Last modified: June 21 2021
The coronavirus pandemic has shuttered the world's economies, overwhelmed healthcare systems and taken loved ones from us. Politicians have promised their citizens a "return to normal" following the pandemic. However understandable, this longing for "normal "will lead us to a mirage. Worse, our recovery from COVID-19 could be a short-lived victory if we aspire only to have a "normal" economy again. Normal created a climate change timebomb that may make the economic consequences of coronavirus look mild by comparison. Normal would give two brutal dictators the power to topple North America's fossil fuel industry whenever they feel like it. Normal also caused the mass destruction of ecosystems, human desperation for animal protein and increased human-wildlife contact. Combined, these factors led to Ebola, Hanta, bird flu, SARS, MERS and now COVID-19 to find a new, more plentiful host in human beings. Stimulus spending around the world has already eclipsed the 2009 recovery measures and "New Deal" programs of the 1930s. And more spending is inevitable. Will your taxpayer money be wasted on a return to normal? Or, could it be used to create a new roaring 20s and an economy that thrives for decades to come? Normal is no longer desirable or secure in the fossil fuel industry. In late February 2020, as stock markets tumbled and Asian oil demand evaporated, Russia and OPEC were still coordinating production levels under an agreement known as OPEC+. It was formed, ostensibly, to counter the American shale oil boom, which had turned the U.S. into the world's largest producer.
In early March, at a meeting in OPEC's headquarters in Vienna, Saudi Arabia proposed that OPEC+ slice production by 1 million barrels, with Russia shouldering half the cut. Russia refused, so Saudi Arabia retaliated by starting a price war. A month later, Saudi Crown Prince Mohammed bin Salman (aka, MBS) and Russian President Vladimir Putin still seem unwilling to back down. Thanks to their spat and the pandemic recession, WTI crude is trading around $25 per barrel, which is at least $15 below the breakeven price for the typical North American oil well. The situation is even worse in the Canadian oil sands where, as The Financial Post put it, Canadian heavy oil is now "cheaper than a pint of beer." Most U.S. and Canadian producers will not be able to survive -which is part of why Putin is in no rush to negotiate with MBS. Saudi Arabia and Russia seem to be initiating the "Oil End Game." Even before the pandemic, Michael Liebreich, energy consultant and founder of Bloomberg New Energy Finance, predicted that petroleum demand would peak and fall before 2030. The transition from fossil fuels to clean energy is bound to kill demand for petroleum, the lifeblood of these two countries. Saudi Arabia and Russia need to be among the last countries to pump oil out of the ground.
Full article written by Wal van Lierop can be found here:https://bit.ly/3e8WP3F