Oil Markets Continue Precipitous Decline

I don’t normally post about the financial markets here, but I feel the continuing dramatic decline in in oil prices is certainly noteworthy here as we discuss energy topics.

Personally I’m still not sure how much of the slide is due to anticipation in the markets of new superior energy technology coming online, but I would guess that there are at least some people in positions of power and influence relative to the financial markets who are aware of the E-Cat, and who are expecting it to have a significant impact in energy production.

As much as cheap clean energy can be a real benefit to the world in so many ways (my home heating and transportation costs have dropped, which is very welcome), declining energy prices can certainly cause difficulties for many in the near term. Here are a few headlines and excerpts from news stories I’ve heard recently

Amid Recession, Brazil Struggles With the Huge Cost of the Olympics

Rio’s state government gets much of its revenue from oil production. But the price of a barrel is very low, leaving the state practically bankrupt. The most visible sign of this has been at state hospitals.

On a recent day, dozens of people were crowding the entrance of the Hospital Albert Schweitzer, creating a chaotic scene outside the hospital they could not enter.

Oil Plunge Dims Nigeria’s Economic Outlook As Equities Re-Adjusts

Nigeria, Africa’s largest oil producer, is struggling to cope with crude oil prices that have fallen to below about $31 a barrel. Oil accounts for two-thirds of government revenue and about 90 percent of its foreign currency earnings. The slump is weighing on growth, which is estimated to have slowed tolow to 3.2 percent last year, the slowest pace this century, according to a Bloomberg survey of economists.

Low Oil Prices Start A Revolution In Saudi Arabia. Russia Next?

With an estimated 90% of Saudi government income based on oil production the collapse in the price of oil has dealt a painful blow to the country’s economy with the budget deficit exploding to 15% of gross domestic product.

For now, Saudi Arabia can ride out the oil crisis thanks to foreign reserves believed to stand at around $550 billion. The problem, however, is that those reserves stood at $650 billion in the middle of last year.


If Russia cannot wean itself off a petroleum-only diet it will become an even more dangerous and isolated place that it is at present.

The key to future events is the oil price with Saudi Arabia and Russia praying in their own particular ways for higher prices, but with Russia praying the hardest

These are just a few examples of the economic impact of the oil crash on national economies where petroleum revenues has been the mains source of government funding and employment.

We’ve talked here for years about what could happen if there is a negative price shock in the oil markets — and we are now seeing it happen. Just today, US WTI oil had dropped another five percent and is now trading well below $30 a barrel, and there are respected voices in the financial world saying that we could well see $20 oil and lower.

Where things will go from here is of course unclear, but if we do see big news coming from Andrea Rossi’s E-Cat test in the near future there could be further impacts on the energy markets. With latest hints about the electricity production and high power density from the E-Cat X, it is conceivable that if those predictions pan out, the E-Cat could be suitable not only for electricity generation, but also in transportation.

I think oil prices may well rise again, but in the long term oil may never recover. Even without LENR, energy technology continues to develop in other areas such as energy storage, which makes solar and wind more useful — and there is also the chance of Steorn’s Orbo being confirmed to generate electricity without fuel out of thin air.

It’s a very interesting time. Technological advancement continues to accelerate with little sign of slowing down, making possible things that would have been inconceivable a generation ago (even a decade ago). But technological miracles can have real human casualties, as we are seeing, and I hope it will be possible to extend the benefits of these technologies quickly to those who may caught up in the tumult that this energy shock is bringing in many parts of the world.

  • Buck

    Tom Wipple of the Falls Church News-Press adds a layer of perspective to the challenges and changes in the global energy market for 2015.

    For those who are unfamiliar with Tom Wipple, he has been following and writing about LENR, Rossi/IH, Brillouin, etc. for some time.

    link>> http://fcnp.com/2016/01/04/top-10-energy-stories-of-2015/

  • Hi all

    In reply to Michael S:

    On the matter of education I agree, The Khan Academy:
    leads the way here.

    There are a whole host of other FREE on-line education resources. Many major TV scientists and Educators as well as academics are placing their past work and lectures on-line as a public good.

    Like music and film the internet is changing face of education. Journalism is increasingly being democratised by facebook, twitter and the mobile phone.

    For me the big one will be the first nation to move to direct democracy, cutting out the middle man. Plato’s republican model of representative democracy is clearly a failure, so we need to return to the Greek forum democracy using the internet. The only arguments for Plato’s republican model were those to do with size, the internet solves this.

    Kind Regards walker

  • atanguy

    World has apparently an ocean of oil in storage,so much that they use tankers at sea to store it,
    If the price of oil continue to crash,LENR eventually won’t be competitive,at least for a while…

    • Omega Z

      LENR will be able to compete even if they gave you the oil.
      LENR will be cheaper then the shipping costs.

      • atanguy

        It’s not only the price but also, and mainly, the capitalistic economic structure that you have to account for: In this case what bring more profit for the rich investor: Cold Fusion or oil?
        Anyway I said “at least for a while…”

        • Omega Z

          You are of course correct, But Rossi has mentioned a $50 a kilowatt pricetag so I think in most cases it will be about the cost of energy. Not the hardware.

          An E-cat car even with a required battery will be cheaper then an Electric car dependent only on a much larger battery.

          However, there is another factor to consider. LENR’s success could/would slow a transition. At $5 a gallon gas, a LENR/electric car is strongly considered. However, as cars transition from fossil energy, gas soon costs only $1 a gallon. The urgency to switch declines. I may drive my fossil powered car until it needs replaced due to being worn out.

          • atanguy

            You’r still talking about prices,I’m talking about profit coming from the current economy. As an example Tesla Motors can’t find dealers to sell their cars because they are too reliable and do not need service, so the dealers who are making money mainly with servicing the cars they sell are not interested.
            One other example is the current situation in Nevada and other states who stop the sell of solar panels by rising their taxes, because the energy companies owning the grid are starting to lose profit.

  • Billy Jackson

    Our world is on the verge of fundamental changes in the next 20 years that are greater than the past of all human history. We are not talking about technologies 50 or 70 years out. No we are talking technologies that are in testing phases now that can be put into operation in the next few years. The amount of technological acceleration in these next few years is going to change not just the items we use but our social structures, ourselves and how we define life itself.

    Several of the top Futurist in the world, some who have a very high rate of success at predictions have made a list of things they think will happen in the next decade or near future.


    while some of it seems far fetched even to me.. i cant say i completely disagree as predictions are not always 100% correct as we get the minor details wrong..that still leaves us with a high rate of success that these predictions or some form of them will take place.

    LENR and OIL is but one cog in the machine. a large one. but by no means the only one. below is a list of significant changes coming our way that will severely impact the way we do things that will affect almost every aspect of our lives.



    Almost everyone of these has the potential to be destructive and eventually beneficial to us unless we are not prepared to handle the changes and impacts that happen socially, politically, or economically. these next several years may just be one of the most exciting times to be alive. You may not see it now. but we can see the start of it by just looking at whats happening with LENR and its impact on OIL…

    • Agree. I’ve been trying to get the message out for years as a speaker. This last year, for the first time, there’s a broader understanding of that some big changes are upcoming, but people are still overwhelmed when they get the real picture, and few believe that the changes will come so fast and be so big.

      • Billy Jackson

        Unfortunately Mats i dare not go much further on that list as your average individual simply will not believe whats in the pipeline for our future.. some of it is nothing short of science fiction come to life…you start getting funny looks at that point like they think you are off your rocker… 🙂

        • Omega Z

          Most predictions never pan out.
          However, the few that do will make a substantial difference.

          • Billy Jackson

            I would normally agree with you except for one caveat .. these technologies listed seem to be a lot closer to when, than if. while minor details can and more than likely will be different than what we expect.. i think that they will be with us in some form.

  • LilyLover

    Oh, oh, Oil Price! Again!
    Well, mother nature provides everything for free.
    The harder we work the more respectable it could be.
    Therefore a farmer is much more respectable than an oil driller.
    Full automation of farming represents progress.
    Maximum bloating of OilCos represents increased bureaucratic burden and increased zero sum fattening of middle-men parasites.
    Growth of oil sector indicates growth of tumour.
    Oilprice down means healing has begun.
    What about jobs?
    The parasites and the immorals deserve to lose the cushy “jobs” in oil related sector.
    If your national economy relied upon oil, so far, it was nothing real to begin with, and so far you have enjoyed elevated lifestyle purely out of luck.
    Now, the oil goes to zero and everything is reset. Human equality begins.

    As you see, growth of civilization cannot happen unless the dead-weight of old ideas is cast aside.

    Every job lost is a potential soul freed from meaningless existence and possibility of his/her efforts into a newer and more innovative upliftment of humanity.

    Viva oil-less World!!

    • Omega Z

      The middle-men is needed.

      It’s only a problem when you have the middle man for the middle man, Etc, etc, etc,..

  • Albert D. Kallal

    I don’t believe that LENR has “much” to do with oil prices.

    However, there are some “high” level investments moving away from oil.
    (but, that in fact would suggest oil should go up!!).

    If we produce too many apples, then the price goes down. We have a “somewhat” too much oil on the market right now – this is really so simple.

    The simple matter is that we see dramatic increases in oil production in the USA – in fact unprecedented

    For example, in Alberta oil sands (heavy oil) we find extraction is rather costly, MANY billions have been spent over the last 30 years.

    In fact 200 billion from 1999 to 2013 was invested (again, that is a “b” for billion). That is 14 years

    The resulting production?

    A paltry 2.3 million Barrels per day!

    Amazing! So for 200 billion investment we have in the range of 2 million barrels.

    And I should point out the HUGE investments started in the last 1970’s!

    Note the HUGE AMOUNT of TIME to reach that level of production!

    Again: think of the AMOUNT OF TIME!

    Every President from Carter, Regan up to now has made HOLLOW promises to prompt an increase domestic oil production.

    NEVER EVER happened – not even close!

    Then the “miracle” of directional drilling and hydraulic fracturing “came” together. Hydraulic fracturing been used since the 1950’s. However, combine that technology with directional drilling, and


    So in place of 20 or 30 years to get a few million barrels of oil? In a period of about 10 years (in fact less), USA INCREASED production by 8 million barrels a day!

    This is BEYOND remarkable!

    This short time frame is BEYOND ANY previous increase, and this especially so in a VERY HEAVY regulated environment!

    This is a BLACK SWAN event that IS VERY RARE in our lifetimes!

    Despite this “miracle” of production increase in the USA?

    Well, last time we saw oil prices collapse, the DIFFERENCE between demand and supply was about 3 million barrels per day (too much oil).

    And oil (like most commodities) will sharply drop or increase on a “relative” oversupply or “relative” under supply.

    This time around, we ARE ONLY about 1.5 million barrels “extra” on the market.

    With low prices, we seeing some drop in production (especially those high cost producers that were fat and happy at $100 per barrel of oil).

    Given worldwide demand continues to increase (dispute sluggish world economies) by about 1%, then that means about 1 million ADDITIONAL barrels of oil will be required next year.

    So combined with a slight drop in production we are seeing now? And toss in increased demand? We should see oil prices start to firm up in the relative near future.

    We likely not see $100 much soon, but don’t count your chickens too soon! The directional drilling technology will NOT go away, and MANY other countries will adopt this technology. So we don’t
    have lots of $20 oil, but we DO HAVE lots of $80 oil!

    Thus a relative “minor” tightening in oil extra supply can and will cause dramatic increases oil prices.

    There is also HUGE amounts of paper money from the like of Goldman Sachs etc. that are shorting oil. So combined with Saudis continuing to pump, and paper pushing down oil, then strong factors
    exist to push oil down.

    Oil likely has some additional downside. So we might see $20, but NOT for very long.

    Market forces WILL start to push oil up – and it not a “distant” future.

    So with continued growing world demand, the “extra” supply gap is rather small!

    Without a “large” gap between supply and demand, the SIMPLE result is oil prices will firm up.

    I am betting by the end of this year, we see prices start to firm up.

    Albert D. Kallal
    Edmonton, Alberta Canada

    • Jimr

      A PALTRY 2.3 million barrels a day is 35 billion gallons a year, Doesn’t sound too paltry to me.

      • Omega Z

        In the big picture, 2.3 million Barrels per day is paltry.
        i.e. it could easily disappear from daily production.

        The 3+ billion in storage is a different issue.

  • Optimist

    One thing that the low oil prices could affect is the timing of the release of the 1 year Rossi test report. Realistically the process from the release of the report until the world has been convinced, the trolls killed and the truth accepted will take several years. IH and others that have been investing in Rossi are hard-core business guys. As they must have believed that Rossi would deliver positive results that would bring them long-term profit, they must also have been betting that the oil stock would plummet when the world would recognize the potential threat of LENR to the oil industry. IH should therefore have seen the opportunity in short-selling oil stock with a deadline sometimes after the release of the test results. So if we assume that IH is short-selling oil with deadline in Q2 of 2016, it would make sense to have the report released a month or two earlier to maximize the price drop. If however the oil-price has already dropped without the Rossi report, there is no longer any short term benefit for IH to have those information in the open. In that case it would be better to let Rossi develop and patent the technology further before drawing too much attention to it and keep the opportunity in their sleeves to short oil again later if the oil-price recovers to some degree. Rossi has already said that the release timing of the report depends on him, IH and the buyer, so this could actually be a real situation that Rossi has nothing to say about. This would however be a great disappointment so I hope this is not the case.

  • bfast

    I actually see a sunny side to the low price of oil in light of LENR. When LENR becomes a phenomenon (as early as February) every smart energy producer will want to sell as much product as they can because keeping it in the ground will no longer make sense. Therefore, LENR will produce a precipitous drop in the price of oil, and will do so just as soon as the world realizes how revolutionary LENR is. (That’ll take at least 6 months from when it becomes known IMHO.)

    Now for the sunny side. By bringing lower oil prices to the scene early, the slope of decline will be more gradual. I know it feels awfully steep right now, esepecially for oil producing nations such as mine, Canada. However, any effect of making the shock more gradual will exponentially reduce the severity of the shock.

    I know that oillprice.com has been following LENR rather well. As such, the oil producing world has been told. I do not know if the Saudis see LENR coming as a factor in their decision to abandon the OPEC “reduced production” strategy. It may be. In any case, lower oil now means less shock later.

  • artefact

    The gas price is decoupled from the oilprice. And about one year ago for Germany over 42% on the electricity production was from coal, 5% from others where oil is included. So the price is not much influenced by the cheap oilprice.
    For people just the gasoline and the heating oil went down as far as I realised.

  • Ophelia Rump

    One Month 13 days.

    I just thought it deserved mention in the thread, even if you can see the writing on the wall.

    • GreenWin

      Its a great opportunity for President Obama. Introducing LENR will give whoever is in the White House a legacy for centuries.

      • psi2u2

        Look for it. He has to know.

  • atanguy

    The american banks are starting to realize that they are going to have to forget the loans they have given to the schiste oil companies – This can add to the economic slump.

    • Owen Geiger

      They’ll need another bail out…

  • nietsnie

    I think that everything is economics. When the price of oil rises above certain points it becomes profitable to invest in producing it in more expensive ways. Saudi has realized that the biggest advantage they have over most of the other sources is that theirs is relatively cheaper to produce. By flooding the market with oil they have lowered the price for oil below that which allows those producing it in more expensive ways to make a profit. They are essentially driving their competition out of business. When that has been accomplished, the ready supply of oil will diminish which will drive the price back up. At that point the Saudis will have cornered the market.

    Similarly, the high price of oil has driven interest in alternative energy sources. Wind power, sun power, switch grass, more efficient engines – all of these are only profitable because oil became so expensive. Here in the US we are experimenting with electric automobiles. Global warming is driving some of our consumption decisions. By lowering the price of oil the Saudis are attempting to drive them all out of business as well – or, at least, delay their inevitable onset. And – it has been working. Just look at the increase in the purchase of gas-goozling vehicles since the price of oil dropped. Some of the new US fracking concerns are closing wells.

    I think Saudi recognizes the long term trend and wants to make sure that they have maximized their potential profit from the oil business before it goes bust and leaves them with a bunch of worthless crude in the ground that could have been lucrative had they used their ability to control the market more intelligently. This is going to happen at the expense of oil fields and alternative industries that only became Saudi competitors when the price went up. I don’t think their strategic move has anything to do with LENR. Until the day that even Rossi retires F9, no-one in the position of controlling billion dollar industries is going to make decisions based on LENR. However, unlike all the other alternatives, LENR will price oil out of consideration when it actually hits its stride. Saudi may not be reacting to LENR yet but a day will come when oil will become its victim in the same way that Russia and Brazil are victims of cheap Saudi crude.

    • Pekka Janhunen

      If LENR comes, the Saudi strategy does not look stupid in retrospect. If LENR does not come, the Saudi strategy does not look stupid in retrospect. Without LENR, it makes sense to Saudis to every once in a while to push prices down and remove competition, as you said. In the no-LENR scenario, the “purge” operation can be done at any time, basically. In the yes-LENR scenario, the right time to lower prices is now. It’s possible that they are aware of LENR and that’s why they are doing exactly now what they were going to do sooner or later anyway.

    • nietsnie

      I just read that Iran, in it’s first nuclear post-paraiah move, will shortly ramp up it’s crude production by 500,000 barrels a day – this in a market that already consumes less than is produced, with storage for more running out. I think we can expect the price to go down and stay there for awhile. This only exacerbates the situation most of the rest of the oil producers face of surviving in the industry at all. But, Saudi is still in the drivers seat as it already produces over 8 times more than Iran per day.

  • artefact

    At the moment we are at 7% down today for Brent 6% for WTI.
    A low price but still strong changes.

  • If the E-Cat test is positive and gets 60 Minutes style attention in the television media, then oil will be under even more pressure. I think LENR has had a slight influence on Saudi Arabian paranoia that oil will be replaced some day, but I don’t think LENR has had any significant effect as yet on the price of oil. It’s still too speculative and there is too much doubt about its validity. The Saudi Government just wants to kill off the American shale oil industry, so they are drowning us in oil.

    • At this point the Saudis need the cashflow for domestic reasons more than anything else.

    • Anon2012_2014

      Oil is a high carbon fuel that is dead in 40 years anyway. The Saudi’s see the writing on the wall. If LENR is successful, it may hasten that, but in 40 years any crude you haven’t sold is only a source of specialty chemicals for plastics and lubricants. That would be worth $1/bbl. Saudis know this.

      • As Jed Rothwell points out in ‘Cold Fusion and the Future’, also the market for chemicals and plastics might disappear for oil producers. If energy is very cheap it makes more sense to produce hydrocarbons from CO2/carbon and water locally, than to pull it out of the ground and transport it over large distances.

        • Anon2012_2014


          I think it will always be cheaper to make plastics and lubricants from the petroleum constituents, or from recycled plastics. Energy won’t be free, it will just be very very cheap. Transportation cost will be much lower than they are today.

          Overall, if we can eliminate the use of petroleum for all transportation fuels (even aviation which requires it to be light yet energy dense), I think petroleum usage could fall to 2% of current levels; or even less if we recycle efficiently.

          I like the idea of extracting CO2 from the air to keep the level of CO2 optimal for the overall ecosystem. It will be very energy expensive to do as it is literally reversing the entropy that was created when the carbon products were burnt. We just might have to rely on plants as had originally happened in the primordial atmosphere.

  • Andreas Moraitis

    Surprisingly, Warren Buffett has just expanded his engagement in oil:


    Either he made the mistake of his life, or he is smarter than all the rest. One might think that he speculates on a bandwagon effect, but that would be inconsistent with his conservative investment philosophy.

    • Gerald

      Oil refinery are less affected because of the huge use of heat. They could be the winners. We use oil for much more then energy and gasoil. The real problem in my opinion is they companies who produce oil because we need less and less.

  • Also the Saudis need cashflow desperately. Plus they no longer believe in future better markets for oil since otherwise keeping oil in the ground would be the best bank account ever at todays ~0% interest rates. Also they are planning to sell the stocks of Aramco in the IPO of the millenium (10+x Exxon valuation). Go figure… (they are informed because this is important to them)


  • Hi all

    Pretty well the things that Torkel Nyberg of Sifferkol and I were predicting back in 2013 have all come to pass. In fact it was these strategic movements that I started watching for back in late 2011. I already had another indication from another source but signed an NDA with regard to that so I needed another method of speaking publicly and decided to watch for the strategic moments of major players in the world economy.

    By the way as well as being aware of LENR I think US President Obama warned the US Grid and Energy sector LENR was coming back in May 2013

    Since then I think he and others have been preparing the world economy for the shock.

    I said as much in that seasons greetings post.

    I think the world Markets have largely priced in the initial effects of LENR. At least those in power have. I think the rest of us are still to experience the shock.

    I think Big Oil may wave their bloody stumps at Governments to scrounge a TARP. If a country has a government with representatives beholden to them in power, I think they might get it. The reality is they already quit the oil field ownership market long ago and I pointed that out back in 2013. Since then they were short on oil and made billions, now their refineries costs have plunged and they are rolling in money that is not getting seen by the accountants and the SEC. Ditto the banks.

    Kind Regards walker

    • Gerard McEk

      I don’t see anything on the Presitent’s table about LENR Ian. 😉

      Still I very much doubt what you are saying. If it is true, than many more developments and results must have been known in 2011, otherwise Obama wouldn’t would not start to prepare the market. Until now only Rossi and Brillouin are announcing results that may change the market slowly in the coming 10 years, I expect. Otherwise there are not much indications that other than these are having world shocking results. If really something has been going on at the background, I would expect many new signs/publications in the near future.

      • Hi all

        At that moment back in May 2013 President Obama had who had previously signed a rare executive order alowing combined heat and power (CHP).

        At the meeting in the photograph he was stating all Federal Offices would be moving to CHP and going off grid.

        In a confidential briefing just before it, he gave a heads up to a small group, less than ten, of CEO’s of the Major power and grid utilities, apparently there was quite a bit of the language from the briefing that got a little bit heated and had to be removed from the record.

        The Executive Order also paves the way for any company or individual to go off grid too. As you can imagine this did not go down well with the utilities.

        Europe had already passed such a directive, though the current UK government is trying to abrogate it:

        Kind Regards walker

  • Jag Kaurah

    I think LENR is still not known widely enough to have caused the drop in oil price. The oil industry plans years ahead and banked on some percentage growth in consumption but due to many factors like the rapid rise of renewables, albeit from a low base, Obama’s fuel mandate increasing the efficiency of vehicles, the lackluster economic growth, fracking gas and several other such factors decreased the growth of crude oil usage well below projections.

    The resulting surplus is so large that storage has become difficult to find.

  • georgehants

    I do not want to comment but as I have stated many times and Nobody gives any Evidential argument against the obvious I will.
    As production of food and services etc. does not in any way rely on economics only a small percentage of manpower, the lose of income has no effect except the joy of putting more people out of necessary work.
    Only the illusion created by economics creates booms and busts etc.
    Without economics there is no problem only gain.
    Cold Fusion simply means like all advancing technology we are able to put people out of work, with an overall benefit to everybody.
    Production has no need to change if the World financial system collapses but if it does, millions will starve just to keep a capitalist system.

  • Gerard McEk

    So why is the oil price so low?
    1. US&Saudies are pushing Russia to behave.
    2. Saudies are pushing all others compatitors out of the market.
    3. Less oil is needed
    4. US&Saudies try to deminish the (oil based) cash flow to IS
    5. LENR is coming
    6. US produces fracking gas, which has turened the market upside down
    7. The oil price is being manipulated because of somthing else.
    I think that both 1 and 4 are the reasons.

    • I think they all are having an impact.

    • PappyYokum

      4 is incorrect. IS is being sponsored by Turkey, Saudi Arabia, and the U.S. The Russians have been bombing the IS oil truck convoys heading to the Turkish border. I expect IS will be defunct in a few months.

      The economic impact LENR is going to have (5), if any, is over the planning horizon.

      8. The global economy is going into recession due to a glut of debt thereby cutting demand.

      9. The normalizing of relations with Iran is putting more of its oil on the world market thereby increasing supply.

      10. The oil supply chain is backed up with inventory because of 8 and 9. There is nowhere to put it. Low margin producers have to be driven out of business before prices go back up again. As David Stockman says, “The answer to the problem of high oil prices is high oil prices.” There has never been a shortage of supply. The problem has been political efforts to interrupt production to keep the prices high. High prices bring in new supply sources. The efforts to keep oil prices high are failing for the time being due to the ending of decades of Russian and Iranian economic isolation.