The call for global decision making that supports a sustainable oil price! the ogm gas vs electric oven cost

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The biggest influence on oil price is supply and demand and more importantly, it’s resulting impact on the excess supply of oil. When supply is high oil prices most often go down. When oil supply is low and demand is high, prices often go up.

The population is an obvious factor influencing the price of oil. As population increases, the demand for oil and gas and its consumption also increases. Our ever-expanding global population and the importance of reducing energy poverty especially among developing countries is critical. Growth rates mean energy demand is expected to increase by close to 100 million barrels of oil equivalent a day (mboe/d) between 2015 and 2040.

OPEC stands for The Organization of Petroleum Exporting Countries. OPEC is a consortium consisting of 13 of the world’s major oil-exporting nations including: Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE, and Venezuela.

The purpose of OPEC is to deliver petroleum policies of its members and to provide member states with technical and economic aid. OPEC manages the supply of oil in an effort to set the price of oil on the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries. OPEC countries act together as if they were a single producer and is able to fix prices for oil without unnecessary competition and market disparity.

2015 – US shale oil producers steadily increased and pushed US oil production to 9.4 million mbpd, reducing OPEC market share. The result was of the increased supply of oil which also caused a dramatic and historic drop in oil prices affecting many countries negatively around the globe. It also created a boom for oil production in the US Shale Oil play.

The direct impact of low oil prices spans far and wide the world over. It affects oil producers, major contractors, suppliers and supporting industries and the people who work in them. To give you an example of how hard-hitting low oil prices can be, consider this: In 2015, oil exploration and production declined significantly. The number of drilling rigs declined 44 percent in the first quarter of 2015. How did that impact exploration, production, drilling progress, oil supply, and all the companies and employees of those operations? The magnitude was staggering.

The employment situation that resulted from the low price of oil was a global tragedy. Job loss also has a domino effect in terms of overall economics, individual spending, household income, individual health and well being, family health, quality of life and many other socio-economic impacts. The ‘Declaration of Cooperation’ Combats low oil price

To combat low oil prices and its impact on the energy sector and the world, on November 30, 2016, OPEC extended production cuts to 1.2 million barrels per day to the end of 2018. This ensured that high demand and lower production would drive the price of oil back up.

On December 2016 a decision of the 11 non-OPEC producing nations also agreed to voluntary production adjustments over the same time period as OPEC. The focus for all nations was to accelerate the drawdown of the stock overhang and bring the oil market rebalancing forward. These adjustments by a total of 24 participating nations,

Without such adjustments by OPEC and non-OPEC nations, the oil market would have experienced even further extreme volatility, which would have had far-reaching negative consequences for oil producers, the supply and service sector of oil and gas, oil and gas consumers, industry investors, the overall industry and it’s supporting industries, and the global economy overall. Other Influencing Factors

The dollar price impacts the price of oil. When the dollar declines, oil revenues decline and simultaneously costs go up. Recessions impact the price of oil. In a domino effect, the most likely scenario of a recession is an economic decline, that leads to a spending decline, an oil consumption decline and then an oil price decline.

Political dynamics impact the price of oil. For example, in January 2013, oil prices rose when Iran played war games near the Straits of Hormuz causing a potential threat to this oil shipping lane. Based on a perceived decrease in supply, by February 8, oil had reached $118.90/barrel. That sent gas prices to $3.85 a gallon by February 25.

The current oil price spike is a great indicator of how variables merge and create changes in the price of oil. For the oil and gas industry, this dramatic increase is a welcome change and provides hope and optimism for a robust industry moving forward.

Right now, the oil price spike is hovering between $75 – $80 per barrel. Factors that impact the price spike are the obvious US production, OPEC production, geopolitical considerations, currency exchange rates and current world oil supply and demand.

Politically, we are currently experiencing a number of important factors. The volatility in Venezuela impacts oil as Washington is considering sanctions against Venezuela. While there is an increase in demand for Nigerian oil, there are ongoing Nigerian domestic problems causing and unstable exploration and production climate. US President Trump’s decision to reinstate sanctions on Iran. China is at unrest in the South China Sea. We will always have global political influences on oil production, its a matter of how we manage them.

We will never perfect the oil price game to the point were it remains perfectly stable, because there are too many moving parts. But we can lessen the degree of impact and mitigate risks. Our goal should be to unite where possible, make global production decisions that benefit all, mitigate natural disasters and climate change where possible by ensuring our planet is clean and safe. It seems simple but with 7 billion differing views on the planet, it’s a challenge.

Given that every person on the planet is impacted by oil and gas production and price, we need to make global decisions rather than local ones. Our action plan moving forward is clear. “Take careful consideration of as many variables as possible AND THEN, take action to leave our people, places and things in better shape than we found them.”