Opinion writer
we have been watching the Islamic State and discussing Iran, something
much bigger is happening in the world. We are witnessing a historic fall
in the price of oil, down more than 50 percent in less than a year. When a similar drop happened in the 1980s, the Soviet Union collapsed. What will it mean now?
Nick
Butler, former head of strategy for BP, told me, “We are in for a
longer and more sustained period of low oil prices than in the late
1980s.” Why? He points to a perfect storm. Supply is up substantially
because a decade of high oil prices encouraged producers throughout the
world to invest vast amounts of money in finding new sources. Those
investments are made and will keep supply flowing for years. Leonardo
Maugeri, former head of strategy for the Italian energy giant Eni, says,
“There is no way to stop this phenomenon.” He predicts that prices
could actually drop to $35 per barrel next year, down from more than
$105 last summer.
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