Chart of the Day: The World Has More Oil Than It Needs

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


I don’t have a lot to say about this, but I wanted to pass along this chart from Chris Mooney over at Wonkblog. Basically, it shows that although both supply and demand for oil have been roughly in sync for the past five years, demand abruptly dropped earlier this year and is projected to stay low next year. This is why prices have dropped so far: not because supply has skyrocketed thanks to fracking—the supply trendline is actually fairly smooth—but because the world is using less oil.

This is a short-term blip, and I don’t want to make too much of it. Still, regular readers will remember that one of the biggest problems with oil isn’t high prices per se. The world can actually get along OK with high oil prices. The problem is spikes in oil prices caused by sudden imbalances between supply and demand. Historically this wasn’t a big problem because potential supply was much higher than demand. If demand went up, the Saudis and others just opened up the taps a bit and everything was back in balance.

But that hasn’t been true for a while. There’s very little excess capacity these days, so if oil supply drops due to war or natural disaster, it can result in a very sudden spike in prices. And that can lead to economic chaos. But if demand has fallen significantly below supply, it means we now have excess capacity again. And if we have excess capacity, it means that the price of oil can be managed. It will still go up and down, but it’s less likely to unexpectedly spike upward. And this in turn means that, at least in the near future, oil is unlikely to derail the economic recovery. It’s a small but meaningful piece of good news.

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate