How Much For 10 Million Barrels Oil Each Day?

A group of 347 investors holding assets of $24 trillion has called for introducing world wide “carbon pricing”. They want effective climate policy.

I agree with their position.

But there already is a price on carbon. That is the price the market sets for oil (I am restricting my discussion here to oil, but the same is true for coal, lignite, and gas).

That price is changing all the time. But let’s just set it to $100 a barrel for this post.

That means if these investors started buying 10 million barrels a day, they would need to find $1 billion each day for such an investment fund. With $24,000 billion in their portfolios, that looks quite possible.

So, if they start taking 10 million barrels a day off the market, what would happen to the price of oil? World consumption is estimated to be around 92.4 million barrels a day right now. Taking 10 million barrels a day off the market, equal to about one third of OPEC production and over 10% of demand would bring prices up.

Which would be good news for the investors who bought that oil. They can sell their position with a profit, if they are after short term gains.

Anyway, this just shows that a small amount like $1 billion a day may be enough to get phaseout profit going.

And this could be done tomorrow. If these rich investors want higher prices for oil, all they need to do is buy some.

 

 

 

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: