Connect with us

Hi, what are you looking for?

Jewish Business News

Leadership & A-List

Mikhail Fridman Says Era of Lower Oil Prices Has Begun

Mikhail Fridman x640x360

Although some analysts believe it is only a matter of time until oil prices rebound, billionaire Mikhail Fridman, one of the richest men in Russia, believes that low prices are here to stay.

“While many of my colleagues in Russia and elsewhere are arguing about when the oil price may bounce back, I am convinced that we have entered a new period of low oil prices”, he said in a column for the Financial Times.

“It is like alchemy, but in reverse: black gold, a precious substance whose price was determined by its scarcity, has turned into a black, smelly liquid that makes wheels turn”, he said.

As China and India underwent rapid economic growth during the previous decade, the perception of demand and supply changed, and developed countries with high levels of entrepreneurial freedom took the lead in trying to find a solution, Fridman said in the column.

Emphasizing that free competition motivates people and enables humanity to overcome problems, Fridman said, “It was no accident that the countries that led the innovation were liberal market economies with strong property rights, while the countries that wished to thwart these efforts were resentful of competition and riddled with monopolists.”

For example, Fridman said, the U.S. has led the way in the production of shale oil and gas due to its abundance of economic freedom, rather than the amount of shale in its possession. It lets people buy land, and promises that nobody can take away what is theirs.

Turning to the recent drop in prices, Fridman predicted that the future will bring positive changes for oil production.

“The dizzying oil prices of recent years were profoundly abnormal. The fall will turn oil production into a proper business where costs and efficiency matter more than lobbying power”, he said.

Fridman added that the price decline will also make the world safer and freer by reducing the power of repressive regimes that thrive on oil money.

However, some analysts expect oil prices to make a comeback.

Chris Lafakis, a senior economist at Moody’s Analytics and head of the firm’s energy coverage, told CNN Money that oil prices are likely to shoot up to $80 by the end of 2015.

“There has to be increased demand at some point because of lower prices, ” he said. “Lower oil prices encourage people to use more crude. That’s going to occur over the next six months.”

He also said that other parts of the world will start spending more on oil, and that most of the increased demand will come from emerging markets.

 

 

Click to comment

Newsletter

Advertisement

You May Also Like

World News

In the 15th Nov 2015 edition of Israel’s good news, the highlights include:   ·         A new Israeli treatment brings hope to relapsed leukemia...

Entertainment

The Movie The Professional is what made Natalie Portman a Lolita.

VC, Investments

You may not become a millionaire, but there is a lot to learn from George Soros.

Travel

After two decades without a rating system in Israel, at the end of 2012 an international tender for hotel rating was published.  Invited to place bids...

Advertisement