The Oil Market
Intro
Oil has long been one of the most important commodities in the world. Its ubiquity and relative cheapness have allowed societies to massively expand their energy consumption, forge more advanced economies, and live comfortably in abundance.
Our ability to harness energy at cheaper costs is perhaps the single biggest driver of human advancement. Without energy, we can’t do or make hardly anything, so the cost of energy is baked into just about everything in the modern world.
With that in mind, it should come as no surprise that cheap fossil fuels have been the focus of many wars and geopolitical aspirations. Energy is both literally and figuratively the source of everyone’s power, so the value of the best, cheapest, and most widely available energy sources is not lost on nations and shouldn’t be lost on you.
Oil production and consumption are not without drawbacks—the environmental impact and unjustly wielded political leverage it affords certain nations being the most damning—but it is objectively one of the most useful and important commodities on the planet. For that reason, understanding the oil market and even specific details about the commodity itself should be of similar importance.
Aside from offering a window into the politics and complexity of the modern energy market, this deep dive will hopefully underscore just how significant of a role oil plays in everyone’s daily lives. Oil has become almost inextricably baked into the infrastructure of modern society, so the relevance of its market dynamics will likely become clearer the further down the rabbit hole you go.
Oil Demand
To begin this exploration into the oil market, let’s talk about demand. Each year the entire world averages about 100 million barrels of oil per day. And just for more context, a barrel of oil is 42 gallons or 159 liters, so that’s 4,200,000,000 gallons or 15,900,000,000 liters per day.
Back in 2010, global oil consumption was about 86 million barrels per day, which means we’ve seen a near 15% increase in the last 12 years. Just the US, which consumes the most oil out of any country, consumes a whopping 20 million barrels of oil per day, followed by China at nearly 13 million barrels per day, and then India at around 4.5 million barrels per day.
What is particularly interesting about oil demand is it has increased almost every year. In fact, oil demand is expected to keep increasing despite all the talk about transitioning to cleaner energy sources. In projections out to 2026, oil consumption is expected to increase by about 1 million barrels per day each year.
The biggest reason for this is so many undeveloped or underdeveloped nations have only just started their energy-intensive expansions. The United States is well into that development and why it consumes so much more oil than every other nation, but other nations like China, India, Brazil, and countless more are dramatically increasing both their production and dependency on oil every day.
The United States has a population of about 330 million people and India alone has a population of 1.38 billion, which is more than three times as many people, so even if they were to consume just half as much oil as Americans do per person, their total oil consumption would easily surpass the United States’ 20 million barrels per day.
This is important because India is hardly an outlier. There are dozens of nations constantly expanding their dependency on oil, so any marginal decrease in oil consumption by a country like the US will easily be offset by other countries’ marginal increases over the years as their economies continue to grow.
The rest of the world still has a lot of catching up to do in terms of economic development and oil consumption compared to the US, so unless a cheaper energy source becomes widely available to these developing nations, they are going to rely on fossil fuels like oil, which will naturally keep driving overall demand and consumption higher.
With that general outline of global oil demand out of the way, let’s transition to what oil is actually used for.
Oil Products
The obvious oil product we all know is gasoline. There’s no need to explain what we use it for—at least I hope there isn’t—but I’ll still walk through some noteworthy statistics. For starters, gas accounts for over 40% of all oil consumption at about 19.4 gallons of the 42 gallons per barrel.
However, if you include other fuel sources like diesel (about 27% of oil consumption), jet fuel (about 6%), and heavy fuel (about 5%), transportation fuels account for about 80% of all oil consumption.
Now, while everyone is acutely aware of oil’s role in gasoline or other fuel sources, far fewer will be aware of just how deep oil penetrates into other products and markets.
A huge part of oil demand comes from petroleum products, which include fuel oils for heating and electricity generation, asphalt and road oil, makeup products, and feedstocks for making the chemicals, plastics, and synthetic materials that are in nearly everything we use.
About 18 million barrels of the 100 million consumed globally every day are used for petroleum products, and about 12 million of that 18 are for petrochemical feedstock to make things like plastics and fertilizers.
So although the vast majority of oil is used for cars, planes, boats, and all the other transportation vehicles, almost a fifth of oil is for creating petrol products we currently have no alternative way of producing. Because it isn’t obvious oil is used for so many of the consumer goods we take for granted, it’s easy to forget just how much we need it. Even more frightening, though, is the geopolitics surrounding oil dependence.
Oil Nations
One of the most important considerations in the oil market is, unsurprisingly, where it’s located. Every country needs energy and oil is arguably the most desired form of energy at present, so oil reserves play a vital role in any country’s geopolitical power and economic self-sufficiency.
There are an estimated 1.73 trillion barrels of proven global oil reserves, but a significant portion of that is dominated by just a few countries. Most people will likely have a general idea of which countries have the most oil, but let’s walk through them to paint a more complete picture.
The country with the most oil reserves might actually come as a surprise to some and that’s Venezuela with about 300 billion barrels. A close second is Saudi Arabia with nearly 297 billion barrels, then Canada with around 170 billion, Iran with about 160 billion, Iraq with a little over 140 billion, Russia with around 110 billion, and then Kuwait and the United Arab Emirates (UAE) with about 100 billion each.
For those keeping track, the United States doesn’t even sit in the top 8 with its measly 69 billion barrels. However, this is far from the full picture. Oil reserves are very different from actual barrels of oil produced and capable of being released into the market.
As an example, Russia has the sixth largest oil reserve, but they are the third largest oil producer, accounting for about 10% of the global supply or 10.7 million barrels per day. Perhaps even more surprising is the US is the largest oil producer accounting for over 18% of the global supply or almost 19 million barrels per day despite being 9th in total oil reserves.
The amount of oil a country has under the ground within its borders is obviously very significant, but the combination of proven oil reserves and the ability to extract and produce barrels is what really matters. That combination is the reason nations like Saudi Arabia, which is just ahead of Russia in oil production at 10.8 million barrels per day, and the UAE (8th in production) have so much more power than other oil-rich countries like Venezuela.
A big part of this disconnect is because Venezuela’s government has been so dysfunctional that it doesn’t have the infrastructure in place to increase its production. This is not to say the middle east is known for its well-functioning governments, but it has invested heavily in building out its production ability and capacity, so it’s able to pump out orders of magnitude more oil each day.
As alluded to before, one key aspect of the global oil market to keep in mind in the context of nations is that just five countries control more than half of the entire oil supply and over 70% is controlled by the top ten oil producers. When you consider how important oil is as an input to so many products, businesses, and economic activities, it should be clear why oil nations have so much leverage in the world economy.
Organization of the Petroleum Exporting Countries
Now, in any discussion about oil nations, I would be remiss if I didn’t mention OPEC. OPEC is an acronym for Organization of the Petroleum Exporting Countries and just refers to 13 of the biggest oil nations mostly from the Middle East and Africa, but it also includes Venezuela. Together, OPEC members account for over 40 percent of global oil production and over 80% of the world’s proven oil reserves, so it is a very powerful and relevant organization.
The purpose of OPEC is to coordinate and unify the petroleum policies of all its member countries, but many economists view OPEC as a kind of oil cartel that cooperates to reduce market competition. Regardless of where you fall on that issue, there is no denying OPEC significantly influences the oil market with its plans and actions around increasing or decreasing supply.
In addition to OPEC, there is also OPEC+, which includes ten more oil exporting nations like Russia, Mexico, and Kazakhstan. Much like OPEC, OPEC+ is an organization aimed at coordinating oil production between its members to increase or decrease supply as needed (or perhaps more accurately, as desired).
For both OPECs, the largest oil producers within the organization(s) that are actually capable of increasing supply essentially have everything to gain because they adapt to market dynamics while many of the smaller countries are constantly maxed out on their production. This means most of the smaller nations don’t have anywhere close to the same leverage or influence over the oil market as larger ones like Saudi Arabia, the UAE, or Russia.
That said, they are still somewhat influenced by and beholden to other OPEC members, so membership isn’t strictly beneficial. The US actually has a lot of advantages not being part of OPEC as it and it alone dictates its oil policy. There is strength in numbers, but there is also strength in operating independently, which a country like the US certainly values.
Strategic Petroleum Reserve
Another important consideration about nations’ oil reserves is the strategic stockpiles they keep for emergencies. The US calls this its Strategic Petroleum Reserve (SPR), a phrase that American citizens have become more familiar with amid the Biden Administration’s attempt to combat oil inflation with periodic releases from that reserve.
The U.S., China, and Japan, as some of the most developed economies and biggest crude oil consumers, maintain the largest strategic reserves. The US SPR alone has a 714 million barrel capacity and held a little over 500 million barrels in that reserve as of June 2022, which would be about 29 days worth of oil based on the roughly 20 million barrels the US consumed per day in 2021.
A somewhat unsettling fact about the SPR that Americans will probably have mixed feelings over is Congress has actually been selling oil in the reserve in unpublicized sales to fund the deficit since 2015. However, Biden’s plan to release one million barrels a day for 180 days will ultimately bring down the reserve much more than any of those sales. Nevertheless, still a fascinating bit of information.
Cost of Production
The last major element of the oil market in the context of different nations that I wanted to dive into is their cost of production. The cost of production is naturally somewhat related to the amount of oil reserves a country has, but it’s also a product of that country’s ability to tap into any reserves and actually produce barrels of oil.
Countries like Canada and Venezuela, for example, have some of the largest oil reserves in the world, but their production is severely hindered by geology, geography, and politics in the case of Venezuela, which I discussed earlier. The geological difficulties stem from oil reserves locked in denser materials that are simply more costly to extract oil from, and the geographic difficulties stem from reserves located in very inconvenient areas, whether that’s deep in the ocean, under blankets of ice, or what have you.
So whether a country’s oil is trapped in extremely dense materials, scattered in inconvenient ways, or gridlocked by governments, the ease and cost of extraction are not the same everywhere you go. In that sense, then, reserves can be far less important than availability.
For these reasons, including the political ones, the quantity of reserves isn’t the be-all-end-all. Venezuela may have the most oil reserves, but there’s a reason we generally don’t think of it as a top dog in the oil market. Saudi Arabia, on the other hand, has one of the lowest costs for production in addition to its massive reserves, and that’s why it, not Venezuela, is the larger oil exporter in the world.
Interestingly enough, the list of countries by the cost of oil production is actually more telling than the list of countries by proven oil reserves. For anyone who has been berated by the media about Russia’s role in the oil market and was surprised to see it so far down the list in reserves, they also have some of the lowest oil production costs at nearly $10 per barrel. Iran and Saudi Arabia are also countries with near or below $10 per barrel breakevens, so they have the most to gain from oil sales in the global market.
For more context, the US breakeven price is a little over $20 per barrel and the UK’s breakeven price is over $50. Twenty or thirty dollars is probably closer to the average, but any difference is significant, especially when the price of oil falls below any nation’s respective breakeven rate. Supply and demand will eventually balance each other out, but that doesn’t mean it’s resolved quickly or painlessly. Consequently, high costs of production can create serious problems for countries and force them into very undesirable alliances or political agreements.
Aside from the obvious advantage of having a larger profit margin in the oil market, a cheaper cost of production affords a nation a great deal of geopolitical leverage. If oil prices fall below certain levels, countries with higher oil production costs will lose money for every barrel they produce, so countries like Saudi Arabia and Russia would dominate the oil market even more, as they can weather falling prices well below just about every other producer.
It’s rare to see the price of oil drop below most countries’ cost of production, but it’s at least something to keep in mind when analyzing the global oil market dynamics. Even if prices don’t fall below the cost of production, if profit margins aren’t high enough, overall production may slow out of fear business will cease to be economical. In those scenarios, more and more power redistributes to the cheapest producers.
Oil Discovery
At this point, I’ve talked quite a bit about oil, but I’ve yet to mention what is potentially the most important part: how we actually get the thing out of the ground. As can fairly be assumed, there are many different methods for extracting oil, but they all start with identifying oil reserves in the ground.
To locate oil reserves, geologists will use echoes from a vibration source they have on a vehicle like a truck or that they generate through an explosion. With those vibrations, they generate a seismic survey of the ground below. I can’t speak to the specific signs geologists look for, but if they see something promising, they’ll drill an exploratory well to see if they are correct and if it is enough oil to be worthwhile.
Another purpose of an exploratory well is to identify the type of oil within it. The prevailing opinion among most individuals is probably oil is oil, but there are gradations to crude that make it more or less appealing to producers.
Types of Oil
While the difference is mostly in location, the most important distinction between types of oil, especially in markets, is Brent crude oil and WTI crude oil. There are a lot more oil varieties, but those are the two main varieties. Brent crude refers to oil from the North Sea, and WTI or West Texas Intermediate crude refers to oil extracted in the US, hence its name.
Though Brent oil isn’t the highest quality available, it’s very good quality and abundant, so it is the most commonly referenced oil in markets. In fact, roughly two-thirds of all crude contracts are priced in Brent crude, so it’s usually a better indicator of global oil prices. That said, abundance isn’t everything and the quality of the oil is still very important, as it can make the refining process much easier, so Brent is by no means the king of oil.
There are a number of factors oil producers use to differentiate the quality of oil, but the two main factors are the API gravity (the measurement of an oil’s density relative to water) and its sweetness. But before you go tasting your oil to see how sweet it is, understand that is just a term to reference its sulfur content.
Oil producers will place their oil on a spectrum of sweet to sour with sweeter blends having less sulfur. The less sulfur oil has or the sweeter it is, the easier it is to refine. WTI crude, for example, is much sweeter and lighter than most oils, and why it frequently trades at a slight premium to other oils in the market. That premium will vary or even disappear under different market conditions, so it isn’t a guarantee, but that should hopefully explain some of the price discrepancies between the different kinds of oil you see listed in any given market.
In addition to Brent and WTI, the last major variety of oil worth mentioning is the Oman or Middle Eastern crude, which is a good reference for slightly lower grade oil than WTI or Brent. Oman crude is considered lower quality because it is on the sour side, which makes it more difficult to refine. Because Oman crude is sourced all throughout the Middle East, it is used as a benchmark for Gulf crudes in the area that are sold in the Asia-Pacific market. However, despite being sourced in many areas throughout the Middle East, its most notable source is Dubai (Saudi Arabia), which is why it is sometimes called Dubai crude.
All that being said, the most important types of oil to remember are Brent and WTI, as they represent the vast majority of oil contracts and price references globally.
But enough about these esoteric distinctions. Let’s get down to the nuts and bolts of the oil market: drilling.
Oil Drilling
Once an oil well is found and deemed worth pursuing, producers will start drilling down to wherever the well is. Wells can range in depth from a few hundred feet to more than 20,000 feet, but the average is around 6,000 feet, which is a little more than a mile down. Given the challenges of drilling so far down into the earth, creating access to an oil well will easily cost hundreds of thousands of dollars or even more if it’s in a hard-to-reach area. For that reason, investing in drilling requires a fair amount of oil or confidence in the investment to warrant the overhead.
After a well (drilling site) is created, it’s frequently sold or exchanged between different companies as an asset. Because the price of oil fluctuates so much, wells can vacillate between profitable and unprofitable, so even if they’re currently offline because oil prices are low, they will be held or traded under the assumption they will become economically viable again when oil prices rise.
As for the actual mechanics of oil drilling—not that you asked—once the drill reaches the desired depth, a cement casing is added around the pipe lowered into the well to prevent the hole from collapsing. After the stability of the hole is ensured, the pump system or pumpjack will be added to the land site to start pulling it out. If the crude is on the heavier side, sometimes producers will have to drill a second hole to inject steam, which thins the oil and adds pressure to drive it up the pipes, and this is just one of the challenges different types of oil can create.
With that basic understanding of how traditional drilling works, let’s transition to one of the buzzwords in the oil market: fracking.
Fracking
Despite the general public’s overall distaste for fracking, it was one of the most significant innovations in the oil market commonly referred to as the shale revolution, and it particularly benefited the US. The term fracking comes from the phrase hydraulic fracturing, which is in reference to the development of horizontal drilling techniques that made previously unviable sources of oil economically obtainable through the fracturing of shale rock.
Normal drilling is just a straight line down into a well, so it’s limited in the sense that you would have to drill a lot of holes to get oil reserves scattered under the ground. Even if the costs made sense to drill dozens of holes, each drill still might not be able to collect all that much. Fracking, on the other hand, utilizes drills that eventually move horizontally after drilling down into the earth, which can dramatically increase the amount of oil that is collected with one drill.
After the drill is pushed horizontally, small charges will be detonated in that portion of the pipe to create fissures in the shale—this being the fracturing or fracking part of the process. The fissures are like thin branches that extend hundreds of feet and grant more access to the oil scattered in the ground. Once those branches are made, water will be sent down the pipe at high pressure to push out any oil before it’s cycled back up to the surface.
That might be more information about fracking than you needed, but, in a nutshell, fracking is just a more capital-intensive way to extract oil from the ground than traditional oil drilling, but it’s also more effective when wells aren’t neatly organized into a single reservoir. Accordingly, the primary advantage of fracking is that it allows countries and oil companies to tap into oil reserves that were previously too difficult to reach through traditional methods.
Fracking was the key innovation responsible for the shale boom that started in the 70s, which allowed drillers to massively increase the global oil supply. However, prices had to be high to make fracking economical, so there is a little bit of a balancing act. As oil prices move higher, there will likely be more costly extraction methods gain in popularity as they become economical. In the end, any extraction method lives and dies with the cost of oil.
But before you start thinking fracking is at risk of going out of business, the cost per barrel of production can still be as low as $35, and it is much more abundant. In the US, for example, more than 70% of output comes from shale production and that will probably continue to be the case as long as oil trades above $40 to $50.
The countries with the largest amount of recoverable shale oil are Russia, the United States, China, Argentina, and Libya. But as mentioned, fracking requires pretty advanced technology and is more expensive than traditional drilling, meaning it won’t be easy for some nations to put into practice and the breakeven price will be much higher (perhaps even too high for undercapitalized nations to risk). While unlikely given current prices, if oil prices ever fell near or below the $30 to $50 fracking breakeven price, fracking would cease to be profitable and nations would be all but forced to go back to traditional drilling techniques.
But enough about drilling. Let’s transition the conversation to another vital and frequently overlooked aspect of the oil industry: refining.
Oil Refining
Oil refining is an entirely separate process after its extraction that breaks crude oil down into its various components, which are then selectively reconfigured into new products like gasoline or asphalt. Given we need oil for specific products, the refining process is an essential component of the oil supply chain. Barrels of oil don’t do our cars much good if we can’t turn them into gasoline. However, once you realize there’s additional work involved in oil refining to create the products we need, you’ll gather there has to be an additional cost associated with that process.
One metric to keep in mind related to oil refining costs is the crack spread, which refers to the difference in price between a barrel of unrefined crude oil and products like gasoline created through refining. Refiners generally want the crack spread to be larger, as that means they are making more money, but the spread isn’t exactly up to them. Like every price in the market, crack spreads are dictated by supply and demand, so the margin refiners make will change as demand for refined products changes. If the demand for refined products is relatively higher than the overall demand for oil, refiners will make more money. In other words, they want oil prices to be low while demand for gas or other refined products remains elevated.
To calculate the most important crack spread—the difference between a gallon of oil and a gallon of gas—divide the cost per barrel of oil by 42 (because 42 gallons in a barrel) and subtract that from the current price of gas per gallon. If oil is trading at $100 per barrel, its cost per gallon is roughly $2.38. Compare that with the gas price per gallon (as measured by the current futures contract, not your local gas station) of $3.33 and you get a difference of $0.95, which would add up to $39.90 for a full 42 gallons of oil. So refiners, in this circumstance, would be making about $40 per barrel of oil.
That profit doesn’t technically take into account the cost of refining, but that will usually run refiners less than a dollar per barrel, so it hardly impacts their bottom line. However, there are usually other expenses such as interest on debt obligations or other costs associated with business operations that eat into the profit margin. After you account for taxes, distribution, and marketing, refiners don’t make nearly as much per barrel as it might sound, but they certainly can profit quite a bit. The bulk of the profit certainly goes to the producers, but refiners are still important players and have seen their margins increase significantly with oil prices climbing.
The majority of the world’s largest refineries are in the Asia Pacific region with the largest being in India, followed by Venezuela, South Korea, and then the United Arab Emirates. I mention this because the nations that dominate the oil refining process dominate a vital part of the supply chain. India, for example, isn’t a particularly large exporter or producer of oil, but they have the largest refinery, so they still have considerable influence over the market compared to those who aren’t major producers or refiners.
In the United States, the biggest refineries are almost exclusively in Texas, Louisiana, and California and are owned by the likes of Saudi Aramco, Marathon, and Exxon Mobil—everyone’s most trusted companies. Regardless of where oil is extracted, it usually has to make it to a refinery before reaching consumers, so it might be helpful to keep in mind that we need pipelines, trains, and trucks to carry the final products from refinery storage tanks to other locations across the world or one’s respective nation. In fact, we need all sorts of transportation methods for moving oil from its extraction point to refineries and then additional transportation methods to take it to gas stations, stores, and suppliers, which brings us to the final topic.
Oil Transportation
The final part of the oil market I wanted to touch on is, you guessed it, transportation. Oil is, unfortunately, useless if we can’t get it where we need it, so this is another vital part of the oil supply chain that doesn’t get much love. Aside from actual ships or vehicles that transport oil, pipelines also play an essential role in oil transportation.
Whether transporting by pipeline or ship, there are two basic classifications: crude pipelines/tankers and product pipelines/tankers. The former are used to move unrefined oil to refineries and the latter are used to move refined products closer to the markets that ultimately consume them.
While pipelines are generally seen as safer modes of transportation, they are also much more expensive and challenging to create. There are certainly benefits to having the pipeline infrastructure in place for years and even decades to come, but digging what is essentially a massive tunnel stretching upwards of 3,000 miles is naturally as expensive as it is time consuming. Notwithstanding those concerns, about 66% of US crude is moved through thousands of miles of oil pipelines and plenty of other regions like Europe and China are also heavily reliant on oil pipelines, as they are incredibly efficient for land transportation, which is essential if you aren’t a coastal location or the nearest supplier is separated by land only. That said, it isn’t always easy or economically possible to create pipelines going everywhere oil is needed, so crude trucks, trains, and especially carriers also play a vital role.
Crude carriers are usually classified by size with the most notable classifications being Panamax (the max size that can fit through the Panama Canal), Suezmax (the max size that can fit through the Suez Canal), VLCCs (Very Large Crude Carriers), and ULCCs (Ultra Large Crude Carriers). As of today, there are more than 3,500 oil tankers in operation, but only about 800 VLCCs and 2 functional ULCCs, which are extremely important for lowering shipping costs and meeting demand due to their massive size.
I could go further into the shipping side of things and touch on some of the challenges the market is currently facing with regard to VLCCs, but I would direct you to Zoltan Poszar’s article titled “Money, Commodities, and Bretton Woods III” where he explains the situation much better and in more detail than I ever could. It might sound boring, but the article as a whole is excellent and the points he raises about VLCCs and oil shipping actually have serious implications for the oil market. But I’d say this has been more than enough information for an introduction.
So with all that exciting information about oil nations, production, refining, shipping, and everything else out of the way, I think it’s time to wrap this up.
Conclusion
Up until this point, I have neglected to mention much of anything about the environmental consequences of oil, and that’s not because they don’t exist, it’s just because those consequences are more a product of the commodity itself than the market. When we burn oil for energy, it just happens to release carbon into the air, so discussing that in further detail would be a better conversation for a climatologist, and certainly a conversation worthy of its own article.
That being said, environmental concerns around fracking, specifically, are more reasonable because the practice itself can pollute water supplies and cause minor earthquakes, but we still will have to weigh the costs and benefits of keeping or eliminating fracking at a time when the oil supply is already so tight. And this is not to say the extraction process in fracking or any other aspect of the oil market doesn’t pose legitimate concerns because they do. Oil is not without its consequences, but most of the environmental concerns around oil are largely unavoidable without society abandoning it as an energy source and we are unfortunately not yet in a position to do that.
Regardless of any environmental aspirations a person or country may have, there is and will continue to be a huge amount of oil demand that remains inelastic. Aside from the petroleum products we depend on and will have a difficult time replacing, there are no electric planes, tanks, or large shipping boats, and there is very little infrastructure in place at the moment to replace much of the oil demand coming from regular vehicles, despite the recent EV craze.
Much of the world is slowly taking steps to ween itself off of oil, but, for better or for worse, that day when we fully sever our dependence won’t be anytime soon. Even with countries like the US trying to reduce the amount of oil it consumes, countries like India, China, Russia, and most of the developing world won’t abandon it until a cheaper and more practical alternative exists.
It’s possible the average daily global consumption tapers off and heads south of 100 million barrels per day in the latter half of the decade, but I would argue it’s more likely it continues higher unless there’s a significant technological advancement in energy. You can like or dislike that projection, but oil is too important to abandon at the moment, so it and the countries that produce it will almost certainly continue to dramatically influence geopolitics.
In a perfect world, dependence on oil and the geopolitical and environmental consequences that come with it would be replaced by an equally effective, ubiquitous, and less controversial energy source, but we have to play with the cards we’re dealt.
That doesn’t mean we should stop pursuing alternative energy sources, but we shouldn’t be so quick to abandon oil without a viable replacement no matter how dirty it may be. Even if you hate oil, you will probably hate the devastation abandoning it without a replacement would bring upon the world a lot more. There are plenty of reasons to dislike oil and the oil market, but ignoring oil and its role in the modern economy will only make circumstances worse. The more we learn about oil and the energy market more broadly, the more equipped we’ll be to fix the problems in and around it and pave the way to a future of cheap, clean, and abundant energy for everyone.