Financial Times: Gulf oil production hits record

"Despite the shale revolution, the Middle East is and will remain the heart of global oil industry for some time to come". I think that these words of Fatih Birol (IEA) are enough to explain the topic of the following article of Ajay Makan (Financial Times). The shale revolution is already a reality in US, but, as last data say, it's still far to seriously threat the "Gulf states supremacy".

The Gulf states are producing more oil than ever before, defying expectations that the US shale revolution would break their 40-year grip on the global oil market and diminish their importance to the world’s consuming nations. 

Surging production in North America is expected to eat into the market for oil from Opec. But the quartet of Gulf kingdoms that dominate the cartel of oil exporters have so far emerged unscathed. Instead, they have expanded their share of the world market as political and social factors have reduced production from a number other members. 

Saudi Arabia, Kuwait, the United Arab Emirates and Qatar set aggregate production records in each of the last three months, according to fresh estimates from the International Energy Agency. In September they accounted for 18 per cent of global demand – a level only matched twice in IEA data stretching back to the 1980s.

“Despite the shale revolution, the Middle East is and will remain the heart of global oil industry for some time to come,” Fatih Birol, the IEA’s chief economist said.

US crude oil production has increased by 50 per cent since 2008 and the country is expected to meet the lion’s share of the world’s growing demand over the next five years. But while US companies tend to maximise production to generate more profits, the Gulf states – and Saudi Arabia in particular – invest heavily to maintain spare capacity.

That has allowed them to raise production to offset a run of disruptions across the Middle East and Africa in the last two years. US-led sanctions have reduced Iranian production by 1m barrels a day since the start of last year, while civil unrest has returned this summer to Libya and crude oil theft increased in Nigeria. 

As a result Gulf states are capturing more of the fast growing Asian market. India imported 44 per cent of its crude from Saudi Arabia, Kuwait, Qatar and the UAE in July, up from 36 per cent in 2011, while China relies on the countries for a quarter of its imports compared to 21 per cent in 2007.

A rapid return to production among other Opec members, for example through a resolution to Iran’s nuclear standoff with the US, could yet leave the Gulf states exposed to the US shale revolution. And some analysts argue that Opec could yet need to discuss production cuts when its oil ministers next meet in Vienna in December.

The record output has provided a windfall for the oil-dependent monarchies. The 16.4m barrels a day produced by the four states during the third quarter was worth more than $150bn at today’s prices of more than $100 a barrel. 

The principal beneficiaries have been Saudi Arabia, which has increased output more than 10 per cent since the start of the year to a record of 10.19m b/d in August, and the UAE where the 2.77m b/d produced in September was a record, and 7 per cent higher than at the start of the year. Kuwait has also set a series of production records this year, but Qatar has been unable to raise production significantly. 

It also means the region remains crucial to the world’s major powers. The US continues to import almost 60m barrels a month from the Gulf, a number that has actually increased in the last three years even as US imports overall have fallen. 

Cantico delle Creature - San Francesco d'Assisi

Per uno scout nell'anima come me, il Cantico delle Creature è un po' come un manifesto.

Mi riporta alla memoria la strada, le attività con i frati francescani che ho avuto la fortuna di fare, ma soprattutto mi fa ricordare la Natura che tante volte mi sono fermato ad ammirare a bocca aperta, e tramite Lei lodare il Nostro Signore.

Buona lettura.

Altissimu, onnipotente, bon Signore,
tue so’ le laude, la gloria e l’honore et onne benedictione.

Ad te solo, Altissimo, se konfàno et nullu homo è ne dignu te mentovare.

Laudato sie, mi’ Signore, cum tucte le tue creature, spetialmente messor lo frate sole, lo qual’è iorno, et allumini noi per lui. Et ellu è bellu e radiante cum grande splendore, de te, Altissimo, porta significatione.

Laudato si’, mi’ Signore, per sora luna e le stelle, in celu l’ài formate clarite et pretiose et belle.

Laudato si’, mi’ Signore, per frate vento et per aere et nubilo et sereno et onne tempo, per lo quale a le tue creature dai sustentamento.

Laudato si’, mi’ Signore, per sor’aqua, la quale è multo utile et humile et pretiosa et casta.

Laudato si’, mi' Signore, per frate focu, per lo quale ennallumini la nocte, et ello è bello et iocundo et robustoso et forte.

Laudato si’, mi’ Signore, per sora nostra matre terra, la quale ne sustenta et governa, et produce diversi fructi con coloriti flori et herba.

Laudato si’, mi’ Signore, per quelli ke perdonano per lo tuo amore, et sostengo infirmitate et tribulatione.

Beati quelli ke 'l sosterrano in pace, ka da te, Altissimo, sirano incoronati.

Laudato si’ mi’ Signore per sora nostra morte corporale, da la quale nullu homo vivente pò skappare: guai a quelli ke morrano ne le peccata mortali; beati quelli ke trovarà ne le tue santissime voluntati, ka la morte secunda no 'l farrà male.

Laudate et benedicete mi’ Signore' et ringratiate et serviateli cum grande humilitate.

Rosario Livatino, 23 anni fa.

Il 21 settembre 1990 veniva ucciso il giudice Rosario Livatino, per il quale, nel 2011, è stata aperta la causa di beatificazione. Io voglio rendergli omaggio tramite le famosissime parole pronunciate il 9 maggio 1993 ad Agrigento da Giovanni Paolo II.
Don Ciotti in un suo libro ha raccontato che quelle parole furono ispirate dalla visita che il pontefice fece a casa dei genitori di Livatino, prima di recarsi alla Valle dei Templi.
Durante quella visita, il papa parlò con la madre di Rosario, e, stringendole le mani, aprì e lesse una pagina del diario del giudice.
Poche ore dopo, davanti a migliaia di siciliani, pronunciò queste parole.
Grazie Rosario Livatino. 

Che sia concordia!
Dio ha detto una volta: non uccidere!
Non può l’uomo, qualsiasi uomo, qualsiasi umana agglomerazione… mafia, non può cambiare e calpestare questo diritto santissimo di Dio!

Questo popolo, popolo siciliano, talmente attaccato alla vita, popolo che ama la vita, che dà la vita, non può vivere sempre sotto la pressione di una civilta contraria, civiltà della morte!

Nel nome di questo Cristo crocifisso e risorto, di questo Cristo che è vita, via, verità e vita.
Lo dico ai responsabili: convertitevi! Una volta, un giorno, verrà il giudizio di Dio!

“Bolle” e Siria: bad and good news per lo shale-gas

di Marco Campagna

Eccoci di nuovo a parlare di “shale-gas con le bolle” come lo chiamai qualche tempo fa.

Nel mio articolo precedente parlavo del fatto che, secondo alcuni esperti (Andy Hall, guru del trading, in primis), negli anni passati ci sia stata fin troppa fiducia  sui rendimenti attesi dei pozzi di shale gas e shale oil americani, e che questa sovrastima (stimata dal Post Carbon Institute tra il 100% e il 500% della produzione realmente registrata) abbia portato alla formazione di una “bolla” non troppo dissimile dall’altra ben più famosa bolla dei sub-prime. Infatti, secondo Hall ma anche per il Fondo Monetario Internazionale, il repentino declino della produzione dei pozzi avrebbe potuto generare la necessità di aumentare la trivellazione di pozzi fino ad un livello insostenibile economicamente, generando inoltre la diffusione di prodotti finanziari di copertura che, se nelle mani sbagliate, avrebbero potuto fare qualche danno inaspettato. Fatto il “riassunto della puntata precedente”, che può essere letta integralmente qui, passiamo alle novità degli ultimi giorni.

Da una recente analisi targata Bloomberg, nei primi sei mesi del 2013 il mercato nordamericano degli asset oil & gas si è dimezzato rispetto allo stesso periodo dell'anno scorso, passando da 54 a 26 miliardi di dollari. Compagnie importanti come BHP e Shell hanno drasticamente ridimensionato i loro investimenti in shale gas e shale oil. Sembra che la corsa a questi “fossili non convenzionali” negli USA inizi a rallentare, e qualcuno inizia a chiedersi se gas e petrolio da scisti siano veramente in grado di mantenere le promesse di prosperità di poco tempo fa.

Anche evitando inutili catastrofismi, è però innegabile che, un po’ per il fatto che i prezzi del gas negli Usa siano scesi nel 2012 a causa (o grazie a, dipende dai punti di vista) dell'oversupply, e un po’ perché in effetti alcuni pozzi stiano rendendo meno del previsto, si è verificata una contrazione di investimenti, facendo così calare il valore degli asset. Dopo i record degli ultimi tre anni il volume degli asset energetici scambiati sul mercato nordamericano ha toccato il minimo dal 2004.

Le aziende si stanno concentrando sullo sfruttamento dei progetti già operativi e si sono praticamente fermate sul fronte nuove acquisizioni: oltre al fatto che, a mio avviso, ci sia una  normale fase di assestamento successiva ad un boom iniziale, secondo gli analisti il motivo di questo slowdown è dovuto alla difficoltà di giustificare nuovi investimenti, dato che i giacimenti ottenuti nella corsa avvenuta dal 2009 al 2012 attualmente come valore sono ben al di sotto del prezzo cui sono stati acquistati. Insomma, dopo il boom del 2008-2012, per la prima volta da quando si sono diffuse le tecniche di trivellazione che permettono di ottenere gas e petrolio dagli scisti, gli investimenti in shale gas sono calati.

Questo rallentamento, osserva Bloomberg, potrebbe durare per anni e minaccia di ostacolare la crescita della produzione di gas e petrolio. Le aziende che hanno investito nello shale nel rush degli ultimi 3 anni, ora con gli asset che valgono meno di quanto si prevedeva, si trovano a corto di risorse per finanziare nuove trivellazioni. Più i produttori sono indebitati e costretti a vendere asset per finanziarsi, più il valore di questi calerà.

Il tutto fa quindi tornare in mente le previsioni di Andy Hall e del FMI di qualche tempo fa, ovvero che forse si stava riponendo fin troppa fiducia nel petrolio e gas da scisti, gonfiando così una nuova bolla finanziaria.

Fin qui le “cattive notizie” per lo shale-gas e oil, ma, facendo un “volo pindarico” fino alla crisi siriana, c’è invece chi vede good news all’orizzonte.

Nick Butler, del Financial Times, espone la possibilità che la bollente situazione in Siria possa rafforzare la “causa” degli idrocarburi non-convenzionali. Butler parte dal fatto che, già in questi giorni, l’effetto Siria si sia fatto sentire sui mercati del petrolio, facendo arrivare il Brent a 115$/b: il motivo è ovviamente che i mercati temono l’eventualità che USA ed Europa non riescano a fermarsi ad un mero “bombarda e fuggi”, ma che invece accendano ancor di più il conflitto sunniti-sciiti (con asse Arabia Saudita-Iran), rimanendovi impantanati. In effetti, che l’intervento in Siria sia tutt’altro che ben pianificato e con chiari obbiettivi, è piuttosto lapalissiano.

Tornando al ragionamento di Butler, viene giustamente fatto notare che questa febbre siriana, come tante altre, passerà velocemente e che inoltre la Siria è un attore nettamente minore nello scenario dei produttori di petrolio e gas medio-orientali: infatti l’Europa (primo importatore di greggio siriano) ne ha fatto facilmente a meno.  Dal punto di vista globale, con la crescita della Cina in fase di rallentamento, l’India che non sembra ancora avere quella struttura istituzionale necessaria per attrarre gli investimenti nelle infrastrutture necessarie a spingerne lo sviluppo, l’Europa in netto calo dei consumi e gli USA alle prese con il famoso boom degli idrocarburi non convenzionali, il reale rischio per uno shortage di olio o gas sul mercato è ancora decisamente basso.

Ma ecco la considerazione finale di Butler: il più grande impatto della situazione siriana, egiziana, libica e della meno nota situazione irachena, è che il "mondo che consuma" si stancherà del Medio Oriente e dei suoi conflitti infiniti, vista l’importanza primaria della sicurezza degli approvvigionamenti. Per questo gli eventi in Siria danno un nuovo incentivo allo sviluppo di rifornimenti energetici indigeni e low-cost, rendendo così Bashar Al-Assad il miglior sponsor per l’industria dello shale-gas.

Fracking: Dash for Cash, by Economist

Why in USA, though anti-fracking-protests exist, many locals populations allowed the execution of hydrofracking drilling for shale gas and oil, and, contrarily, in UK the protest is becoming a national and irremovable  issue? The American answer is easy:

Stuff their mouths with cash.

“THERE are many, many more of us than there are of you,” shouted protesters in Balcombe, a village in southern England with an exploratory drilling rig and a population swollen by eco-warriors, to the police and the frackers. Sadly, they are right. Britons are broadly opposed to hydraulic fracturing for oil and gas, or “fracking”—at least if it might happen anywhere near their homes. Cuadrilla, an energy firm, has already been spooked into shutting down its rig.

Fracking has transformed America’s energy market and helped the country out of recession. It can create jobs, lower bills and reduce dependence on unreliable, autocratic oil- and gas-producing countries. Once a well is drilled—something that can be done increasingly speedily—it is scarcely more of a blot on the landscape than a garden shed. Nobody knows whether the earth under Britain can be pummelled into giving up much oil and gas, although the latest estimates suggest there is a lot of the stuff. Why not start looking?

For two broad reasons, say the protesters. The first objection to fracking, favoured by Greenpeace and smaller green groups like No Dash for Gas, is environmental. Hydrocarbons, say the campaigners, are bad; the methane occasionally emitted from wells is a greenhouse gas; fracking can pollute water. The second objection, voiced more often by locals carrying “Frack off” signs, is to the lorries and disruption that come along with mining: pure NIMBYism.

The environmental objections are weak. Natural gas is far cleaner than coal. America’s many wells have produced little pollution—and the danger could be reduced by decent regulation. Technology is making it possible to drill many wells from a single pad and to reuse the water that is pumped in.

Oddly, the NIMBYs have a stronger case. Fracking is indeed a nuisance, particularly while wells are being drilled. Lorries clog the roads. Workers spend money locally—but they also get drunk and fight locally. In western Wyoming, rising crime strikingly tracked an increase in drilling.

Stuff their mouths with cash

Fracking has boomed in America partly because local people have been paid off handsomely. Landowners can sell the rights to the hydrocarbons under their fields. States tax extracted oil and gas, and redistribute much of the revenue to the affected counties, which spend it on glorious schools and fire stations. America has NIMBYs too—and some states have banned fracking outright—but money has proved a powerful salve.

In centralised Britain, by contrast, almost all the proceeds from fracking that do not flow to miners would end up in the Treasury’s coffers. Oil and gas rights are held in effect by the crown, not landowners. George Osborne, the chancellor of the exchequer, sets the tax on shale-gas production: it is 30%, much lower than taxes on North Sea fields. Mining firms pledge to pay £100,000 per well and 1% of revenues to local communities (not yet defined). As a result of a broad reform to business rates, local authorities may also be able to keep a share of the rates paid by energy firms, subject to complex calculations. This is simply too small and too vague a lure.

The ideal solution would be to radically decentralise the tax system and allow local authorities greater freedom to set extraction taxes—which would encourage miners to go where they are least disliked. Unfortunately, the government is unlikely to loosen its grip over taxation. But one simple change would help. Following long protests against wind farms, in April the rules were changed to allow local authorities to keep all the business rates paid by turbine installers. Do the same for fracking.

No middle ground in fracking debate, by Guy Chazan (FT)

A useful and clear Q&A article to help everyone wants to know more about hydraulic fracking and shale gas. Financial Times (here with Guy Chazan) is trying to consider pros and cons of fracking, presenting both sides of the same coin in a hard-to-find impartial manner.

Enjoy your read.

Balcombe, the leafy West Sussex village where UK shale pioneer Cuadrilla is drilling for oil, is ground zero in an increasingly fiery national debate about fracking, the controversial extraction technique.

On one side is David Cameron, prime minister, who says exploiting the UK’s shale gas reserves will drive down energy bills and make Britain more competitive. On the other are environmentalists who say fracking poisons water supplies, pollutes the atmosphere and triggers earthquakes. Attitudes are hardening, as the two sides dig in. “The problem is there’s no middle ground any more,” says Joseph Dutton of Leicester University’s Global Gas Security Project. “We need an informed, rational debate, not the highly emotional discourse we have right now.”

Exhibit A is Gasland, a 2010 documentary that shows a Colorado man setting his kitchen tap water on fire with a cigarette lighter. Regulators said that was in fact caused by “biogenic” gas that has been detected in local groundwater for years, and had nothing to do with fracking. “There are a lot of misconceptions,” says Susan Brantley, professor of geosciences at Pennsylvania State University. But they have proved enduring, and are even influencing policy, as well as public opinion. France and Bulgaria have banned fracking outright, and green campaigners say the UK should do the same. The FT considers the process and its pros and cons.

What is shale?

Shales are the most abundant form of sedimentary rock. They also serve as the “source rock” for oil and gas that migrates over time into conventional reservoirs, where it can easily be extracted. A lot of hydrocarbons are still in shale, but for decades, geologists could not figure out a way to access them, stymied by the low permeability of the rock. In recent years, that has changed. Oil companies in the US worked out a way of using techniques such as horizontal drilling, hydraulic fracturing, or “fracking”, and 3D seismic imaging to unlock North America’s vast shale resources.

What is fracking?

Fracking involves pumping fluid into a shale formation at high pressure to create cracks in the rock. The fluid contains a “proppant” such as sand which “props” open the fractures: the oil and gas then flows through these pathways towards the well. The fracking fluid is mainly made up of water, but also contains chemical additives such as polymers to reduce friction and allow the water to be pumped at lower pressures.

Is fracking new?

About a million wells have been fracked in the US since the 1940s, when the technique was first used, although pressures used in the process have increased vastly since then. The big change happened in the 1990s when fracking was applied to shale and, combined with horizontal drilling, released enormous quantities of gas that had previously been impossible to extract economically.

What has been the effect?

Shale gas production has soared in the US, providing a wave of cheap and abundant energy. In 2000, shale represented just two per cent of US natural gas supply. By 2012 it was 37 per cent. Last year, the surge in output pushed the US gas price to 10-year lows.

Can it happen here?

The government and Cuadrilla say yes. Latest estimates suggest there are about 1,300tn cubic feet of shale gas in the northwest of England alone. Even if only a tenth of that can be extracted, it is still the equivalent of 51 years’ supply. The government says developing this resource will create jobs, bring down fuel bills and reduce dependence on imported gas. Even the Church of England says fracking could help tackle fuel poverty: “blanket opposition . . . fails to take into account those who suffer most when resources are scarce”, it says.

What are the environmental concerns?

One of the most common objections is that the process can contaminate groundwater. Environmentalists say that methane can leak into aquifers in areas where shale gas drilling has taken place – a fact confirmed in a 2011 study by Duke University. But the industry argues that fractures usually remain separated from groundwater aquifers by thousands of feet of rock, and there is next to no risk of leakage, especially if well casings are structurally sound.

One academic review published in 2011 by the Massachusetts Institute of Technology concluded that the environmental impacts of shale are “challenging but manageable”, and that properly constructed wells should pose no problem. But it did identify some risks, such as surface spills of fracking fluids, pollution from inappropriate wastewater disposal and excessive water withdrawals.

Water use is a key issue. Some 4-6m gallons of water are required to frack each well and in some parts of the US that have been hit by drought, there are concerns about how fracking can affect the availability of water for other purposes, such as agriculture.

Waste water is also a problem. After a well is fracked, some of the fluid comes back up to the surface along with “flowback”, naturally-occurring water from deep underground that can contain pollutants or even radioactivity and requires careful disposal. Regulators are now increasingly calling on companies to reduce waste by recycling more water from fracking operations.

Can fracking cause earthquakes?

Cuadrilla had to suspend operations in the northwest of England in 2011 after its fracking caused a sequence of “seismic events”. But experts say fracking-related earthquakes are relatively rare and, when they do occur, are too small to be detected on the surface. They say coal-mining is much more likely to cause tremors than fracking for gas.

A larger problem is the disposal wells where flowback water from fracking is deposited for permanent storage. A study by researchers at Columbia University says that as many as 109 tremors in Ohio in 2011 and 2012 were directly linked to a well in which wastewater from fracking in nearby Pennsylvania was being injected deep underground.

What about the impact on communities?

Some of the residents of Balcombe are neutral on the fracking process, but do not want to see a big industrial development on the edge of their village. They worry about the impact on local air quality of increased road traffic and gas flaring. That, say experts, is understandable. “You can be ‘pro’ shopping malls, but not want a shopping mall in your backyard,” says Prof Brantley.

What about climate change?

The broader objection to fracking is that the more it is done, the more natural gas is produced and burnt, and the more greenhouse gases are released into the atmosphere, exacerbating global warming. Environmentalists say shale gas distracts attention and investment from renewables such as wind and solar that are crucial tools in fighting climate change. In the words of Caroline Lucas, the Green MP who was arrested during the Balcombe protests: “The evidence is clear that fracking undermines efforts to tackle the climate crisis.”

On the other hand, fracking’s promoters point to the fact that the increased use of gas can cut carbon emissions. Gas emits half the carbon dioxide per unit of energy of coal. As a result, US energy-related emissions of CO2 fell by 450m tonnes over the past five years as the power sector switched from coal to gas.

Yesterday's fuel

L'Economist sostiene che il picco di consumo del petrolio si stia avvicinando inesorabilmente, sottolineando una differenza sostanziale: non è l'offerta che presto potrebbe iniziare a diminuire, bensì la domanda.

Perchè?

Buona lettura

The world’s thirst for oil could be nearing a peak. That is bad news for producers, excellent for everyone else

THE dawn of the oil age was fairly recent. Although the stuff was used to waterproof boats in the Middle East 6,000 years ago, extracting it in earnest began only in 1859 after an oil strike in Pennsylvania. The first barrels of crude fetched $18 (around $450 at today’s prices). It was used to make kerosene, the main fuel for artificial lighting after overfishing led to a shortage of whale blubber. Other liquids produced in the refining process, too unstable or smoky for lamplight, were burned or dumped. But the unwanted petrol and diesel did not go to waste for long, thanks to the development of the internal-combustion engine a few years later.

Since then demand for oil has, with a couple of blips in the 1970s and 1980s, risen steadily alongside ever-increasing travel by car, plane and ship. Three-fifths of it ends up in fuel tanks. With billions of Chinese and Indians growing richer and itching to get behind the wheel of a car, the big oil companies, the International Energy Agency (IEA) and America’s Energy Information Administration all predict that demand will keep on rising. One of the oil giants, Britain’s BP, reckons it will grow from 89m b/d now to 104m b/d by 2030.

Scraping the barrel

We believe that they are wrong, and that oil is close to a peak. This is not the “peak oil” widely discussed several years ago, when several theorists, who have since gone strangely quiet, reckoned that supply would flatten and then fall. We believe that demand, not supply, could decline. In the rich world oil demand has already peaked: it has fallen since 2005. Even allowing for all those new drivers in Beijing and Delhi, two revolutions in technology will dampen the world’s thirst for the black stuff.

The first revolution was led by a Texan who has just died (see article). George Mitchell championed “fracking” as a way to release huge supplies of “unconventional” gas from shale beds. This, along with vast new discoveries of conventional gas, has recently helped increase the world’s reserves from 50 to 200 years. In America, where thanks to Mr Mitchell shale gas already billows from the ground, liquefied or compressed gas is finding its way into the tanks of lorries, buses and local-delivery vehicles. Gas could also replace oil in ships, power stations, petrochemical plants and domestic and industrial heating systems, and thus displace a few million barrels of oil a day by 2020.

The other great change is in automotive technology. Rapid advances in engine and vehicle design also threaten oil’s dominance. Foremost is the efficiency of the internal-combustion engine itself. Petrol and diesel engines are becoming ever more frugal. The materials used to make cars are getting lighter and stronger. The growing popularity of electric and hybrid cars, as well as vehicles powered by natural gas or hydrogen fuel cells, will also have an effect on demand for oil. Analysts at Citi, a bank, calculate that if the fuel-efficiency of cars and trucks improves by an average of 2.5% a year it will be enough to constrain oil demand; they predict that a peak of less than 92m b/d will come in the next few years. Ricardo, a big automotive engineer, has come to a similar conclusion.

Not surprisingly, the oil “supermajors” and the IEA disagree. They point out that most of the emerging world has a long way to go before it owns as many cars, or drives as many miles per head, as America.

But it would be foolish to extrapolate from the rich world’s past to booming Asia’s future. The sort of environmental policies that are reducing the thirst for fuel in Europe and America by imposing ever-tougher fuel-efficiency standards on vehicles are also being adopted in the emerging economies. China recently introduced its own set of fuel-economy measures. If, as a result of its determination to reduce its dependence on imported oil, the regime imposes policies designed to “leapfrog” the country’s transport system to hybrids, oil demand will come under even more pressure.

A fit of peak

A couple of countervailing factors could kick in to increase consumption. First, the Saudis, who control 11% of output and have the most spare capacity, may decide to push out more, lowering prices and thus increasing demand. Then again, they might cut production to try to raise prices, thereby lowering demand further. Second, if declining demand pushes down the oil price, drivers may turn back to gas-guzzling cars, as they did when oil was cheap in the 1990s. But tightening emissions standards should make that harder in future.

If the demand for oil merely stabilises, it will have important consequences. The environment should fare a little better. Gas vehicles emit less carbon dioxide than equivalent petrol-powered ones.

The corporate pecking order will change, too. Currently, Exxon Mobil vies with Apple as the world’s biggest listed company. Yet Exxon and the other oil supermajors are more vulnerable than they look (see article). Bernstein, a research firm, reckons that new barrels of oil from the Arctic or other technologically (or politically) demanding environments now cost $100 to extract. Big Oil can still have a decent future as Big Gas, but that will not prove as profitable.

The biggest impact of declining demand could be geopolitical. Oil underpins Vladimir Putin’s kleptocracy. The Kremlin will find it more difficult to impose its will on the country if its main source of patronage is diminished. The Saudi princes have relied on a high oil price to balance their budgets while paying for lavish social programmes to placate the restless young generation that has taken to the streets elsewhere. Their huge financial reserves can plug the gap for a while; but if the oil flows into the kingdom’s coffers less readily, buying off the opposition will be harder and the chances of upheaval greater. And if America is heading towards shale-powered energy self-sufficiency, it is unlikely to be as indulgent in future towards the Arab allies it propped up in the past. In its rise, oil has fuelled many conflicts. It may continue to do so as it falls. For all that, most people will welcome the change.