Tuesday, March 24, 2015

U.S. crude was up 3.6% to $49.21 a barrel this week due in great part to a weaker dollar. In conjunction with the weaker dollar, the fighting in Yemen and speculative buying boosted prices. But with energy alternatives growing tremendously, the oil bust may be for good this time.

A weaker dollar makes commodities denominated in the greenback, typically boosting demand for such raw materials. Meanwhile, fighting in Yemen raised concerns about the security of oil shipments from the Middle East with analysts weary of potential proxy way on the Arabian Peninsula. This is of course home to the world's biggest oil fields.

But as US inventories continue building to record highs for an 11th week, with inventories up 8.2 million barrels to 80-year highs, supply is outweighing demand. This is projected to drive prices down in the near future, prolonging the duration pink slips keep oil workers at bay in Texas. But there is much more contributing to tough times in Houston, possibly for good.

Oil, being a commodity, has seen lulls in supply and lulls in demand since it was commercially bought and sold. But perhaps with a fast-growing industry offering energy alternatives, this- if not the next- bust could possibly be the last. There has been much greater investment in solar, hydro and even something called ‘compact fusion’ options. So if the oil prices do spike to stable rates, it is likely they will struggle to maintain value- especially over the coming years.

Just as oil made kerosene and coal oil obsolete, investors are speculating alternative resources will have the same effect on oil in as soon as five years, by some projections. And with oil possibly losing all utility, it is sure to be a worthless commodity not long thereafter. With so many alternatives in the works and the electric car becoming increasingly apparent, the focus is clear: to make oil a thing of the past.