Oil's importance to economic and national security cannot be taken lightly.
Volatility will affect global oil markets if the world's supplies fail to manage crude output and market expectations.
The world market is tied to oil prices. When money is shifted from the petroleum industry to the high-flying stocks that have no potential for immediate profits, it's at the expense of the energy industries. Consequently, there are new highs in oil prices and new lows in oil company and service company stocks. However, the higher oil and gas prices rise, the greater the opportunity for profits in an industry that has been devastated by oil prices as low as $10/bbl. With low oil prices, supply has dwindled while demand has risen. And with a growing world economy, it's likely demand will quickly outstrip the supply of current oil reserves and productivity.
Continued oil production restraints and escalating prices could eventually destabilize world economies.
The US has no energy policy, yet we are dictating to other nations what they should do with their oil production. If the US is not willing to produce oil for its own consumption, how can we browbeat other nations to do it for us.
The world is discovering 6 billion bbl of oil annually, but it's using 25 billion bbl. Within the next decade, the world will have a shortfall of 10 billion bbl of oil annually. It's likely we will be engulfed in wars over oil.
Dailey J. Berard
President
Universal Fabricators LLC
New Iberia, La.
