Publications: Notes at the Margin

Oil's False Dawn (March 14, 2016)


The airwaves, ether, and print media celebrated the bottom of the oil market last week. These reports are almost certain to be wrong. This is oil’s "false dawn," defined by the Oxford Online Dictionary as "a promising situation which comes to nothing." The price increases in energy markets in recent weeks constitute a promise that will come to nothing. Low oil prices will be part of the global economy for years because the costs of finding and developing oil and gas are falling dramatically. Oil’s bleak future does not imply, however, that oil prices are on a one-way downhill street. Prices will rise, as they did last week. Indeed, prices could rally for several weeks. The trend, though, is not upwards, not yet anyway.


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