Wednesday, July 21, 2021

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Too many people are going to start drilling now, and when they all get their wells drilled, the price will drop too far. Better for everyone, if OPEC releases a little more oil, keeps the global price down, and slows the rush to frack in the U.S. The more important moderating factor in the U.S. is prospect of the electric car. Oil producers know that people have an alternative which has never existed before, and that the automakers are with this change. Electric car sales are still too small to make a difference, but that won’t be true for much longer. Some time in the next two or three years you can expect to see global oil prices stabilize, probably at a lower level than today, although if you look at this: it is clear that prices are pretty normal right now. OPEC should be willing to keep prices from going much higher.


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