Oil Prices Get Lower

Mr Putin, Leader of the Russian Federation has suggested that the fall in oil prices is due to American shale gas production. I doubt whether this is the sole factor, and no doubt Mr Putin would acknowledge other factors, such as the Islamic State of Iraq and Syria selling oil for only $30 a barrel and increased production in Libya, but as Mr Putin points out, if oil prices fall to less than $80 a barrel most shale gas production is uneconomic. Continue reading

Oil Price Falls and Falls

It is odd that the price of oil falls while economic activity is increasing marginally, while the cost of oil extraction increases and while fewer new oil fields are being discovered. In the case of commodities the price usually depend upon supply and demand, and the producers of the supply always (usually) try to keep the demand high by limited the supply. This is normal economic activity. Continue reading