Thu Apr 23rd, 2020 at 06:20:39 PM EST
A basic tenet of eurotrib in its early days was that oil was running out and the world was heading for high energy prices and hard economic times. The $40 negative price for a barrel of oil recently brought that to mind.
Oil is so plentiful compared to demand that the price was close to 0, but holders of oil were paying storage costs. So if you wanted to get rid of your oil, you had to pay someone to take it, because they would incur the cost of storage. Thus the negative price.
One reason for this is that there was plenty of oil left to be drilled. Those that postulated we were running out were just wrong.
And the higher prices also brought out new technologies to retrieve that oil at the higher price levels, such as fracking..
And another reason is that higher prices are attractive to entrepreneurs who find new technologies to address a potential energy shortage, Elon Musk and many others.
Free markets and capitalism at work.
I hope you all are well.