Friday, December 12, 2014

Oil price falling

Crude oil price is falling. Now it has dropped down to less than $60 per barrel. It is for a decade encountering such low price of oil except the fall in 2008.

There may be several reasons for the decline. The major contributor is shale gas excavated in the US. If the extraction of shale gas becomes more common and stable, oil will no more be dominant as an energy source.

Financial Times: Oil falls further as IEA cuts 2015 forecast

Some media also report the failure of cooperation in oil supplying nations. In the situation of reduced demand, they should restrict the amount of mining to maintain the market price of oil. However, some countries pursued the transient profit, selling oil with lowered price. Perhaps, they could not stand waiting for another opportunity, because oil money dysfunction immediately means a default.

I am not sure whether shale gas brings a revolution. Energy supply and saving is essential to sustain today's world. Sooner or later, the oil will be exhausted. Gradual conversion into other resources is indispensable, both for buyers and suppliers.


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