Weekend Economists Piece for Peace April 3-5, 2015

[Demeter]

46. What If An Oil Rebound Never Comes?

EASY GLOBAL WARMING FIX, I SUPPOSE...

http://oilprice.com/Energy/Oil-Prices/What-If-An-Oil-Rebound-Never-Comes.html

Oil prices will remain subdued for the next 20 years.

That comes from a new policy brief from Stanford economist Frank Wolak, who says that a series of phenomena – surging U.S. shale production, a weakening OPEC, the shale revolution spreading globally, efficiencies in drilling, and more natural gas substitution for oil – will combine to prevent oil prices from rising above $100 per barrel anytime soon.

Wolak correctly identifies several trends that are already underway, several of which contributed to the 2014-2015 oil bust.

But there are very good reasons as to why the notion that oil prices will not rebound and instead stay in a moderate band of $50 to $60 per barrel over the next 20 years, as Wolak suggests, is a bit optimistic (or pessimistic, depending on your point of view). Wolak does offer some caveats for why his scenario for tepid oil prices may not play out, but they are treated more as outside risks rather than real possibilities....