Energy round-up: a vulnerable global oil market
Photo credit: alejandro-fi
September 6, 2013 // By: Simone Osborn , Energy Crunch editor
Three things you shouldn't miss this week:
- Worldwide loss of oil supply heightens Syria attack risk - Global crude supply tightens as the crisis in Syria comes to a head.
- 'Baseless economics': Lord Stern on David Cameron’s claims that a UK fracking boom can bring down price of gas - Respected economist criticises the Government for encouraging a rush into fracking.
- Report: UK needs renewable energy 'Plan B' - Ministers urged to work with industry to identify "low regrets" energy investment.
Events in Syria have again highlighted the vulnerability of the global oil market, in spite of the so-called shale oil revolution in North America.
The oil price could hit $150 per barrel if the US attacks the Assad regime and violence spreads throughout the Middle East, financial analysts say. Prices have already jumped to $115/bbl in anticipation of a strike, and the market is vulnerable to any disruption because production has fallen in several important producing countries.
Output in Libya has already plunged to 150,000 barrels per day – just a tenth of its level last year - as workers strike and local gangs blockade facilities. In Iraq violence has returned to 2008 levels, oil production has slipped to under 3 million barrels per day, and experts despair of seeing the 6 mb/d predicted by the IEA for 2020.
Meanwhile, back in the UK, Lord Stern described David Cameron’s claims that fracking could cut British gas bills as “baseless economics”, since gas is traded internationally.
Stern would be delighted if shale gas were burned instead of coal, but said it would be “very worrying” if it displaced renewable energy. He also complained that serious issues, including the amount of water required for fracking and potential contamination, have not been properly debated. He criticised the government’s refusal to set a decarbonisation target for grid electricity, which he said was damaging investor confidence.
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