Expect More Venezuelas in the Post-Peak Oil Era
Producers that aren’t able to diversify in time will face economic collapse.
Higher-cost producers face a brutal squeeze as demand declines.
Photographer: Bloomberg
One of the world’s largest energy companies says the era of oil demand growth is dead; a key OPEC producer flouts supply cuts that have rebalanced the crude market; the country with the largest reserves turns pipelines into scrap to upgrade crumbling refineries.
The three events aren’t unconnected. The future of declining oil demand forecast in BP Plc’s latest energy outlook is one in which lower-cost exporters may opt to quietly flood the market, as the United Arab Emirates now appears to be doing. That will drive out production from higher-cost nations in brutal fashion. Those that aren’t able to diversify in time face economic collapse, not unlike the one now forcing Venezuela to cannibalize its own infrastructure to keep the barrels flowing.