You may have been surprised over the last few months as oil prices have continued to tumble. A few years ago, when oil prices were surging higher, some analysts were discussing the concept of peak oil – the notion that the world was running oil of oil. But the world today is awash in crude oil, with enough extra oil produced last year to fuel all of Great Britain.
Prices will remain low as long as oil remains plentiful, and unsold crude oil continues to pile up around the world. As reported in the New York Times, as prices have fallen, the amount of excess production has been cut in half over the past six months. But that means that there are still about one million barrels of extra oil that is now being supplied to the markets each day.
The glut therefore continues to expand and it could take years to work through all the extra oil presently being warehoused or loaded onto supertankers for storage at sea. Oil companies among others have been losing money as prices have plummeted.
How quickly things can change – just a couple of years ago, producers and oil producing nations were enjoying the accumulation of vast fortunes as they drilled and pumped relentlessly to fuel expanding middle classes in China, India, Russia, Brazil, Nigeria and elsewhere.
