Slump in oil prices

Oil prices are not related with its middle and long term availabillity

D.Anton

Rollercoster petroleum prices, oversupply,  wars, geopolitical issues, speculation and short term unpredictability

When the chart of mean oil prices is analyzed it is clear that the pricing trends do not relate with exhaustion of oil fields. The variations are such that other causes should be considered. One important cause was the agreement of oil exporting countries to limit production in 1973. The price of the barril rose from US$ dollars 19 to 50 (March 1974) in less than one year. However, six years later (March 1980) rose again to 115 dollars, probably in relation with the war between Iran and Iraq, The rollercoster continued, in 1986 the price went down to 28.08 dollars (oversupply?) and up again in May 2008 to 145.31 dollars A number of events occurredmm, Venezuela cutted sales to Exxon Mobil, two main pipelines were blown up in Iraq, strikes of oil workers in Nigeria and Scotland, etc. However, these facts do no explain completely the acute drop in prices. Most probably the speculation played a more important role.

Eight months later in February 2009 prices fell to 44 dollars (probably again because of oversupply led by the huge production of Saudi Arabian oil fields).

After two years it increased to 109 dollars remaining high up to December 2013 (103 dollars). The last drop took place during 2014 and 2015 (linked to production of shale oils in Uniiter States and Canada) reaching 29 dollars in January 2016.

As it can be seen it is difficult to predict future prices due to the dramatic changes in short periods of time.

There are many factors that influence this variations. Some we mentioned already: oversupply, decrease in production in high production countries due to wars, strikes, political situations, etc,

And of course the everpresent specuation manoeuvres.

In the background, there is always something we can define as a “ghost”, a peermanent threat in the immediate or no so immediatefuture. It is a threat not confirmed in practice that oll fields will be exhausted in the future. It is argued that, because they are “fossil” fuels they can be found ONLY in sedimentary basins. And sedimentary basins average only 1/20000 of the diameter of the Earth.

Because, according to the biotic hypothesis, hydrocarbons are not found in all sedimentary formations, and when they are they are contained only in the pores or voids in sedimentary basins they probably would represent less than 1/1,000 of all mass contained in sedimentary formations and therefore less (or much less) than 1/10,000,000. of the Earth mass.

However, according to the abiotic hydrocarbons are much more abundant. If we compare the Earth with other planets, satellites, comets and meteorites, we may assume that hydrocarbons can at least be 1/100 of the Earth mass and probably much more (up to 10/1000). This means that, even acceping low porosity levels, the petroleum and gas contained in the Earth crust and upper mantle (not counting the lower mantle and nucleus), could reach up to 1/1,000 to 1/10,000 the mass of the Earth.

Conclusion: according to the theory of mineral origin of hydrocarbons there are much, much more oil and gas than the “fossil” theory accepts.

Those levels are enough to keep supplied humankind for several millennia. For sure that in less time the technology will change and hydrocarbons utilization may become totally different. From the point of view of hydrocarbons as sources of energy we can safely state that oil and gas are unexhaustible.

Danilo Anton, in "Unexhaustible, Petroleum and Gas", Second Edition.