Negative Oil Prices, End of Environmentalists' Peak Oil Theory

People who read my article Italy Coronavirus Lockdown, No Cars, Pollution Up were surprised to find out that, in the absence of car traffic during the pandemic lockdown, the air pollution all over Italy increased rather than decreasing as expected according to the current views.

But contra facta non valent argumenta, as the Latin expression goes, there are no valid arguments against facts. Perhaps the pet, fashionable ecologist theories consider only some causal factors and not others, they overestimate human activity to the detriment of natural phenomena, they focus too much on cars and industries and too little on the weather.

Indeed we should consider another case in which a theory long supported by the fans of Malthus has been debunked for the umpteenth time amid - but not because of - the coronavirus crisis.

Now, for the first time in history, oil prices have become negative. That means that oil producers and traders are paying market players to take oil off their hands. They got stuck between a gigantic oversupply of oil and an absence of places to store it.

The BBC blames it on coronavirus, but while the lockdown may have been a contributing factor, this historic low is not just the effect of the Covid-19 pandemic, as the oil price has been going down for years.

As Capital says,

it may prove to be the case that the coronavirus crisis accelerated and deepened a recession that was due anyway after a prolonged upswing.

...Finally, for all the talk of renewables and of carbon fuels being “stranded assets” that cannot be used, it is widely accepted that oil will remain one of the highest value cards in the energy deck, alongside gas and nuclear power.

A Colorado paper alerts: "Oil price: futures markets warn it won't recover after coronavirus".

You may have heard of the peak oil theory. It was one of the environmentalists' many neo-Malthusian ideas holding that, due to the fact that the earth's resources are finite, we'll get to the point that oil, after a "peak" of production, will become scarce and oil price will skyrocket.

In fact oil prices have gone down over time, and now they have even become negative. Peak oil theory has been repeatedly refuted again and again. But how could environmentalists, who supported a false theory, ever predict that? They foresaw exactly the opposite of what has happened. Similarly, those ecologist theories have turned out to be fallacious or at least doubtful about cars being the only or main cause of air pollution. This is what evidence and data show. Do we prefer fantasies instead?

Julian Lee on Bloomberg, declaring that the current crisis of negative oil prices is not an anomaly, has got closer to the explanatory cause much more accurately than those who blame the coronavirus lockdown:

If oil producers don’t cut supply, negative prices will come back to force them.

Crude oil's collapse into negative prices on Monday was a clear warning of just how scarce storage space for oil is getting. Prices below zero are the market's way of telling producers to stop pumping, now.

...with the world awash in oil, there was nowhere for them to store it. So they had to get rid of that obligation, at almost any price.
The situation has arisen because there is still simply too much crude being produced in a world that can’t use it.

The problem seems to be that oil producers are not cutting supply quickly and aggressively enough.

Compare this reality with the fiction of the greens' theory of peak oil that describes an enormous demand of oil confronting a very low and ever-decreasing supply.

What happened? Fracking happened, and electric cars. It's man's ingenuity and human choice, not geology, that governs.

This is what occurs when a theory, whether it is cars as a major responsible for air pollution or it is peak oil, is put to the test: this is the scientific method. Otherwise, it's pure ideology with no foundation.

SHORT TIMETABLE OF MAIN RECENT EVENTS

• 12 April: The world’s top oil producers, among which the U.S., Russia and OPEC (Organization of the Petroleum Exporting Countries) nations, including Saudi Arabia, agreed to cut down global oil production by record levels, ending an oil price war that saw the price of crude plummet.
• 20 April: Despite that landmark deal, oil futures plunged to their lowest level in history as demand for crude oil continues to decrease and U.S. storage tanks are full.
• 20 April: The price of one American oil futures contract plunged into the negative for the first time in history, exposing how an already-fragile market was hit by the COVID-19 crisis; as demand hits rock-bottom and storage tanks fill up, companies pay traders to take crude oil off their hands.
• 25 April: Saudi Arabia, Russia and other oil-producing countries’ intentions to continue producing in the face of diminishing demand played a role in the disaster. Trump persuaded some of them to drop output, bringing production to 9.7 million barrels a day. But experts said that the deal is unlikely to show results for another month.

PHOTO CREDIT
Image by Free-Photos from Pixabay