Monthly Archives: December 2015

El Nino may have positive affect for oilpatch!

December 10, 2015 0 Comments

Grande Prairie County No. 1-20141006-00052

If we see in the sky any sign that is positive for oil exploitation, it’s possibly the El Niño. It is, after all, a year in which this phenomenon of the recurrent climate cycle must warm the Pacific Ocean and make the winter warmer in North America, although with inclement weather in several places.

As with El Niño, this is accompanied by some startling predictions. One of the primary news sources in the United States recently announced that "it could trigger floods, famine, and disease in much of the world.

It is true that the entrance of this climatic phenomenon has been promoted to a great extent (and yes, I know it is contradictory because El Niño means “little boy” since ocean water temperatures are higher than they have been in previous years.

As for oil, a recent working paper published by the International Monetary Fund (IMF) found that El Niño strikes tend to have a positive effect on prices for this type of non-renewable energy.

One reason is that drought in Asia leads to lower production of hydroelectric power stations and a greater dependence on fossil energy supply, which increases the demand for oil.

These positive impacts are not insignificant. According to the IMF, Canada enjoys an accumulated GDP increase of 0.85% in the four quarters after El Niño. This growth, in turn, leads to greater demand for oil, raising prices. The study found that oil prices rose nearly 14 percent a year after El Niño made an appearance.

Right about now any news is good news!

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