oil is currently underpriced compared to its fundamentals

[keannu]

1.What does this "oil is currently underpriced compared to its fundamentals" mean here? Does it mean "as the oil price is already lower, the government doens't have to lower it"?
2. And what does "fundamentals" mean?

mo3-22
ex)To solve our long-term energy needs, our society needs to move away from oil and focus on developing various alternative energy sources. Yet sometimes out government directs its efforts toward supporting increased oil productoin through a pricing policy. If oil is priced at lower levels by government, people will use more fuel than usual and producers will need to manufacture more oil. This policy is geared toward perpetuating the myth that cheap oil will exist in perpetuity.However, the truth is that oil is currently underpriced compared to its fundamentals and oil reserves will be used up in about 40 years.

 

[MartinEnglish]

I'm an English teacher and I can only guess the meaning, the same as you.
I suspect this is because:
a) fundamentals (in this context) is jargon from this field - oil production - and only people who work in this field use the word in this way and understan what they mean by it.
b) it's been written by a non-native speaker and is a poor translation from their L1

So, you need to either ask an oil industry expert (not an English teacher) what it means, or find a better translation from the original!

 

[Tdol]

I think the text is suggesting that the reality of the scarcity and cost of extraction are not reflected in the price- it's running out, but the prices don't reflect that.

 

[Gillnetter]

1.What does this "oil is currently underpriced compared to its fundamentals" mean here? Does it mean "as the oil price is already lower, the government doens't have to lower it"?
2. And what does "fundamentals" mean?

mo3-22
ex)To solve our long-term energy needs, our society needs to move away from oil and focus on developing various alternative energy sources. Yet sometimes out government directs its efforts toward supporting increased oil productoin through a pricing policy. If oil is priced at lower levels by government, people will use more fuel than usual and producers will need to manufacture more oil. This policy is geared toward perpetuating the myth that cheap oil will exist in pepetuity...However, the truth is that oil is currently underpriced compared to its fundamentals and oil reserves will be used up in about 40 years.

The writer is saying that the price of oil is cheap compared to what it could be sold for. Oil can be used in many applications: as a fuel source, as a lubricant, as a base materiel for certain plastics, as a base material for paving highways, etc. Fundamentals refers to the price an oil company could receive if the oil companies sold oil in its rawest (unrefined) form.

 

[Barb_D]

By the way, I don't see anything that makes me think it is written by a non-native English speaker. In this case, "fundamentals" is finance jargon, not oil-production jargon.

 

[LingvaLupo]

In addition to what has already been stated, there is also the problem of the usage of "compared." Technically, "compared to" is supposed to be used for similarities. Here, since "underpriced" indicates a difference, one should use "contrasted with." The problem is that so many people misuse "compare" and "contrast" now that the latter SOUNDS incorrect to many people.