States in 2006. Cars and trucks are expected to account for nearly 75% of an increase in oil consumption by India and China between 2001 and 2025. In 2008, car sales in China are expected to grow by 15-20 percent, generated in part from an economic growth rate of more than 10 percent for five consecutive years..
Demand growth is the highest in developing countries, but the United States is the world's largest petroleum consumer. Between 1995 and 2005, US consumption grew from 17.7 million barrels (2.810 million m 3 ) a day to 20.7 million barrels (3,290,000 m 3 ) a day, an increase 3 million barrels (480,000 m 3 ) a day. China, by comparison, increased consumption from 3.4 million barrels (540,000 m 3 ) a day to 7 million barrels (1,100,000 m 3 ) a day, an increase of 3.6 million barrels (570,000 m 3 ) a day, within the same time frame. Per capita, annual consumption is 24.85 barrel (3,951 m 3 ) by people in the US, 1.79 barrels (0.285 m 3 ) in China, and 0 , 79 barrels (0.126). Ã, m 3 ) in India.
As the developing world, industry, rapid urbanization and higher living standards increase energy use, most often oil. Developing economies like China and India are rapidly becoming big oil consumers. China has seen oil consumption grow 8% annually since 2002, doubling from 1996-2006.
Although rapid growth in China is often predicted, others predict that China's export-dominated economy will not continue such a growth trend because of wage and price inflation and reduced demand from the US. India's oil imports are expected to increase more than triple from 2005 levels by 2020, rising to 5 million barrels per day (790 ÃÆ'â € "span> 10 3 m 3 /d).
Another big factor in petroleum demand is the growth of the human population. As the world population grew faster than oil production, per capita production culminated in 1979 (preceded by the highlands during the period 1973-1979). The world population in 2030 is expected to double in 1980.
Role of fuel subsidy
State fuel subsidies protect consumers in many countries from higher market prices, but many of these subsidies are reduced or eliminated when government costs rise.
In June 2008, AFP reported that:
China became the last Asian country to curb energy subsidies last week after climbing gasoline and retail diesel prices by 18 percent... Elsewhere in Asia, Malaysia has raised fuel prices by 41 percent and Indonesia by 29 per cent, while Taiwan and India have also raising their energy costs.
In the same month, Reuters reported that:
Countries like China and India, along with Gulf countries whose oil prices are kept below global prices, accounted for 61 percent of the global crude oil consumption increase from 2000 to 2006, according to JPMorgan.
In addition to Japan, Hong Kong, Singapore and South Korea, most Asian countries subsidize domestic fuel prices. The more countries subsidize them, the less likely the high oil prices will affect sic in reducing overall demand, forcing governments in weaker financial situations to surrender and stop their subsidies.
That's what happened over the last two weeks. Indonesia, Taiwan, Sri Lanka, Bangladesh, India, and Malaysia have raised their fuel prices or promised that they will do so.
The Economist reported: "Half of the world's population enjoys fuel subsidies This estimate, from Morgan Stanley, implies that almost a quarter of the world's gasoline is being sold for less than the market price." US Energy Secretary Samuel Bodman stated that about 30 million barrels per day (4,800,000 m 3 /d) of oil consumption (more than a third of the global total) is subsidized.
Supply
An important contributor to price increases is the slowdown in oil supply growth, which has become a general trend since oil production surpassed new discoveries in 1980. The possibility that global oil production will decline at some point, causing lower supply, is long-indicating the cause fundamental of price increases. Although there are conflicts about the exact time at which global production will peak, the majority of industry actors recognize that the peak production concept is valid. However, some commentators argue that awareness of global warming and new energy sources will limit demand before supply effects can, suggesting that reserve depletion will not be a problem.
A bigger factor in lower petroleum supply growth is the historic high oil ratios of Energy Returned on Energy Invested declining significantly. Oil is a limited resource, and residual accessible reserves are consumed faster each year. The remaining reserves are harder to extract and therefore more expensive. Finally, the reserves will only be economically viable to be extracted at a very high price. Even if the total oil supply does not decrease, more and more experts believe that the source of easily accessible light sweet crudes is running out and in the future the world will rely on more expensive non-conventional oil reserves and heavy crude oil, as well as renewable energy. source. It is thought by many, including energy economists such as Matthew Simmons, that prices can continue to rise indefinitely until a new market equilibrium is reached at a time when supply meets demand worldwide.
Timothy Kailing, in the Journal of Energy Security 2008 article, pointed out the difficulty of increasing production in mature petroleum areas, even with an ever-increasing investment in exploration and production. By looking at the historical response of production to variations in drilling efforts, it claims that very little increase in production can be attributed to increased drilling. This is due to the strong quantitative relationship of diminishing returns with increasing drilling efforts: As drilling efforts increase, the energy obtained per active drilling rig is reduced in accordance with the law of greatly reduced strength. This analysis shows that even large increases in drilling efforts are unlikely to significantly increase oil and gas production in mature petroleum areas such as the United States.
A prominent investment example in non-conventional sources is seen in Canadian oil sands. They are a source of low quality crude oil that is much cheaper than conventional crude oil; but when oil trades above $ 60/bbl, tar sand becomes attractive to exploration and production companies. While Canada's oil sands are thought to contain as much "heavy" oil as all of the world's "conventional" oil reserves, efforts to exploit these resources are economically lagging behind the rising demand in recent years.
Until 2008, CERA (a consulting firm wholly owned by IHS Energy energy consultant) does not believe this will be an urgent issue. However, in an interview with The Wall Street Journal, Daniel Yergin, previously known for his quote that oil prices will soon return to "normal", change the company's position on May 7, 2008 to predict that oil will reach $ 150 during 2008, due to tight supplies. This opinion reversal is significant, because CERA, among other consultants, gives price projections used by many official agencies to plan long-term strategies in terms of energy mix and price.
Other major energy organizations, such as the International Energy Agency (IEA), have been much less optimistic in their assessment over time. In 2008, the IEA drastically accelerated the predicted decline in production for existing oilfields, from 3.7% a year to 6.7% per year, largely based on better accounting methods, including the actual research of each of the oil fields around the world.
Terrorist and rebel groups increasingly target oil and gas installations, and managed to halt large export volumes during 2003-2008 from the American occupation of Iraq. Such attacks are sometimes perpetrated by militias in areas where oil wealth has produced little real benefits for local people, as is the case in the Niger Delta.
Many factors have resulted in the real possibilities and/or concerns about the reduced supply of oil. The post-9/11 war on terror, labor strikes, storm threats to oil platforms, fires and terrorist threats in oil refineries, and other short-term issues are not entirely responsible for higher prices. Such problems do push prices higher for a while, but historically are not important for long-term price increases.
Investment request/speculation
Investment demand for oil occurs when investors buy futures contracts to buy commodities at prices set for future deliveries. "Speculators do not buy genuine crude... When the [adult] contract matures, they settle it by cash payment or sell it to the original consumer."
Some claims have been made as a result of financial speculation as the main cause of price increases. In May 2008 the head of transportation for the German Social Democrats estimated that 25 percent of the increase to $ 135 per barrel had nothing to do with the underlying supply and demand. The testimony was given to the US Senate committee in May which showed that the "demand shock" of "institutional investors" had increased by 848 million barrels (134.8 million m 3 ) over the previous five years, almost as much as increased demand physically from China (920 million barrels (146,000,000 m 3 )). The influence of institutional investors, such as state wealth funds, was also discussed in June 2008, when Lehman Brothers stated that price increases were associated with increased exposure to commodities by these investors. He claims that "for every $ 100 million in new inflows, West Texas Intermediate prices, the US benchmark, increased by 1.6%." Also in May 2008, an article in The Economist showed that futures trading on the New York Mercantile Exchange (NYMEX), almost reflects the price of oil increases for several years; However, the article acknowledges that increased investment may follow price rises, not cause them, and that nickel commodity markets have halved the value between May 2007 and May 2008 despite significant speculative interest. It also reminds readers that "Investments can flood the oil market without raising prices because speculators do not buy real crude oil... no oil is dumped or somehow kept out of the market," and that the prices of some non-traded commodities actually have rising faster than oil prices. In June 2008, OPEC Secretary General Abdallah Salem el-Badri stated that the current world oil consumption of 87 million bpd is far surpassed by a "paper market" for oil, which is equivalent to about 1.36 billion barrels per day, or more than 15 times the actual market. demand.
An intergovernmental task force on the commodity market was set up in the US government to investigate claims of speculator influence on the oil market. The task force concluded in July 2008 that "market fundamentals" such as supply and demand provide the best explanation for rising oil prices, and that speculation increases statistically does not correlate with increases. The report also notes that an increase in prices with elastic supply will lead to an increase in petroleum inventories. Because inventory is actually decreasing, the task force concludes that market pressures are most likely to blame. Other commodities that are not subject to market speculation (such as coal, steel, and onions) see the same price increase over the same time period.
In June 2008, US energy secretary Samuel Bodman said insufficient oil production, not financial speculation, boosted crude prices. He said that oil production is not in line with increasing demand. "With no additional supply of crude oil, for every 1% of crude demand, we would expect a 20% price increase to balance the market," Bodman said. This is contrary to previous statements by Iran's OPEC governor Mohammad-Ali Khatibi indicating that the saturated oil market and that Saudi Arabia's production increase announced "is wrong". OPEC has previously also stated that the oil market is well supplied and that high prices are the result of speculation and a weak US dollar.
In September 2008, Master Capital Management released a study of the oil market, concluding that speculation has a significant impact on prices. The study states that more than $ 60 billion was invested in oil during the first six months of 2008, helping to push barrel prices from $ 95 to $ 147, and that in early September, $ 39 billion had been withdrawn by speculators, causing prices to fall.
Effects
There is a debate about what the effects of the energy crisis of the 2000s will last in the long term. Some speculated that a surge in oil prices could create a recession comparable to those following the 1973 and 1979 energy crises or potentially worse situations such as the global oil crash. Increased oil prices are reflected in a large number of petroleum products, as well as those transported using fuel oil.
Political scientist George Friedman has postulated that if high prices for oil and food survive, they will determine the different geopolitical regimes of four since the end of World War II, the previous three being the Cold War, the period 1989-2001 in which the primary economic globalization, and the "war against terror "post 9/11.
In addition to high oil prices, from 2000 the instability of oil prices has increased significantly and this volatility has been suggested to be a factor in the financial crisis that began in 2008.
The rise in oil prices perceived differently internationally in accordance with fluctuations in the currency market and the purchasing power of currencies. For example, excluding changes in the relative purchasing power of various currencies, from January 1, 2002 to January 1, 2008:
- In US $, the price of oil rose from $ 20.37 to nearly $ 100, approximately 4.91 times more expensive;
- In the same period, Taiwan dollar earned more than US dollar to make oil in Taiwan 4.53 times more expensive;
- In the same period, the Japanese Yen earned more than US dollars to make oil in Japan 4.10 times more expensive;
- In the same period, the Euro earned more than the US dollar to make oil at Eurozone 2.94 times more expensive.
On average, oil prices about fourfold for these areas, triggering widespread protest activity. The same price spike for petroleum-based fertilizer contributed to the 2007-08 world food price crisis and further unrest.
In 2008, a report by Cambridge Energy Research Associates stated that 2007 was the year of top gasoline use in the United States, and that record energy prices would cause a "lasting shift" in energy consumption practices. According to the report, in April gas consumption has been lower than a year earlier for the sixth consecutive month, suggesting 2008 will be the first year of US gasoline usage declining in 17 years. The total miles traveled in the US began to decline in 2006.
In the United States, oil prices contributed to an average inflation of 3.3% in 2005-2006, well above the 2.5% average in the previous 10-year period. As a result, during this period the Federal Reserve steadily raised interest rates to curb inflation.
High oil prices typically affect less affluent countries first, especially developing countries with less free income. There are fewer vehicles per capita, and oil is often used for power generation as well as private transportation. The World Bank has looked more deeply at the effects of oil prices in developing countries. One analysis found that in South Africa, a 125 percent increase in the price of crude oil and refined crude oil reduces employment and GDP by about 2 percent, and reduces household consumption by about 7 percent, which mainly affects the poor.
OPEC's annual oil export revenue jumped to a new record in 2008, estimated at around US $ 800 billion.
Predicted prices and trends
According to an informed observer, OPEC, meeting in early December 2007, seems to want a high but stable price that will generate much-needed revenue for oil-producing countries but avoid a very high price so they will have a negative impact on the country's oil- consumer countries. The range of US $ 70-80 per barrel is suggested by some analysts as OPEC's goal.
In November 2008, as prices fell below $ 60 a barrel, the IEA warned that falling prices could lead to a lack of investment in new sources of oil and a more costly decline in production of more expensive non-conventional reserves such as Canadian oil sands. Chief Economist of the IEA warned, "Future oil inventories will come more from smaller and more difficult fields," meaning that future production requires more investment every year. The lack of new investment in such projects, which has been observed, could ultimately lead to new and more severe supply problems than had been experienced in the early 2000s under the IEA. Due to the sharpest production decline seen in developed countries, the IEA warned that the largest growth in production is expected to come from smaller projects in OPEC countries, increasing their world production share from 44% in 2008 to 51% is projected by 2030. The IEA also shows that demand from developed countries may also peak, so future demand growth may come from developing countries such as China, accounting for 43%, and India and the Middle East, each about 20%.
End of crisis
In early September 2008, prices had fallen to $ 110. OPEC Secretary-General El-Badri said the organization intends to cut production by about 500,000 barrels (79,000 m 3 ) a day, which he sees as correcting "excess large supply "due to a declining economy and a stronger US dollar. On September 10, the International Energy Agency (IEA) lowered its 2009 demand forecast by 140,000 barrels (22,000 m 3 ) to 87.6 million barrels (13,930,000 m 3 ) a day.
As many countries around the world are entering an economic recession in the third quarter of 2008 and the global banking system is under heavy pressure, oil prices continue to slide. In November and December, global demand growth declined, and US oil demand fell by about 10% overall from early October to early November 2008 (accompanied by a significant drop in car sales).
In their December meeting, OPEC members agreed to reduce their production by 2.2 million barrels (350,000 m 3 ) per day, and said their resolution to reduce production in October had an 85% compliance rate.
The price of oil fell below $ 35 in February 2009, but in May 2009 it had risen back to the mid-November 2008 level of around $ 55. The global economic downturn left oil storage facilities with more oil than in any year since 1990, when the invasion of Iraq to Kuwait disrupt the market.
In early 2011, crude oil rebounded above US $ 100/bbl due to Arab Spring protests in the Middle East and North Africa, including the 2011 Egyptian revolution, Libya's 2011 civil war, and continues to tighten international sanctions against Iran. Oil prices fluctuate around $ 100 until early 2014.
In 2014-2015, the world oil market is constantly oversupplied, led by an almost unexpected double in US oil production from 2008 levels due to a substantial increase in "chip shrinking" technology. In January 2016, the OPEC Reference Basket fell to US $ 22.48/bbl - less than a sixth of its record from July 2008 ($ 140.73), and back below the starting point of April 2003 ($ 23.27) from its history. OPEC production is poised to rise further with the lifting of Iran sanctions, when the market appears to be oversupplying at least 2 million barrels per day.
Possible mitigation
Efforts to reduce the impact of rising oil prices include:
- Increase petroleum supply
- Search for petroleum replacements
- Lower petroleum demand
- Attempts to reduce the impact of rising prices on petroleum consumers
In mainstream economic theory, the free market quota becomes an increasingly scarce commodity by increasing its price. Higher prices should stimulate producers to produce more, and consumers to consume less, while possibly turning to substitutions. The first three mitigation strategies listed above, therefore, are in accordance with mainstream economic theory, as government policy can affect petroleum supply and demand and the availability of replacements. In contrast, the last type of strategy on the list (trying to protect consumers from rising prices) seems to work against classical economic theory, by encouraging consumers to consume too much rare quantity, making it even rarer. To avoid creating real deficiencies, price control efforts may require an allotment scheme.
Alternate drivers
Alternative fuels
Economists say that the substitution effect will spur demand for alternative fossil fuels, such as coal or liquefied natural gas and for renewable energy, such as solar power, wind power, and advanced biofuels.
For example, China and India are currently investing heavily in liquefied natural gas and coal facilities. Nigeria is working on burning natural gas to generate electricity instead of just burning gas, where all non-emergency gas combustion will be banned after 2008. Outside the US, more than 50% of the oil is consumed for stationary, non-transport purposes such as electricity production where it is relatively easy to replace natural gas for oil.
Oil companies including supermajors began to fund research on alternative fuels. BP has invested half a billion dollars in research over the next few years. The motivation behind the move is to obtain patents and understand the technology so that the future vertical integration of the industry can be achieved.
Electric drive
The rise in oil prices led to renewed interest in electric cars, with some new models hitting the market, both hybrid and pure electricity. The most successful of the first is the Toyota Prius and among the last company cars like Tesla. Some countries also provide incentives for the use of electric cars through tax breaks or subsidies or by building a filling station.
High speed rails
In the same vein as the original TGV that switched from gas turbine to electric propulsion after the 1973 oil crisis, some countries have renewed and stepped up their efforts for electric propulsion in their rail systems, especially the high-speed rail. By the time since 2003, the global high-speed train network had almost doubled and there were global plans numbering to the duplicated network in the next ten to twenty years, based on the current construction. China in particular is changing from not having a high speed rail in 2003 to the world's longest network by 2015.
Bioplastic and bioasphalt
Another major factor in petroleum demand is the widespread use of oil products such as plastics. These can be partially replaced by bioplastics, derived from renewable plant feedstocks such as vegetable oil, corn flour, peanut flour, or microbiota. They are used either as a direct replacement for traditional plastics or as a mixture with traditional plastics. The most common end use market is for packing materials. Japan has also been a pioneer in bioplastics, putting it in electronics and cars.
Bioasphalt can also be used as a substitute for petroleum asphalt.
United States Strategic Fuel Reserve
The United States Strategic Petroleum Reserve can, by itself, supply current US demand for about a month in an emergency, unless it is also destroyed or inaccessible in an emergency. This could potentially happen if a major storm hit the Gulf of Mexico, where the reserves are located. While total consumption has increased, the western economy is less dependent on oil than it was twenty-five years ago, both because of substantial growth in productivity and growth in the economic sectors with little oil dependency such as finance and banking, retail, etc. The decline of heavy industry and manufacturing in most developed countries has reduced the amount of oil per unit of GDP; However, as these items are imported, there is little change in the dependence of oil from industrialized countries than indicated by direct consumption statistics.
Fuel tax
One way used and discussed in the past to avoid the negative impact of oil shocks in many developed countries with high fuel taxes is to temporarily or permanently temporarily suspend this tax due to increased fuel costs.
France, Italy and the Netherlands lowered taxes in 2000 in response to protests over high prices, but other European countries rejected this option because the financing of public services was partly based on energy taxes. The problem came again in 2004, when oil hit $ 40 a barrel leading to a meeting of 25 EU finance ministers to lower the economic growth forecast for that year. Because of the budget deficit in some countries, they decided to pressure OPEC to lower prices rather than lower taxes. In 2007, European truckers, farmers and fishermen once again voiced concern over record oil prices that cut their earnings, expecting taxes to be lowered. In Britain, where fuel taxes are raised in October and are scheduled to rise again in April 2008, there is talk of protests and roadblocks if tax issues are not addressed. On April 1, 2008, a fuel tax of 25 yen per liter in Japan was allowed for a while.
This method of softening price shocks is even less feasible for countries with much lower gas taxes, such as the United States.
A fall in local fuel taxes could reduce fuel prices, but global prices are determined by supply and demand, and therefore fuel tax reductions may not have an effect on fuel prices, and fuel tax increases can actually lower fuel prices by reducing demand. But this depends on the elasticity of the demand for fuels of -0.09 to -0.31, which means that fuel is a relatively inelastic commodity, ie an increase or decrease in overall prices has little impact on demand and hence price changes.
Request management
Transport demand management has the potential to be an effective policy response to fuel shortages or price increases and has the possibility of longer term benefits greater than other mitigation options.
There is a big difference in energy consumption for private transportation between cities; US urban dwellers on average use 24 times more energy each year for personal transportation as urban Chinese. These differences can not be explained by wealth alone but are closely related to the level of walking, cycling, and use of public transport and for maintaining the features of the city including urban density and urban design.
For individuals, telecommuting provides an alternative to daily travel and long distance air travel for business. Technologies for telecommuting, such as videoconferencing, e-mail, and corporate wiki, are on the rise, consistent with the overall upgrading in information technology deemed to be derived from Moore's law. As the cost of moving human labor continues to rise, while the cost of transferring information electronically continues to decline, it is likely that market forces will cause more people to replace the virtual journey for physical travel. Matthew Simmons explicitly called for "labor release" by changing the mindset of companies from paying people to physically appear to work every day, paying them, not for the work they do, from any location. This will allow more information workers to work from home either part-time or full-time, or from satellite offices or internet cafes near where they live, freeing them from daily long traffic jams to headquarters. However, even full adoption of telecommuting by all eligible workers may only reduce energy consumption by about 1% (with current estimated energy savings of 0.01-0.04%). By comparison, a 20% increase in car fuel economy will save 5.4%.
Political action against market speculation
Rising prices in mid-2008 led to proposals to change the rules governing energy markets and energy futures markets, to prevent rises due to market speculation.
On July 26, 2008, the United States House of Representatives passed the 2008 Emergency Energy Markets Act (HR 6377), which directed the Commodity Futures Trading Commission (CFTC) "to utilize all its powers, including its emergency powers, to curb the excessive role of speculation at any contract market within the jurisdiction and control of the Commodity Futures Trading Commission, on or where energy futures or swaps are traded, and to remove excessive speculation, price distortions, sudden or unwarranted fluctuations or unwarranted price changes or unauthorized activity others that cause major market disruptions that prevent the market from accurately reflecting the strength of supply and demand for energy commodities. "
Note
External links
- US. DOE energy chronology and EIA analysis
- Oil Price Analysis and Analysis
Source of the article : Wikipedia
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