Everyone is shocked oil has gone down in the last few years when it was close to $4 a gallon now under $3. Why has gas dropped so low in the US and worldwide?
In the United States under the Obama Administration, an increased amount of “fracking” occurred where they increased domestic production to reduce dependence abroad.
The strong U.S. dollar has been the main driver for the price decline of crude oil over the last few years. In fact, the dollar is at a 12-year high against the euro, leading to appreciations in the U.S. dollar index and a reduction in oil prices. This puts the market under a lot of pressure because when the value of the dollar is strong, the value of commodities falls. Global commodity prices are usually in dollars and fall when the U.S. dollar is strong. For example, the surge in the dollar in the second half of 2014 caused a sharp fall in the leading commodity indexes (Evan Tarver Investopedia). More reason are that OPEC has been unwilling to stabilize oil prices and is actively competing with the US. But also higher fuel efficient US/EU (somewhat due to Obama) has resulted in less demand for oil. The Iran Nuclear Deal also help Iran sell more oil on the market lower prices.
The reason oil and many other industries are likely to die is simple, they require to much water. It takes 2-7 barrels of water to create 1 barrel of oil. Varies based on method. Let’s talk fracking!
“Water use and wastewater production are two of the chief environmental concerns voiced about hydraulic fracturing,” said Avner Vengosh, professor of geochemistry and water quality at Duke’s Nicholas School of the Environment. (Duke Staff)
So to get oil, it requires the intense use of water and dumping of the dirty water back into areas which can create more water problems.
Kondash said. “Drilling a single well can require between 3 to 6 million gallons of water, and thousands of wells are fracked each year. Local water shortages could limit future production.”Finding ways to treat and dispose of or recycle the large volume of chemical-laden flow back water and brine-laden wastewater that is produced over the lifetime of an unconventional oil or gas well also poses challenges, the researchers stated.“Given the high levels of contaminants these waters contain, it’s startling that the amount of wastewater being produced from hydraulic fracturing in the United States is nearly on the same level as the amount of water used to frack the wells in the first place,”(Duke Staff).
So if you following me here, there will be a major shift in the use of petroleum because profits are declining, the benefits are being reduced and the dollar value of clean water will only continue to increase. This does not way in regulations like a carbon tax or other taxes likely to take affect in the next 20 years. Almost all countries are Earth will have water problems in the next 15 years. The only direction to move is away from oil production and into new energy sources. Electric cars, a proper transit system, solar, tidal and other technologies that have a lower impact on the environment and aren’t as resource heavy. To speed it up, a good plan would be to increase taxes or higher standards to speed up the process.Another good way is to encourage divestment from oil producers/heavy use things like cars and into more community-based technology like transit. The only problem with that is the World currency is the US dollar. The US dollar is based on Petroleum. A collapse of Petroleum could have ripple effects that most economists probably don’t have the wherewithal to predict. Looks like the sun is setting on the future of petroleum.
Read more: 4 Reasons Why the Price of Crude Oil Dropped
Blue Gold World Water Wars
Weekly Retail Gasoline and Diesel Prices
HOW MUCH WATER DOES U.S. FRACKING REALLY USE?