Experts seldom expect surprises. In spite of the ever deepening economic and political uncertainties gripping most oil producing and oil consuming regions, most market experts surveyed last year predicted that oil price would fluctuate between $65 and $70 through 2023.
That forecast assumes that nothing unforeseen would happen over the next five years. Such an assumption, to put it politely, is unjustified and the list of reasons is long and complex, and it can be neither ignored nor wished away. Over the recent months I’d written a handful of articles on the subject of the ‘coming oil price shock.’ Here are the last three:
While the articles discuss geopolitical crisis points and Saudi Arabia’s oil production woes, these factors wouldn’t in themselves be the cause the oil price shock. Rather they might have been the catalysts, triggering a series of cascading developments that could unleash the full weight of the crisis upon the world. While these earlier events failed to ignite the crisis, last Saturday’s Houthi attack on Saudi Aramco’s Abqaiq production facilities may turn out to be that decisive triggering event – this we’ll only know in retrospect.
However, the fundamental causes of the energy crisis that will inevitably erupt is far more profound and intractable. What lies ahead is humanity’s inevitable collision with the concept of limited, nonrenewable resources for which our economies and our societies appear wholly unprepared. I sought to condense this backdrop in a 5-part series of articles I published earlier:
While it is important to understand that we are heading into a storm, it is more important still to prepare to navigate safely through that storm. This is the subject of the last article in the series:
Time will tell how events might unfold. But beyond preparing ourselves and our businesses for the crisis, our societies will have to come to grips with the coming energy crisis and reengineer the way we live, produce and consume. Our children are unlikely to enjoy the abundant cheap energy we enjoyed and wasted.