Thursday, 24 February 2011

Rapid rise in oil prices shows "how little slack there is"

The Financial Times reports that half of Libya's oil production has shut down. The impact that has had on the price of oil has been swift. This morning London Brent oil prices soared to $120.

What's remarkable is that while Libya has been producing 1.6 million barrels of oil a day, the United States alone consumes 20 million barrels of oil a day. As The Atlantic reports:

Given Libya's relatively small contribution to the global oil supply, the turmoil in the energy and stock markets resulting from Libyan unrest lets you know how little slack there is in the oil market.

See also: Chris Huhne says the break-even for low-carbon economy is $100 a barrel oil.

1 comment:

Atlanta Roofing said...

It is absurd that we put up with the pathetic analysis of these issues. The Libyans situation is merely the straw breaking the camels back. What, if Gaddaffi was still securely in charge would oil be back at $20 a barrel? No. The daily reporting and commentary on markets and commodities suits no one but the gamblers in suits who spend their days clipping the ticket… as well as being parasitic their focus on daily or hourly shifts blinds us to the important issues with these essential resources. No government would be forcing their people to invest in the profligate hydrocarbon use that the RoNS mean if we were having a real debate about the likely future availability and cost of oil.