The 2014 Oil Price Crash Explained


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    NPC Capitol Refining Co. plant, Relee, Alexandria County 1925 This is an article by our good friend Euan Mearns at the University of Aberdeen. It was
    [See the full post at: The 2014 Oil Price Crash Explained]

    Euan Mearns

    Bearing in mind that the EIA only have data up to July 2014, hence Roger’s grey dots are “synthetic data” more colloquially known as “made up”. But we know we must be down there somewhere, if you see the down arrow on my Figure 5.


    Just what I was thinking, Euan. It still looks kinda weird, though.


    Also, the fact that US purchases from OPEC nations are at a 30-year low should be noted, in my never terribly humble opinion. With both the US and China, together a huge part of the market, buying a lot less, producers can’t but be nervous. OPEC will come with some sort of statement later this week, but who knows what they actually sell through whatever channels? ISIS is founded through ‘illegal” sales, and that same under the table market could distort official numbers a lot.


    The production increase trend of the past 3 1/2 years (in blue) seems to have hit a wall. Or might it be a cliff?

    John Day

    Thanks Euan and Roger for the really revealing graphic analysis unraveling of complex data sets, to reveal temporal relationships, which we can link to known macroeconomic events.
    It looks like China and the US agreeing to burn less fuel is within what they may be expecting anyway.

    Euan Mearns

    Certainly, China 2030 will expect to have converged upon OECD per capita CO2 emissions and can from that point agree to reduce them in concert with the OECD in a world of diminishing FF availability – maybe (in my very humble but less humble opinion than others 😉


    Yes, what a great job! Even I understood it. Thank you. I remember the price of oil being very low in the early 90’s, and I also remember reading that the U.S. wanted it low so as to break the Soviet Union’s back.

    Looking at the following chart, we can see that $116.00 was hit in April of 1980, and then it began to decline. Down, down it went until levelling off between $30 to $40 until 2002 when it began its climb, eventually reaching $145.00. It took a dive in February of 2009, then climbed back up (China’s economic stimulus coming out the ying yang period).

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