Boom Bust Season 2 Episode 117 Oils Marginal Cost Is As Low As 5 10 a Barrel

As the world continues to grapple with the COVID-19 pandemic and its economic fallout, few sectors have been hit harder than the energy industry. In this episode of Boom Bust, host Brent Jabbour and co-host Christy Ai discuss the latest developments in the oil market, including the jaw-dropping revelation that some of the world's largest oil producers can now extract crude oil at a marginal cost as low as $5-10 per barrel.

Despite widespread predictions of a "peak oil" scenario in which global demand for oil would eventually outstrip supply, the opposite has proven true in recent years. In fact, the world is now awash in a glut of oil, thanks in large part to the shale oil revolution in the United States. As a result, prices have been slow to recover from the dramatic slump they suffered in 2014 and 2015, and even a historic production cut by OPEC and other major producers has only done so much to prop up oil prices.

One of the most striking consequences of this global supply glut is the unprecedentedly low marginal cost of producing a barrel of oil. As Brent and Christy explain, this cost represents the minimum amount that a company must charge in order to break even on each barrel produced. In the case of some particularly efficient and well-capitalized oil producers, this cost has been driven down to a stunningly low $5-10 per barrel. This means that even if prices remain at rock-bottom levels for the foreseeable future, these companies can still extract oil at a profit.

Of course, this is far from an ideal situation for the wider economy. As Brent and Christy note, many of the world's major oil-producing countries are heavily reliant on revenue from the energy sector to fund their governments and provide jobs for their citizens. With prices so low, these countries are facing a serious crisis of their own, and there are fears that this could lead to social and political instability in some areas.

Meanwhile, the low cost of oil also has profound implications for the global climate. As Brent and Christy discuss, cheap oil makes it more difficult for renewable energy sources to compete. In addition, low prices can encourage increased oil consumption, exacerbating carbon emissions and accelerating the pace of climate change.

Despite these challenges, Brent and Christy remain cautiously optimistic about the future of the oil market. They note that demand is slowly recovering as the global economy begins to reopen, and there are hopes that a potential vaccine for COVID-19 could spur economic growth and lead to higher demand for oil.

Overall, this episode of Boom Bust offers a nuanced and informative look at one of the most pressing issues facing the global economy today. With expert analysis and insightful commentary, Brent and Christy provide a valuable perspective on the challenges and opportunities facing the energy sector in the years ahead.