Price of a oil's barrel in 1980 and 2008.
Dr Thomas Chaize
April 18th, 2010
www.dani2989.com In 2008 the price of a barrel of oil was near $ 100 (annual average). The first possibility is to consider this increase as an isolated incident resulting from speculation, then it must stop reading these lines. The second possibility is to treat this incident as exceptional and herald significant structural changes, we must act accordingly so as not to suffer passively the next great wave of rising prices. Choose between first and second solution takes more than psychoanalysis to the economy. Here my work is not to explain the unconscious reason for these choices, but to trace the contours of these changes. Whether you are a private, an investor or an industrialist, peak oil affects us all. Many decisions are then taken for itself, its investment or business. But to work properly, we must be convinced (it must be 110% satisfied), otherwise lack of certainty, we do not take consistent decisions addressing this major issue as important as the advent of railroads in the 19th or car in the 20th.
Price of oil's barrel since 1965.
The increase in oil prices in 2008 has a precedent in 1980, the Iran / Iraq War is dropping sharply the offer of 10%. After rising oil prices in 1980, demand, production and prices fall for several years. The increase in 2008 is comparable in terms of rising prices, it does not seem to have the same impact on demand and production. For the more optimistic it is the result of a great policy of economic recovery and the severity of quotas from OPEC countries. For others, the increasing tension between supply and demand for oil keeps oil prices back down to the lowest. World is more dependent on oil today than 30 years ago. Yet the new resources are becoming increasingly inaccessible and expensive to develop. Oil prices can not decline over an extended period because it destroys too quickly the more expensive party of supply (oil sands, deep offshore, etc.). And it is still necessary.
Increases: 1980 and 2008.
It is interesting to compare the impact of rising prices in 1980 and 2008 about oil production. After the increase price of 1980, demand has dropped dramatically in subsequent years. Demand fell 4.7% in the first year and then 10% in four years. Subsequent years (1980-83), increase price has caused a sharp drop in demand and production.
Rising oil prices in 2008 led to a decline in demand: between 0.5% and 1.5% in 2009, it is small compared to the decline in 1980. It is difficult to estimate oil demand in 2010; it would probably be above the level of 2009 if the economy continues in the same direction. The situation is very different from that of 1980, demand has declined slightly over a shorter period, about 1% over 1 year.
During and after the crisis, the media were apocalyptic decline in oil demand. Finally, the decline will be only about 1% (+/-) in 2009. This is small compared to the decline of production by 10% in 4 years of 1980 and the magnitude of the economic crisis of 2008.
In 1980, the war has the effect of reducing supply, and in 2008, consumption exceeds production. Two similar increases with very different backgrounds and consequences: in 1980, a sudden drop in supply, in 2008, demand exceeds production, which is yet to peak. The world is now so dependent on oil that even during a major economic crisis the demand for oil has remained at a high level.
Two solutions are imposed on us, either makes the "round back" and expects either anticipate and adapt as does China. We can thus reduce the impact, or even benefit. This transition is inevitable, but predictable, and then organize yourself....
Dr Thomas Chaize
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January 18th, 2020
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