Crude oil is facing a world of pain. On Tuesday the price of crude was down 4% during trading. The simple reason is worries about the ineptitude of OPEC.
Today OPEC will meet, and try to figure out a way to bring oversupply under control. The easy way to achieve that is to cut production. But will that happen? Well the price of crude thinks it won’t.
And if they can’t curtail oversupply, then prices are going down, down, down.
It’s basic economic supply and demand. If you have too much supply of something compared to the level of demand, prices fall. And Iran and Iraq are producing a lot of oil right now. It’s helping oversupply in the market.
According to CNBC,
‘Iran and Iraq were resisting pressure from Saudi Arabia to curtail oil production, making it hard for OPEC to reach an agreement. That has led some analysts to suggest the meeting may fail to reach a deal or produce one that is unworkable.’
Thanks to these fears, the price of oil is now trading at US$46.37 (at the time of writing). However if OPEC can come to an agreement then you would assume the price of crude will fly.
But according to my colleague Jason Stevenson,
‘Unfortunately, when crude demand starts falling from November to February (the seasonally lower demand months), OPEC will be producing oil at near record levels. That’s assuming it manages to freeze production in the first place. I wouldn’t get your hopes up [for a spike in the price of oil.]’
Clearly for now there’s money to be made trading the crude market. Jason warns a modicum of caution. I too would advise you be wary if oil trading is your bag. Jason’s reasoning is that the price of crude will head lower, to US$40 and possibly below.
I’m a little more aggressive with my long term view on oil, though. I think that, possibly within the next decade, the price of crude will hit an all-time low of US$0.
The silver bullet that kills oil
You should consider yourself lucky to be alive today. We live in perhaps the most exciting time in human history. We sit on the cusp of some of the biggest breakthroughs ever.
We’re on the verge of amazing technology like artificial intelligence. Soon the world will see millions of self-driving cars deployed on the roads. Our digital and physical worlds converge closer every day.
These technologies aren’t supposed to scare you. They’re not supposed to put you out of a job. They’re supposed to (and will) improve your life.
But perhaps the most exciting changes that are coming in the world are in the field of new energy. And there’s one energy source that could be the one to end all others.
It’s the silver bullet that could bring clean, abundant energy to the world. And if it does come to fruition, it will kill the oil industry. Then you won’t need to worry about the price of crude. It will be worthless. There will be no demand, plenty of supply, and a dying industry.
The new energy I’m talking about is fusion power.
‘Oh yes, here we go again,’ is a phrase I hear regularly when I bring up fusion power. It’s not exactly a new idea. And it’s always been that elusive ‘10 years away’.
But there’s only so long something can continue to be 10 years away. And 20 years ago the world simply didn’t have the available technology to help bring fusion power to reality.
However, today we do. Today we live in a world on the verge of artificial intelligence. Where quantum computing is just one step away from reality. Where companies are developing ‘neural networks’ and human-brain-interfaces.
Each one of those technologies deserves its own special treatment so we won’t go into them in depth today. But what they’re all doing is working toward a world where humans and machines work together to accelerate our understanding of everything.
Perhaps the most important development of the 21st century will be fusion power. I have no doubt that this century we’ll have abundant fusion power. I actually think it will come within…well, the next 10 years. In all reality it’s likely to come very soon. It is the silver bullet that will kill oil.
Understand the sun, understand fusion
I say this because researchers at the US Department of Energy (DoE) and Princeton University have developed a new theory.
This theory might just help crack the elusive fusion power. The researchers had been investigating a problem where plasma was creating its own magnetic fields.
Plasma is the key to fusion power. To create nuclear fusion, hydrogen plasma and helium fuse together using magnetic confinement. This magnetic confinement usually occurs inside a device known as a tokomak.
These new magnetic fields sometimes snap and break apart. And then they explosively reconnect. This phenomenon is known as magnetic reconnection. The force and power is incredibly rapid and dramatic. And it’s the process by which solar flares on the sun occur.
This is important because if scientists can understand magnetic reconnection, they can better understand solar flares. You see, the sun is one giant ball of fusion power. And by better understanding solar flares and magnetic reconnection, scientists can better understand the sun and, hopefully, fusion power.
According to Futurism.com,
‘[This research] also has an effect on how we look at nuclear fusion. One of the most prominent ways of generating nuclear fusion is using tokomak fusion reactors. These trap plasma in magnetic fields in specific areas to force hydrogen to fuse.
‘In experiments, magnetic reconnection can break these fields. This weakens the hold on the plasma, meaning it can reach areas in the containment field that won’t allow fusion to sustain itself. This discovery means we can find ways to strengthen these magnetic barriers, making for better fusion experiments.’
And better fusion experiments lead us closer to fusion power. Make no mistake, fusion power is coming. This theory is ground breaking in the development of fusion power.
When fusion power comes there will be no need for other forms of energy. Oil, coal, hydrogen, solar, it doesn’t matter. Fusion will be the only source of energy we need and use. It will change the world. It will kill off some of the world’s most powerful energy companies.
It’s the silver bullet for all our energy problems. And it’s going to destroy the price of oil.