2014 has been an interesting year. A lot has happened, especially with energy. The major events of the year including Russia’s invasion into Crimea and ISIL’s invasion into Iraq and Syria all had a knock-on affect on the energy market.
At first, both events pushed oil prices up as supply was threatened when Vladmir Putin cut off gas to Ukraine and ISIL gained control of Iraq’s main oil refinery at Baiji, south of Mosul, in June. The civil unrest urged oil prices to rise and brent crude reached a nine-month peak of $115.71 a barrel.
How soon that changed when in the early Autumn OPEC decided to flood the market with cheap oil in an attempt to kill the shale gas revolution in the US. Trying to regain their monopoly in the world energy market dropped prices down to $60 a barrel. It is crazy to think that OPEC has raised prices to $115 and dropped them to $60 a barrel in just seven months.
The influx in energy prices has not been as volatile for sometime and although 2015 will see its share of ups and downs, I don’t think we will see quite as dramatic of rises and falls as we saw in 2014. Taking into consideration all of the civil unrest and geopolitics of this year, I’ve made four predictions for 2015:
1.The US will continue its shale gas revolution:
The US major energy producers know that OPEC will only be able to sustain low prices for the first half of the year (if even that). They will hold their ground, continuing to provide the US market with cheap, reliable and clean energy.
2.Energy prices will rise once again:
OPEC will be forced to cut back supply, increasing the prices again. This won’t be before prices reach a low of $50 a barrel. Saudi Arabia will be the only country in OPEC that won’t be economically damaged from months of low-priced oil. Other member countries like Iran and Venezuela won’t fare as well.
3.The green movement will grow:
We will see larger, strong and more influential lobbying and campaigning from the “green-movement” as Europe becomes an even greater battleground for OPEC countries (especially Russia). As NATO’s Secretary General, Abders Fogh Rasmussen said earlier this year: “I have met allies who can report that Russia, as part of their sophisticated information and disinformation operations, engaged actively with so-called non-governmental organisations — environmental organisations working against shale gas — to maintain European dependence on imported Russian gas.” In 2015, we will see even stronger alliances and cooperation between OPEC countries and environmental organisations.
4.Shale gas in the UK will stay in the ground:
Although the UK’s energy is largely supplied by geopolitically risky countries like the Middle East and Russia, we will not see a huge increase of our own independent gas production. Both the Conservatives and Labour will be too focused on the election for the first part of the year and afterwards, it will depend on which party wins the election. However, with red tape still a hindrance to producers and investors, it won’t be until 2016 when real change could potentially take place.
