The world already has too much oil. But now it’s running out of room to store it.
As the oil sector faces down decimated demand resulting from the coronavirus as well as the oil price war between Saudi Arabia and Russia, which has unleashed still more oil, prices have plunged more than 50% from their recent high in late February. That price drop now threatens untold numbers of jobs, and even the financial fate of whole companies and regions reliant on revenue from the sector.
But it also presents a looming logistical challenge. As drills keep drilling and refineries keep refining, the world is potentially only weeks away from running out of places to put it. According to energy analysts, this lack of space could result in production slowing and even stopping before low prices have had time to work their way through the system.
“Sometime very soon, we may have the global oil storage capacity be completely full,” said Fatih Birol, executive director of the International Energy Agency, speaking on Thursday at an Atlantic Council event on the oil sector.
I was told gas in Ducktown, TN is $1.56.