Energy Market Reviews

…As we’ve noted in previous article

Which brings us to the root of the problem: the oil market is not free. This, and not any geological considerations, will potentially lead to troublesome constraints on oil supply in the future. In other words, if there is going to be an oil supply problem with grave economic consequences then the origin of the problem will be political, not geological.

The free market is very good at anticipating potential supply shortages and addressing the unanticipated shortages that periodically crop up, but governments around the world have their tentacles deeply immersed in the oil business, from oil exploration all the way through to the consumption of oil-based products. In particular, governments: a) heavily regulate oil exploration and production, b) control or influence the prices of oil and oil-based products, c) attempt to influence energy consumption trends, d) reduce, eliminate, or manipulate in some other way the economic incentives to expand supply, and e) use oil as a means of gaining geopolitical advantage.

GL Group