Tags: Technology | Oil | Bear Market | Crude

Technology Shows Oil Is In a Years-Long Bear Market

Technology Shows Oil Is In a Years-Long Bear Market
(Dollar Photo Club)

By    |   Friday, 04 September 2015 07:15 AM

Many years ago, humans thrived after mastering technology associated with stones. The Stone Age didn’t end because we ran out rocks.

The Stone Age eventually ended because bronze proved to be a better tool.

There was also no shortage of bronze when the Bronze Age ended. Technology advanced and allowed humans to enjoy a better quality of life.

Oil bulls are overlooking this important lesson.

The oil age won’t end because we run out of oil. It’ll end because we discover alternatives to oil.

Solar and wind energy are not eliminating the need for oil. New technologies are gradually reducing the need for oil. Although small for now, this is a permanent reduction in oil demand. Electric cars are also a small factor for now but represent another permanent change in demand.

Technology is also transforming the oil industry. Rig counts are widely watched now but the number of operating rigs is no longer an indicator of how many wells are producing oil. Rigs operate more efficiently and are now capable of drilling faster and deeper. A drop in the rig count no longer means a decline in production lies ahead.

New technology is also expanding the supply of economically recoverable oil. Low interest rates decrease the cost of capital and make formerly marginal projects economically feasible.

Oil bulls expecting a return to high prices are ignoring permanent changes in supply and demand. Market prices might continue to shoot both higher and lower with high volatility but the overall trend points to low prices for many years.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
MichaelCarr
Oil bulls expecting a return to high prices are ignoring permanent changes in supply and demand. Market prices might continue to shoot both higher and lower with high volatility but the overall trend points to low prices for many years.
Technology, Oil, Bear Market, Crude
257
2015-15-04
Friday, 04 September 2015 07:15 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved