The BP statistical review of world energy tells us that of the three fossil fuels (oil, coal and natural gas), oil remains king. The world gets 33 per cent of its energy from oil, 29 per cent from coal and 24 per cent from natural gas.

The three collectively account for 86 per cent of global energy consumption and remain the basis of modern civilisation.

Many ?experts? like to forecast the oil price. No one has ever been totally successful at doing that. There are simply too many variables to consider and information is never perfect.

There is supply, demand, geopolitics, market sentiment, weather and the strength of the US dollar.

In the last three years, the oil price has been on a roller coaster.

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On July 30, 2014, the price of West Texas Intermediate (WTI) crude was US$104.29 per barrel.

The next day it fell below US$100.

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A month later, the world?s major reference crude Brent North Sea followed and slipped below US$100 per barrel.

Both WTI and Brent then went into free fall mode until they hit the mid to high twenties in February 2016.

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They have since recovered but are nowhere close to what obtained in mid-2014.

There are some, like Saudi Prince Alwaleed Bin Talal, who argue that oil will never return to over US$100 per barrel.

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I have learned to never say never. The ups and downs (more downs) of the oil price in the last two-plus years have impacted on this country significantly.

When oil prices fall there is also a fall in LNG prices in places where we sell LNG.

On the supply side, the world is not running out of oil and the ?peak oil theory? has been rubbished.

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In the last 15 years, there have been discoveries of massive oilfields in Brazil?s deepwater and huge discoveries of natural gas in Turkmenistan and in East Africa.

In the same period, American oil men led by the late George Mitchell (the Father of Fracking) have unlocked vast stores of oil and natural gas that had been hitherto locked in shale rock.

In reaction to the shale revolution, Saudi Arabia refused to cut production in a strategy to maintain its market share and kill off the shale oil industry of the United States.

Admittedly, some shale oil companies filed for bankruptcy but overall the US shale industry has survived.

They survived by becoming more efficient and lowering the breakeven cost of producing a barrel of shale oil.

In 2015 one leading US shale oil company told me that they could have survived with oil at US$30 per barrel and still make a ten per cent rate of return.

This is the genius of American capitalism?the ability to evolve and adapt.

Interestingly, around the time the price of oil started to collapse, ISIS was wreaking havoc in Syria and Iraq and there was tension in the Black Sea related to Russia?s annexation of the Crimea.

One would have thought that increasing instability in the middle east and geopolitical tension involving Russia would have caused the oil price to increase.

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What happened was the reverse?prices continued to fall.

A major reason for that was the supply side of the market.

In 2010, the United States produced a modest 7.6 million barrels of oil and other liquids.

By 2015 that number had risen 68 per cent to 12.7 million barrels of oil and other liquids.

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That massive increase in a five-year period was almost totally due to shale oil production from places like North Dakota.

Last November, the Saudi?s and OPEC blinked and announced they would cut 1.2 million barrels per day from their output.

That signalled that the shale producers of the USA had won the war of attrition.

The falling price of the last two years saw drilling rig related activity fall in the United States.

Recently with the oil price back in the fifties, the intrepid shale oil producers have started to increase investment and rig count is rising.

The bottom line is as oil prices recover into the mid 50?s US shale oil production will recover and this will again over supply the market.

The good news (for those countries that like high oil prices) is demand is linear and will continue to increase as long as the world population continues to increase and more and more people in India and China move into the middle class.

In 2015 and 2016, oil supply was ahead of demand.

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The results were lower prices and build-up of inventory. In the first quarter of 2017 the situation seems to be re balancing.

According to PIRA, in the first quarter of 2017, the world will demand 98.1 million barrels of oil per day while supply will be 97.9 million barrels per day.

It is expected that global demand for oil will tip into the 100 million mark in the third quarter of this year.

There is however a big inventory of over three billion barrels of oil that has to be gradually unwound.

In the short and medium term, demand for oil will continue to rise.

In the long term, we can think of the impact of the mass commercialisation of the electric car which may cause demand for oil fall.

For now, at least, oil remains king of the world.

Kevin Ramnarine is a former Minister of Energy of Trinidad and Tobago

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