Matolcsy: Oil industry’s woes are writings on the wall

English2020. dec. 4.GOVERNOR MATOLCSY100WORDS

The future of the oil industry seems to be the single loudest signal about the future of the global economy. It is telling that crude prices are expected to be as depressed in 2025 as they are now. /David Sheppard, FT, 12 November 2020/

The main reason behind the scenes is a simple one. The outgoing long period of the world economy, between the end of the 1960s and 2019, was based on oil. Even the global financial system became a petrodollar system in the course of the 1970s. When a new chapter is unfolding, it is exactly the deepest layer of the economy to change.

The new mantra is long-term sustainability and all governments will address climate change. The support for electric vehicles will be strengthening. More and more environmentally minded investors will invest in renewables. Besides, there is too much spare capacities and new ones will join them in the coming years.

Anyway, we entered the 1970s, the 50-year historical cycle will not repeat the same pattern - what if it repeats the pattern resulting in an up-side-down picture?

Governor Matolcsy, MNB, the Central Bank of Hungary

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