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Oil industry faces is "last hurrah" according to Financial Times (14-november-2021)
When Joe Biden spoke during last year´s presidential election about leading the US in a "transition from oil",he hardly expected to be asking the world´s crude producers for more slippy just 12 months later. But the US president´s administration has made repeated efforts to drive down oil prices in recent weeks. The White House even contacted some US producers to ask how quickly they could bump up output("augmentar la sortida"). On the eve of the COP26 climate summit, Biden hinted at unspecified retaliation against Russia and Saudi Arabia. The members rejected Biden´s pleas and stuck with a plan to add 400,000 barrels a day of supply each month, the president is right to be worried,say industry analysts and investors. Oil prices, already above $80 a a barrel, are at their highest in seven years. Mobil¨s chief executive, and his Chervon counterpart Michel Wirth appeared in Congressnfor a grilling about climate disinformation, It marks a big shift-all thanks to the oil price recovery engineered by the supply cuts made by Opec+members last year. American shale producers have barely responded to the crude market recovery. From a high of 13m b/d in November 2019-almost 15% of global production. One explanation is the arrival of an era of capital disipline in a shale patch. But next few years could still bring a bonanza for producers after years of misspending and a lack of investment have left the industry unable to meet consumers. Will Van Loh says world needs to be prepared for «triple digit oil prices». It´s going to financially cripple western economies. Analysts say the implications will be profound for global politics. A year away from midterm elections the danger of further oil price inflation for Biden is plain. A gallon of petrol in the US now costs on average $3.40 Biden´s Republican opponents have seized on resign petrol prices to argue that his energy policies are penalizing Americans. In reality these market distortions have a little to do with federal energy policy. Skeptical capital markets, environmentally-minded shareholders, government regulation and a fundamental doubt about oil´s long-term future in a lower carbon world. For some analysts, this emerging supply gap is similar to the conditional that created the oil bull run between 2005 and 2008, when crude barrel cost $147 a barrel. As the air quality in cities improved last year, a seductive notion emerged. That pandemic lock downs had helped cure the world of its oil addictions, between the second quarters of 2020 and 2021, global oil consumption rose by an unprecedented 12m b/d, according to the IEA. Demand for oil in the US in the past four weeks was just shy of 21m barrels a day. The bigger market distortion is in supply-and nowhere is that more visible than in the US. On the surface, things look rosy. The US Energy Information Administration thinks production by December2022 will have risen to 12.2m b/d. The rest of the world may now have much new oil to yield either. From peak of almost $1tn in upstream capital spending in 2014, the total had fallen to less than $400bn by 2020 and is forecast to remain below $500bn between now and 2025. But Amy Myers Jaffe says Saudi Arabia should beware of taking that position for granted. Another price spike is the last thing anyone selling a fossil fuel should hope for.