The Sleeping Threat of Low Oil Prices

By Chris Nelder

If you need any more proof that the markets are not an efficient discounting mechanism, look no further than the price of oil.

Oil prices in the high $30s to low $40s are nothing short of a ticking time bomb under the world economy, but you wouldn’t know it from watching the commodity markets. Once the global downturn slashed $100 off the price of a barrel, the issue of oil supply seemed to simply fall off the radar of market observers. Falling oil demand is all that anyone seems to care about, but we may pay dearly for taking our eye off the ball of supply.

Marvin Odum, the US President of Royal Dutch Shell worried aloud on Bloomberg television yesterday about the loss of policy focus on oil, as renewables and electric infrastructure upstaged it. “The big risk that I see here is what happens to the energy that runs our economy today, that gives us energy that we can afford, and that is primarily oil and gas.” According to Bloomberg, the company has delayed investment decisions on expanding its Athabascan tar sands project in Alberta, and upgrading its Mars project in the Gulf of Mexico.

I could scarcely agree more.

Click here for the full story.

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