Here is a remarkable article from FOX Business (“Fair and balanced” and as vapid as ABC News). In Venezuela turmoil could push oil market into deficit: IEA they quote the International Energy Agency.
The headline hooked me; I was anxious to read how a market could go into deficit, as I am always eager to fill up my car for a price less than zero. I also follow news about America’s deadly “trade deficit,” as China is obviously harming America by selling us so many potato parers via Walmart without buying enough of our snow-blowers.
“Venezuela holds the world’s largest proven oil reserves, but production has plummeted as the economic crisis has stalled business activity in the socialist nation.” I would call having a socialist nation a crisis, but that’s a quibble. “[T]he ongoing turmoil in Venezuela could result in global oil demand outstripping global oil supply.” There it is. The market will be in deficit because demand will outstrip supply. A drop of oil being unable to be in two places at once, that means someone won’t get any.
“Without any compensatory change from other producers it is possible that…(Venezuela) could be the final element that tips the market decisively into deficit.” Decisively? Like, permanently? Irreparably?
But there is Rhoda’s ceteris paribus again. “All other things being equal,” which they never are. Other producers will step up to fill the gap and keep all of our gas tanks sloshing.
And readers are ahead of me now. The price will rise, some buyers will avoid frivolous travel, some producers will uncap wells in the Bakken, and in the extreme case, Maduro might decide it will help the People’s Struggle to start paying its oil men real salaries in real terms and reopen that sector.
The word “price” appears nowhere in this FOX Business article. I wonder if it appears anywhere in the IEA report or, if the “market goes into deficit” and we become unable to transact in petroleum products, price will occur to the IEA. I know it never occurs to the US Department of Energy, which knows of several remaining ways it can order us to curtail our lives instead.