In the last months of 2013 oil prices
experienced downward fluctuations.
In the last two years a new technology,
fracking, emerged in the energy landscape; according to international agencies that
technology would allow the United States and other countries to raise its oil
production and gas. Even, it has been announced that in the medium term, the
United States will become first oil exporter in the world. If this scenario
were to become reality and OPEC fails to take appropriate measures to cut
production, world oil outlook could change.
In the scenario described above, the first
effect of technology would feel in the prices that obviously would tend to
decrease. If this occurs, the oil nations that depend on that income to fund
their economies will suffer a serious blow. Not all oil producing countries
would be affected in extreme degrees. Countries like Norway and some Arab
nations have created sovereign funds with the resources that have obtained from
oil and have made international investments, which ensure a significant revenue
stream. Other countries such as Venezuela, have not had the same vision and are
highly dependent on prices, for these countries the future is very uncertain.
United States turned to the new technology,
fracking, because it was rapidly depleting their scarce reserves of
conventional oil; had no choice. Same it happens to Mexico whose conventional
oil reserves are almost exhausted.
Oil is the most important input in the
global economy. For that reason it is not surprising that they can make ultra
optimistic predictions about their behavior. These predictions have direct
impact on prices. Only a few years ago started a worldwide campaign in which
the great Caspian oil potential was highlighted. Such production potential
never became reality. What the authors of the campaign sought was to lower oil
prices. It is normal that often the discovery of new reserves is announced, but
usually this information cannot be checked effectively in reality. In the case
of fracking, we should expect to see if expectations created so far are or not
truth.
The reality of the world oil market is that
conventional oil is running out rapidly (1); international companies and
governments know it. Therefore, they are desperately seeking new energy
alternatives. The aim of them is to reduce their dependence from OPEC.
The challenge of OPEC is to keep oil prices
above $ 100. To achieve that purpose shall take measures in the field of
production. Incorporating production of Iran should not alter market prices. If
all members of OPEC agree to maintain determined level of production the oil
price can be kept over $ 100. The production of shale gas in the United States
would not be enough to affect prices significantly if OPEC countries act in
concert and reduce production, because the world needs the oil from OPEC.
(1) Pablo Rafael Gonzalez. Running
Out: How Global Shortages Change the Economic Paradigm. Algora Publishing,
New York, 2008.
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