The CEO of Royal Dutch Shell, one of the world’s biggest oil companies, believes oil prices will continue their long-term price rise. That’s not the first time we hear that and it’s really no news, but what is interesting in his interview is the basis of this statement:
“It’s getting more difficult to get resources out of the ground”. “We need a lot of technology and innovation, and it’s also more expensive, so you will see energy prices rising.”
This is exactly what I discussed in one of my previous articles about how high oil prices ensure future supply. I do not believe we are running out of oil anytime soon, but just like the CEO of Shell, I believe replacing and increasing production to match rising demand is getting more expensive to achieve. Will we ever see oil below $60 this decade? We sure will if we slip back into recession but don’t hold your breath as it will be temporary and prices will creep back up.
We all remember the crash of 2008; oil prices crashed as well which is perfectly normal. But the world still needed oil and gas and prices crept back up to reflect the reality of supply and demand. That’s one reason I am not too worried about this entire debt crisis, if the worst was to happen, the markets will crash and then it’s back on the long road to recovery.
If I just ruined your day with the reality of high oil prices persisting in the future, do not despair. There is some good news amongst all the debt drama out there. President Obama announced new gas mileage rules where American vehicle fleets should average 54.5 miles per gallon by 2025, double today’s average of about 27 m.p.g. This should result in a cut of 40%-50% in fuel consumption from today’s levels. This has more chances of making a dent in US and global oil consumption than electric vehicles, at least for this decade.
Weekly blog roundup:
Leveraged ETFs: Turbo Charged Trading with a 3x Oil Stock ETF (Oil and Gas ETFs)
Are You Investing Wisely in Yourself? (Invest it Wisely)
The Myth of Covered Call Conservatism (Barabara Friedberg)
Portfolio Options for a Risky Market (Balance Junkie)
It’s Getting Better All The Time (101 Centavos)
Are You Ready for Stock Market Limbo? (Cashflow Mantra)
7 Tips for Energy Efficiency (Praire EcoThrifter)
10 Money Saving Tips for Your Home (Praire EcoThrifter)
7 Ways to Rid Stress from Your Life (Praire EcoThrifter)
Have a Great Weekend!