Opec, fuel to the fire. As the oil crisis hurts everyone, even those who should earn – DiariodelWeb.it

DOHA – Another black smoke at the top of the oil producing countries in Doha. A crucial summit, which, in the participants’ hopes, he should facilitate the achievement of an agreement on the freezing of oil production. The goal was not to cut production, but at least temporarily block the levels of January. And instead, mainly because of tensions between Iran and Saudi Arabia, the negotiation ended with a stalemate, and already the results are good: in the first trading day of the day the price of crude oil fell by 2.5% to the $ 41.78 a barrel. The feeling is that the current crisis of the black gold, deeply intertwined with other extraordinary geopolitical crisis, both compared to the past, difficult to resolve, and that there is danger in our own energy security. But what is happening, and what can we expect, at this rate?

Recurrences: a crisis from Cyclic Rate

 At the moment, we are doing the accounts with the largest drop in prices of fossil fuels, in the course of the second half of 2014. A breakdown that is having a strong impact in economic and geopolitical terms. Certainly, it is not the first time that happens. On the other hand, the same Winston Churchill was well aware of the “primacy of politics in the world of energy” ; and the same belief has made clear, some 50 years later, Angela Merkel, when, at the outbreak of the crisis in Ukraine, said that even before being an economic issue, that energy supply is primarily political: demonstration that the theme is so longstanding, but always present. On the other hand, as we explained in the recent ISPI report on energy security, the Second World War there was a big ten-year cyclical basis so in crises which have affected the black gold, often linked to causes such as the hostilities in the foreign policy of exporting countries to Western ones, wars in the Middle East and Western reactions, internal political instability in producing countries and using oil as a weapon of international political pressure. Yet, this time the situation has some elements of originality. Take the case of 1973: then, OPEC was willing to sell less and to lose market volumes in order to achieve a goal “political” , represented by the embargo to the United States and the Netherlands; Today, however, before the collapse of prices and the face of a new age of abundance, manufacturers – Arab and non – seem unwilling to seek to obtain the offer. Indeed, they seem to compete to those who produce more.

and asymmetric stiffness

 Sure: in the past the situation is not easily soothed. Consider 1983, when OPEC realized that constantly increasing the price, stimulated consumers to energy efficiency and the search for alternatives, and so, it was decided to defend the price, limiting the production volumes to limit of 17.5 million barrels / day. This commitment, however, was not enough, because they met almost exclusively by Saudi Arabia: and so, OPEC proved, then as now, your “asymmetry of the cartel of producers. Strong and cohesive if the market is offering. And the competition of all against all if the market is in demand; because the priority of each one becomes that of maintaining its market share ‘. We look at what is happening today: in 2015 the world oil demand grew considerably compared to the year earlier, but the offer has come to exceed demand: OPEC and, far from making a vow of less political production, is as a whole by increasing the production of 0.9 million barrels / day. To this is added the conspicuous growth of North American production thanks to the shale oil , which is the one that then triggered the crisis. And then there is Russia, for the first time open to dialogue at the OPEC table. But the Saudis are in the wrong trusting because the Russians are friends of Iran, and in war zones such as Syria the wounds are still open and bleeding. As we see, the situation is extremely delicate.

The ambiguous effects on

 And then there are the importing countries, especially in Europe, on which are manifested most clearly the ambiguous effects of what the ISPI Report has rightly called the ‘ “age of plenty” . “The EU countries should draw comfort from seeing prices down, both because this increases the competitiveness of their firms than American and Asian, both because European citizens can allocate more resources to other types of consumption. But while the fall in prices at the pump and the domestic consumption is not so marked, in part because of a tax that has a strong influence on energy costs, this has a significant effect on industrial prices and has an impact on the price level in general, at a time when inflation is already too low. A Europe push towards deflation scares markets and banks for financial statements not yet in place, fearing that people postpone purchases hoping to discount lower prices in the future. Moreover, the sovereign funds of the exporting countries are now forced by the crisis to plug the fiscal chasms that open up in the budgets of national governments and therefore withdraw the capital from Western markets, postponing investments already programmed “. This means that an apparently positive scenario for Europe ends up also affect his interests. Not to mention, then, of the United States: the largest consumer of oil, and the third largest producer in the world. Thanks to the new technique of shale oil , the US imported only 50% of the oil we consume, but they are also facing a significant transfer of income.

The chimera of energy independence

 That to which we are faced, in the final analysis, is the crisis of the same paradigm of energy policies developed after World War II. The collapse is twofold: what price and what certainties. And that poses policy makers face a big challenge: to make national political systems more flexible, able to combine political and more general economic outlook with the more technical. Easier said than done, no doubt. Also because of the ‘ “energy independence” is clearly an illusion, and so much for the importing countries and to those exporters. Think of countries such as Russia and Saudi Arabia, forced to sell their oil to finance its welfare state, and then just as “dependent” by exports as Western countries are against imports . All this, without forgetting that the impact of the crisis is uncertain both locally and internationally. Especially in a world scenario in itself dotted with trouble spots in quality and quantity unprecedented.