So my blog more than two years ago on cheap oil its causes and effects has proved to be largely correct. The price of oil remains really low because of the reasons I gave in that blog. And the consequences remain the same. Problem is cheap fuel for air travel means people in their masses are taking short holidays all over the globe. This helps the good effects of globalisation (cultural understanding and reduction of racism) but it does nothing for global warming - on the contrary it hastens it - and tourists in some hot spots are getting attacked and demonstrated against because of local pollution, rise in prices (incl. property), and general destruction of minority cultures.
LATEST NEWS 10.5.18
Prices are finally rising, not because the oil situation has changed, but because of the political crisis around Trump's move to re-introduce sanctions against Iran. His is the only country wanting to do this, so this brings him in direct conflict not only with China and Russia, but also with the UK and Europe, all of whom wish to continue the agreement with Iran, as long as the UN can monitor their nuclear industry. Now the whole might of the US economy will be brought to bear on Iran, but also on us, too, here in Europe. Our companies will find it difficult to trade with Iran, as Trump is trying to blockade the country economically. China has the most interests in Iran, but Europe is not far behind them. This will lead to a trade war and a race to the bottom. The oil price rise is partly because of the loss of oil supply from Iran, but more importantly, the result of jitteriness about what will happen in the future. Higher oil prices has already led to a switch towards shale oil, esp. in the States, as it was not economical to mine it at previously very low prices. My guess is that the oil price will sink again in a couple of months from the now $70 a barrel to $50. But it could go the other way if the political crisis between all the major countries is not solved and the US economy collapses. The greatest danger for us in Europe is not higher transport costs and more inflation, but a real split with the US if Trump manages to stay in power. This will lead to the first major shift in the great global alliances since 1939 - nearly a hundred years ago!. This tectonic shift could easily lead to another World War if not handled properly by the world's politicians. But I doubt it, the more likely scenario is that Trump is forced out of power before then. Let us hope so.