During the summer of 2014, WTI oil traded at prices north of $105/bbl.
Around this time, Bloomberg had an article titled “Oil Topping $116 Seen Possible as Iraq Conflict Widens” while even Investopedia forecasted on June 19, 2014 that oil prices could “hit $118.75” in the coming weeks.
Forecasting is hard, and that’s why we don’t usually do it. In this case, oil prices stunned many investors by dropping off a cliff, tumbling to less than $50/bbl close to six months later.
As Warren Buffett says, many people were caught swimming naked when the tide of high oil prices went out.
Understanding Why Oil Prices Fluctuate
To avoid being caught in a similar situation in the future, it helps to understand why and how oil prices fluctuate. Today’s infographic from Jones Oil is here to help us understand the many different issues that can impact global oil prices.
It covers supply and demand, weather, technology, geopolitics, as well as other factors that make oil prices fluctuate.
Ultimately, oil prices fluctuate because of changes to supply and demand, but the challenge for investors is that there are multiple factors at play that can affect those fundamentals. Many of them are interconnected.
These include weather events, supply interruptions (such as worker strikes or spills), broader demand trends such as the emergence of renewable energy, OPEC decisions, or other events that can have an immediate effect on supplies.
There are also meta factors, such as the “fear” that a future event may happen that could in turn affect supply and demand. This is where geopolitical risks get priced in, such as potential escalation of conflict in the Middle East or future election results of oil exporting nations.
Information and forecasts can also play a role. Imagine being an oil producer in early 2014, hearing some of the bullish reports above. Would you, or would you not invest in a project that had a breakeven of $60/bbl oil? Even a significant oil price fluctuation of +/- 30% would still have you come out on top.
However, as in the situation in 2014, this would have actually increased margin production, which would have only added to the glut in supply.
The Evolution of Hydrogen: From the Big Bang to Fuel Cells
Hydrogen and fuel cell technology harnesses the power of the universe to bring clean energy on Earth. Here is its potential.
It all started with a bang…the big bang!
The explosive power of hydrogen fueled a chain reaction that led to the world we have today.
Now this power is being deployed on Earth to supply the energy needs of tomorrow.
Visualizing the Power of Hydrogen
Today’s infographic comes to us from the Canadian Hydrogen and Fuel Cell Association, and it outlines how hydrogen and fuel cell technology is harnessing the power of the universe to potentially fuel an energy revolution.
What is Hydrogen, and How’s it Used?
With one proton and one electron, hydrogen sits at the very beginning of the periodic table.
Despite hydrogen being the most common molecule in the universe, it is rarely found in its elemental state here on Earth. In fact, almost all hydrogen on the planet is bonded to other elements and can only be released via chemical processes such as steam reforming or electrolysis.
There are five ways hydrogen is being used today:
- Building heat and power
- Energy storage and power generation
- Industry energy
- Industry feedstock
However, what really unleashes the power of hydrogen is fuel cell technology. A fuel cell converts the chemical power of hydrogen into electrical power.
Hydrogen Unleashed: The Fuel Cell
In the early 1960’s, NASA first deployed fuel cells to power the electrical components of the Gemini and Apollo space capsules. Since then, this technology has been deployed in everything from the vehicle you drive, the train you take, and how your favorite products are delivered to your doorstep.
Nations around the world are committing to build hydrogen fueling stations to meet the growth in adoption of fuel cell technology for transportation.
Hydrogen: A Green Energy Solution
Hydrogen fuel and fuel cell technology delivers green solutions in seven ways.
- Decarbonizing industrial energy use
- Acting as a buffer to increase energy system resilience
- Enabling large-scale renewable energy integration and power generation
- Decarbonizing transportation
- Decarbonizing building heat and power
- Distribution energy across sectors and regions
- Providing clean feedstock for industry
According to a recent report by McKinsey, hydrogen and fuel cell technology has the potential to remove six gigatons of carbon dioxide emissions and employ more than 30 million people by 2050, all while creating a $2.5-trillion market.
This is technology that can be deployed today, with the potential to transform how we live and power our economies in a sustainable way.
Map: The Countries With the Most Oil Reserves
See the countries with the most oil reserves on this map, which resizes each country based on how many barrels of oil are contained in its borders.
Map: The Countries With the Most Oil Reserves
There’s little doubt that renewable energy sources will play a strategic role in powering the global economy of the future.
But for now, crude oil is still the undisputed heavyweight champion of the energy world.
In 2018, we consumed more oil than any prior year in history – about 99.3 million barrels per day on a global basis. This number is projected to rise again in 2019 to 100.8 million barrels per day.
The Most Oil Reserves by Country
Given that oil will continue to be dominant in the energy mix for the short and medium term, which countries hold the most oil reserves?
Today’s map comes from HowMuch.net and it uses data from the CIA World Factbook to resize countries based on the amount of oil reserves they hold.
Here’s the data for the top 15 countries below:
|Rank||Country||Oil Reserves (Barrels)|
|#1||🇻🇪 Venezuela||300.9 billion|
|#2||🇸🇦 Saudi Arabia||266.5 billion|
|#3||🇨🇦 Canada||169.7 billion|
|#4||🇮🇷 Iran||158.4 billion|
|#5||🇮🇶 Iraq||142.5 billion|
|#6||🇰🇼 Kuwait||101.5 billion|
|#7||🇦🇪 United Arab Emirates||97.8 billion|
|#8||🇷🇺 Russia||80.0 billion|
|#9||🇱🇾 Libya||48.4 billion|
|#10||🇳🇬 Nigeria||37.1 billion|
|#11||🇺🇸 United States||36.5 billion|
|#12||🇰🇿 Kazakhstan||30.0 billion|
|#13||🇨🇳 China||25.6 billion|
|#14||🇶🇦 Qatar||25.2 billion|
|#15||🇧🇷 Brazil||12.7 billion|
Venezuela tops the list with 300.9 billion barrels of oil in reserve – but even this vast wealth in natural resources has not been enough to save the country from its recent economic and humanitarian crisis.
Saudi Arabia, a country known for its oil dominance, takes the #2 spot with 266.5 billion barrels of oil. Meanwhile, Canada and the U.S. are found at the #3 (169.7 billion bbls) and the #11 (36.5 billion bbls) spots respectively.
The Cost of Production
While having an endowment of billions of barrels of oil within your borders can be a strategic gift from mother nature, it’s worth mentioning that reserves are just one factor in assessing the potential value of this crucial resource.
In Saudi Arabia, for example, the production cost of oil is roughly $3.00 per barrel, which makes black gold strategic to produce at almost any possible price.
Other countries are not so lucky:
|Country||Production cost (bbl)||Total cost (bbl)*|
|🇬🇧 United Kingdom||$17.36||$44.33|
|🇺🇸 U.S. shale||$5.85||$23.35|
|🇺🇸 U.S. non-shale||$5.15||$20.99|
|🇸🇦 Saudi Arabia||$3.00||$8.98|
Even if a country is blessed with some of the most oil reserves in the world, it may not be able to produce and sell that oil to maximize the potential benefit.
Countries like Canada and Venezuela are hindered by geology – in these places, the majority of oil is extra heavy crude or bitumen (oil sands), and these types of oil are simply more difficult and costly to extract.
In other places, obstacles are are self-imposed. In some countries, like Brazil and the U.S., there are higher taxes on oil production, which raises the total cost per barrel.
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