1,238 Billion Barrels of Oil Reserves: Is This an Oil Price Bubble? 79 comments
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That's 1.238 trillion barrels of known oil reserves, or 1,238,00,000,000 barrels. And reserves have actually been growing, by 107.8 billion barrels since 2001, and 168.5 billion barrels, or 14%, over the last decade. Global reserves have risen by 36% since 1987 (map/chart above shows how the 1.23 trillion barrels of oil reserves are distributed globally).
These stats are from the "Statistical Review of World Energy 2008," released yesterday by BP (BP), and reported by The Economist:
"We're not running out of hydrocarbons,” insists Tony Hayward, the boss of BP, one of the world’s biggest oil firms. To back up this view, he cites various comforting figures from the latest edition of the firm’s “Statistical Review of World Energy," released today.
Enough oil has already been discovered around the world, Hayward says, to maintain consumption at current levels for another 42 years. As he put it, humanity has guzzled through 1 trillion barrels, but has its next trillion already lined up, and could probably unearth a third trillion if it really applied itself.
Why then, are oil prices hovering over $130 a barrel?
Mr. Hayward blames poor policy-making or, in his florid phrase, “the madness of men." Some 80% of the world’s oil reserves, he says, are in the hands of state-owned oil firms, which tend to allow firms like his only limited access. He believes that if these riches were fully exploited, the world could easily produce 100m barrels a day or more, a big increase on last year’s figure of 82m barrels per day.
MP: What about all of the attention on rising demand for energy in China and India, and how that contributes to rising oil prices? Well, according to the report's statistical tables, India's share of global oil consumption in 2007 was only 3.3%, not much more than Canada's 2.6% share or Mexico's 2.3% share, and India's oil consumption has grown less than 3% annually during this decade. And India and China's 12.6% combined share of world consumption is still only about half of America's 24%.
In fact, total global oil demand increased by only 1.1% in both 2006 and 2007, roughly the same rate as the increase in world population, and about half the 2.03% average annual growth in oil demand during the 2002-2005 period.
What's going on? Increasing world oil reserves, and relatively weak growth in world oil demand, and oil prices have now doubled in the last year? Is this an oil bubble?
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This article has 79 comments:
85 million barrels per day times 365 days = 31.025 billion barrels/year
So 1238 billion barrels = 40 years oil at current consumption rates
If you up consumption to 100 million barrels per day, that works out to 34 years worth of oil.
I don't know about you -- I am more than 34 years old. The idea that the lifeblood of the world economy could run out within the lifespan of a young adult is bone-chilling. I should think the warning bell has been sounded loud and clear with the latest rise in the price of oil.
Incidentally, my take on peak oil is that the oil will not run out in 34 years, because there is no way we will achieve 100mbpd production. Rather, production shortfalls will force us to figure out how to get by on 60mbpd, and eventually 40mpbd. The story will be all about how we can weather the supply shocks while still trying to find technological alternatives to oil.
Obama is going to have to build new, various energy plants and a viable hydrogen infrastructure to force the energy companies and oil to truly compete.
Oil addiction and a horrible banking cartel keep holding this country hostage and keep shooting this country in the foot.
If Tony Hayward is right,. we just need to watch for the top and make money at the exits.
www.sfgate.com/cgi-bin...
Fortunately, despite the best efforts of the "Know Nothings" in the Congress and the media, cooler heads will prevail. Once we decide to open up our domestic energy reserves to exploration, we will have ample supplies to sustain us until alternative technologies become competitive in the marketplace.
Note to the Greens: What are you afraid of? You're winning the day thanks to the new technologies now being developed that will operate our transportation system in the future. You'll excuse us if we don't wish to sacrifice our liberty to you, as well.
Global warming is a another scare tactic produced by the liberal left to put money into the hands of liberal politicans. This globe has been warming for the past 20,000 years, the artic ice cap is truly diminishing, while the antartic ice cap is increasing in size. Wake up AMERICA.....vote these liberals out.
Not a word about the most important things: The reserve numbers include Oil sands and shale, two hydrocarbons which are not only insanely expensive to turn into oil, but need so much water and energy that the end sum is a product that costs $40 a barrel and uses so much water that Canada barely has enough to produce the low levels of oil sands product they turn out today. The potential of oil sands is locked up in the need for water to produce and a place to put the millions of barrels of waste water. And sand.
Further the SA figures are pure conjecture, water cut and injection at Ghrawar is at 40% - 50% and 7 million barrels a day. Hardly an indication of a healthy well.
Drilling five miles into the sea is hardly a promising future. Is there more recoverable oil? For sure. Is it low hanging fruit? Well actually you will need a truck with a motorized extension ladder.
No, I don't buy this argument. We are tight on the supply/demand curve and I will remain very nervous about the crude supply unless and until someone discovers another super-giant field, if ever.
Reserves divided by Production = an R/P ratio of 42 years, or 42 years of oil left in the ground as of 2007.
What do you think the R/P was in 1997? 41 years.
What was the R/P in 1987? 41 years.
What was the R/P in 1980? 29 years.
What do you think the R/P will be in 2017? 2027?
Maybe we shouldn't be panicking so much right now about oil. I think we need to look more at what influence financial players are having on the price of oil in the futures and options markets. That may lead to a solution faster than any energy legislation that Obama and McCain have in store for us.
The major oil execs have been downplaying the rise in energy prices... why? Obviously they are no better than many others in predicting where oil prices are going, but perhaps it is in order to reduce sovereign countries' desire to control such valuable assets.
The USA in particular will (must) learn to use these assets (much of which is imported) more wisely in order to survive in the long run. Higher energy prices are here to stay and ANWR (if it ever is explored) is not the panacea that many believe. The cost to discover, produce, and transport at the same time as protect the environment, will be quite high. At the consumption rates of the USA, any proven reserves there would not last long in any case.
As others have stated, recoverable reserves - and the cost to recover those reserves is a critical issue that the author does not really consider. The sooner that investors in the western world really understand that although an integral part of the world economy, there are now many other major economies that will place huge demands on the world's reserves of all non-renewables.
This time it really is different. Commodities (Oil; Gas; Base Metals; Gold) - A once in a lifetime investment opportunity.
We have needed an energy policy for many years. I have absolutley zero confidence that this government can produce a workable document of this kind. Look at their record.
Our Congress has the perfect system for doing nothing and getting away with it. They just blame one another for not getting anything done and the American people buy it.
Both sides love this system and they will never change it.
They work very few hours, get big paycheck, huge pensions, lots of perks and live the life of a Rockstar.
Nothing will change as long as we have this two party system in place. Every incumbent needs to be removed.
You're right, of course. The world's no more in danger of running out of oil than air. Faced with this "incovenient truth," the Greens invented "global warming" as their next effort to run our lives and get into our pocketbooks.
What they didn't figure on was that the sharp run-up in oil prices resulting from these scare tactics would wake up the American public. Fortunately, we're on to them now, and it's only a matter of time until we end this self-imposed boycott on our domestic energy reserves.
The funny part is reasonable people have no objection to the technologies being developed in the private sector that will help us conserve fuels and become more energy independent. What we object to is their efforts to impose sanctions and higher taxes on our daily lives via government fiat at the same time.
It also shows us once again that we can't reason with the devotees of the Green Menace who wish to rob us of our freedoms and liberty.
The problem with your 34-40 yr analysis is that 20 years ago, when I went to work for Conoco, we had guess what - 40 years of reserves in the world.
As the author pointed out, reserves have been GROWING, that means more oil has been found than was produced.
Trust me, this is all a shell game, and at some point it will crater to $50 or lower and OPEC will be all woe is me and the oil producing states will take it on the chin as they always do during the bust that follows all booms.
They've seen this game play out before, and will call on their members to supply the world with additional oil in an attempt to retain their price control supremacy. Only this time it won't work.
The public's demand to increase domestic energy production and the advancement of alternative technologies have come too far to be put back in the OPEC cartel's box now.
As usual, the Liberals in the Congress have got it exactly wrong once again. No one's "speculating" about oil prices, the markets have simply been following their lead. And, as for OPEC, we don't need to sue them, just compete.
Good to hear from you again!
I followed your lead and learned about inorganic oil... truly fascinating. Thank you!
The only problem I see is that due to its location, oil will continue to become more expensive to produce in the foreseeable future.
Thanks again, and I look forward to your future posts on this subject.
I hope you're right. Unfortunately, at the rate we're going it may take 20 years to build the NEXT U.S. based nuclar reactor. But that's the historic problem with government, it doesn't know how to get out of the way. Our hope is that we can continue to overcome its endemic intransigience.
www.simmonsco-intl.com...
www.marketwatch.com/ne...
You've got to love this quote:
"Morgan Stanley noted that this year's steep jump in oil prices could put a lid on demand.
"We acknowledge that the political risk premium for oil may have escalated in recent months, but even so, we have seen the price rise by an amount that is increasingly difficult to explain by short-term supply fundamentals alone," said Morgan Stanley, which is boosting its stakes in financials and reducing some holdings in energy."
The investment banks need to be shut down.
The estimate does not take into consideration the fast developing ultra-deepwater, deep-drilling exploration that is taking place in the waters off Brazil's coast, not does it consider much of the deepwater oil off of West Africa's coast, not the huge potential oil fields off the America's East coast in the Carolina Trough, which Congressional Democrats won't even let the oil companies take a look at.
Also, new science is suggesting there is lots of oil, if expensive to explore and produce -- $70 a barrel is the average "lift" expense. "Abiotic Principles" have the potential to direct the world to large new oil deposits.
Check out the Oil Is Mastery website -- where Abiotic Principles -- backed up by hard science -- are focussing on ultra-deepwater, deep-drilling, where big results are already coming in off Brazil's coast.
Oil traders DON'T speculate. All they do is read the newspapers and watch the dummies on TV do their work for them and make their bets (...ie. investments) accordingly. See what happens when we're successful in forcing the "Know Nothings" in Washington end their self-imposed boycott of our nation's energy reserves.
We seen this game played out here in the oil patch many times before. So take a tip, you won't want to long in oil then!
Demand for oil is rising, and though Hubbert's career was nearly destroyed for his peak oil prediction, it is entirely obvious that he was absolutely right. So, probably sooner rather than later, we will "run out" in the sense that we will not be able to expand production quickly and effectively enough to support growing demand. Sure, plenty of oil will be left in the ground, but that's not what's meant by running out in this scenario. We're going to go to war over this stuff, again and again, unless and until we can wean ourselves off it.
We must embark on an energy independence program in the United States, and that means drilling everywhere in the short term, building out nuclear, solar, wind, geothermal, biomass, and other viable alternatives in the medium term, and developing net-positive liquid fuels for the long term. Simultaneously, we MUST address an infrastructure and culture that is almost completely single-occupant automobile dependent. It's wasteful and stupid, and we simply can't pay for it anymore. That's also a long-term problem.
Real leadership in this country will emerge when we start looking inward again, and when we recognize that we're either all going to live together or we're all going to die together. Stop screeching about "liberals this" and "green menace that." Stop squealing about endless protections for places we can't afford to set aside forever anymore, thanks to our own stupidity, avarice, and profligacy up to now.
Let's start finding ways to come together as a nation so that we can have at least SOME chance to survive now and set our children up to thrive later.
news.bbc.co.uk/2/hi/bu...
Quote:
"It's a great global debate. What has driven oil prices to their current dizzy heights?
According to the oil producers' cartel Opec, the blame lies with speculators in the international markets. But Tony Hayward, chief executive of BP, describes that view as "a myth".
He argues that the main cause is the tight balance between global supply and demand. "
About the supply demand problem, three factors we have to think about:
- rate at which oil can be pumped from the ground is finite. Even the biggest reserves take time to extract, and the faster you try to extract them the faster the geological formations will "break", resulting in oil that cannot be recovered (see recent mexican production). We can pump oil for 1000 years - just not very much by then.
- new discoveries typically take 7-10 years to come online, longer for remote projects (I worked for a supplier to Sakhalin I and II - these places are a logistical nightmare)
- high inflation in oil producing countries means it is in their interest to see high prices. They need to maintain their social welfare systems and the only way to do it in an inflationary economy is by restricting supplies.
Dr. Perry may be right about reserves, but how much is in the ground doesn't set the price - it's how fast we pump it minus how fast we burn it (plus some manipulation by the hedgies). Right now that is almost at parity and until demand goes down it won't change. I'm willing to bet that if prices do start to drop below $100/barrel OPEC will reduce production. I'm also willing to bet that we will see nothing but a super volatile market for at least the rest of the summer, which will vindicate the bears when it drops and the bulls when it skyrockets. All the while the hedgies will be playing off each other to see who has the fastest algorithm on the trading floor...
High oil prices are the best thing for this country. Nothing spurs innovation better than a hungry belly, and Americans have been too fat too long.
Unfortunately, however, we've already tried that. The problem is, like in marriage, both sides have to be willing to compromise. If not, you get divorced. And we need a divorce from the Greens.
The Democrats in Congress have done their very best to create a self-imposed boycott on ALL FORMS of our nation's domestic energy reserves. The facts are indisputable here.
So we have a choice (...thank God!). We can either succumb to their view of the world, replete with higher taxes and diminished liberties, or we can stand and fight this tyranny.
I don't like humongous SUV's and wasteful energy use more than you do. I don't own one myself. But the truth is, we're already at "war" over energy and our way of life. Personally, I'm not ready to give up on either.
When you say "we've tried that before" with respect to cooperation and a multi-partisan approach to energy policy, I'm somewhat lost. I don't recall any energy policy in our country other than "keep it cheap and burn it all," which I recognize is hyperbole, but the point remains: I haven't seen the cooperation you speak of. Would love to have a countervailing viewpoint on that.
I'm not sure either that I understand the argument that environmentalists want to take away people's liberties. Certainly I think there are fringe elements that want us all to die in the name of Gaia, but the broader streams seem to be advocating more strongly for reducing energy demand and for cleaning up. Both of these seem like good things to me, especially in the longer term.
I am hopeful that leadership will emerge - and soon, at that - that will tackle the twin perils of fiscal irresponsibility and energy irresponsibility, and that will create a unified front, or at least a "middle path" toward restoring America's potential. We've squandered a lot of it. I don't think it's too late to turn it around but I do think we have to stop screaming at each other first and foremost.
By the way I think Lewisabroad is absolutely right: high energy prices are a great thing insofar as they spark innovation. We have indeed been too fat for too long.
Speculation, greed ..... ripp off
Lastly There may be an Oil Crisis .... but there is no Oil Shortage in our Life Time. Even IF The United States of America foolishly chooses to Not Harvest the (Huge) ANWR Oil Fields ....... Russia, the Middle East, Venesuala and many other Countries will continue to Pump Oil out of their Oil Fields and get Rich Selling it to us !!! Damn ..... What Idiots and Fools we are !!!
I for one do believe in global warming, I don't think that has anything to do with rising oil prices done at the expense of the consumer. This all to do with greed plain and simple. I do think that Obama will do someting about this while I don't think McCain will do a damn thing. Bush is the far-right and the far-right beleives on just what is happening now, that the econmy should be based on what Wall street does and says (that's just how thw rich get richewr and everybody else goes to the poorhouse) and not what the average persons pocketbook and wallet says. Bush has f**ked us big time with this way of thinking and I hope Obama will get us out.
For the record I am for more drilling. OPEC is laughing their butts off about this being that the world is looking to them to get us out. No they ain't going to do it because they are loving these here high oil prices. It take Madam Swarmi and here pack of mystical future and fortune telling tarot cards to look into the days ahead to see where Bush's trip over there to ask for more oil was going. Of course OPEC was going to tell him no. They probably did it with a giggle and a smirk. it's time we stop this and we do need to at least some drilling to get our oen oil and to put OPEC in thier place which is long overdue!
I find very hard to believe that "we are running out of petro", China's insatiable thirst for oil as well as India's (what, do they drink this stuff for breakfast as in "I'll have two pancakes, a bowl of Boo Berry cereal, a pattie of sausge, oh and a cup of oil to wash it all down with) and so forth all was happening BEFORE the war in Iraq began. I don't recall hearing about any of this tripe before the war it's seems like all of the nonsesnse started happening as soon as Bush in his infinite warmongering started picking a fight his good ole enemy Saddam Hussein.
This is the bottm line, OPEC, Big Oil, and Wall Street's wild guessing gamblers, - oh I am sorry, speculators - is doing this out of greed and hope that that bubble will pop and they look like the con artists they really are (and while I'm on it if I hear one more butthole say "pain at the pump' I''ll murder them because i am getting damn sick and tired of hearing that term whch as become the "cute" catchphrase of the media such as "Whatcha ya talking about Willis" was to Differ'nt Strokes and "Hhaayyyy" was to Happy Days. I don't feel pain, I feel like I am being ripped off, been had, and so forth. Gouge at the Gas Station is more like it!)
This brings to my mind a Bugs Bunny and Daffy Duck cartoon where they find the Arabian Knight's treasure in a cave. Daffy takes it all for himself and wants to leave nothing for anybody else. He finds a lamp and out pops a genie whos says he is Daffy's slave. Daffy shoves him back into the lamp telling the genie to get lost, the tresure is all his. The genie comes roaring out pissed and says that he's insulted and Daffy must now pay the consequences. Daffy then says pompously " Consequences, schmoquences, as long I'M rich". The genies the punishes Daffy. Imagine the public as that genie and the before named villian's of the oil market as Daffy. That's what will happen.
2. The cost of oil production has soared, partly because easy targets are exhausted and partly because there has been secular inflation (taxes, standard of living, money supply, oil industry skill shortage and declining rig count, cash piling up in China).
3. Tar sands, deepwater, Arctic 'reserves' should be discounted if not entirely ignored. Abiotic sourcing is absolute hooey.
4. BP -- 'Beyond Petroleum' -- is about to get their financial butts sawed off in Russia, just like Shell and Exxon did. I interpret Mr. Hayward's press release as a plea bargain. Don't blame me, he says, because those selfish Arabs and Russians won't let BP grow and thrive. The new, improved estimates of world 'reserves' are a joke. The one and only thing that matters is production.
5. It doesn't matter whether you play the momentum up or down. What's at stake is energy to produce food, heat homes, get from point A to point B in an airplane, 18-wheeler, or battle tank. That's why we're in Iraq. That's why we have a Strategic Oil Reserve, to power the gas-guzzling U.S. military. Economic history of World War I and II paints a clear picture of what happened last time nations fought nations for control of oilfields. War risk is $30+ per barrel today. I don't see that risk evaporating any time soon.
www.philhart.com/peak_...
www.nasa.gov/centers/j...
"Saturn's orange moon Titan has hundreds of times more liquid hydrocarbons than all the known oil and natural gas reserves on Earth, according to new data from NASA's Cassini spacecraft. The hydrocarbons rain from the sky, collecting in vast deposits that form lakes and dunes."
Transocean should change it's name to Transpace and start developing our natural resources.
1. Most muslims just want to live like normal people, but the wackos (the Wahhabists whose leadership is in Saudi Arabia) have been using the flood of oil money to finance their worldwide network of Jihadist schools and cells. Until we dedicate ourselves to cutting off their funding, we are engaging in a global game of whack-a-mole with an endless supply of enemies.
2. Corn Ethanol is one of the least efficient ways to implement biofuels, but it makes our corn lobby happy and the oil lobby certainly supports anything that makes biofuels look bad. Many other crops are better for producing ethanol, and methanol (which is being blatantly ignored here even though the original Ford research talked about it) can be produced from nearly any kind of organic matter. The technology already exists to burn most combinations of gas/eth/meth but it costs just a little more so the vaunted free market doesn't want to be bothered with it.
3. The "hydrogen economy" is doomed to fail once people try to figure out how to actually implement it in a cost-effective and consumer-safe way. There is too much basic physics and chemistry arguing against the viability of a hydrogen powered passenger vehicle. It's a blatant distraction and only useful for pretending to do something while denying more funding to technologies that have a real chance of working.
4. Global warming is both natural and man-made. The earth itself can handle much higher temperatures (and very early in its history, it did), but we know much less about human civilization's ability to cope with rising sea levels and the shifting of fertile regions from one place to another. For example, Iraq and Egypt used to be much greener places than they are now, but that all changed over the past 5000 years. Our current greenhouse gas emissions are not an imminent threat, but they will be if we continue to burn only fossil fuels and overload the biosphere with pollution and more carbon than it can process.
Part One...there is no external agency is allowed to see what OPEC countries really have in reserve and it probably like the late 70-80 numbers they are way over inflated.
Part Two.. the problem is not how much reserves are there but will they keep up with demand growth. Currently supply/production of oil has been flat since 2005 just like in the early 90's. This is of course in comparison not in nomial terms but with growth. World demand growth at this time has been around 5%.
Part Three. We will never run out of oil becasue there will be a point in which the energy or cost to extract it will vastly exceed its price or energy output. However we will reach a point where the sacrity come into view, insuch that the price of oil wil greatly increase. Notabily.. given the huge play that oil has in every country's economics there is nodoubt that world tensions will rise and i would say war would not be ruled out. Remember Japan? they attacked the US because the US cut off their oil supply....
Brace yourselves for more devastating rounds of shock and dismay -for I assure you no one takes this seriously at all.
www.prudentbear.com/in...
I don't disagree with anything the BP Chairman said. But I think his comments are completely irrelevent.
Yesterday there was a spectacular paradigm shift event. Please read about it on this Seeking Alpha entry:
seekingalpha.com/artic...
Also read my thoughts on Peak Oil:
seekingalpha.com/artic...
1. It won't have any affect on global supply for 7-10 years.
2. I won't lower prices in the US unless global demand goes up less than the incremental increase in production those fields provide. The only affect domestic production has is on the trade balance and some local employment. Great benefits, I admit, but I think far more jobs could be created by developing a technology-driven alternative fuels / alternative technology economy and exporting. Chevy Volt, PV research, and cellulosic biofuels research are a few examples. If we are successful with these then nobody would be buying the oil from the Sauds, Iran, or Chavez, they would be buying or licensing tech from US firms.
3. In 30-50 years, when foreign reserves are tapped, won't our children and grandchildren be glad there is still some production capacity in the US? Might it be a more valuable strategic commodity when it is left in the ground for use in the future when it is more scarce? I suppose this may be one reason the Sauds are reluctant to increase production - the other being maybe they can't...
4. www.eia.doe.gov/oiaf/s... says it all: "With respect to the world oil price impact, projected ANWR oil production constitutes between 0.4 and 1.2 percent of total world oil consumption in 2030, based on the low and high resource cases, respectively. Consequently, ANWR oil production is not projected to have a large impact on world oil prices."
Jacktrader - if you read this, could you elaborate? I'd love to hear more detail about how the estimates are calc'd
Last point, $4 a gallon for gas is still cheap folks - Europeans, Japanese have been paying more for over a decade. And before we go pointing fingers at the Chinese and Indians their per capita oil use is 1/12th and 1/34th of the US, respectively.
sounds like a good Pixar cartoon
I believe it is a false market that will hopefully crash! What about the surplus oil sitting in tankers off shore as they have no where else to store it?
What worries me is the lack of regulation in this market (look up ICE!) just like Enron and sub prime mortgages; so much money is being printed and shuffled around -fortunes need to be made!! Only problem is the man on the street will loose out again, someone has to pay for a burgeoning bureaucracy and dare I say it, a silly war over oil!
smoke and mirrors...........
Proceedings of the National Academy of Sciences of the United States of America
PNAS / August 20, 2002 / vol. 99 / no. 17 / 10976-10981
Chemistry / Physics
The evolution of multicomponent systems at high pressures: VI. The thermo-
dynamic stability of the hydrogen-carbon system: The genesis of hydrocarbons
and the origin of petroleum
J. F. Kenney, Vladimir A. Kutcherov, Nikolai A. Bendeliani, Vladimir A. Alekseev
www.science-frontiers.... The mystery of Eugene Island 330
interactive.wsj.com/ar... Odd resevoir off Louisiana prods
oil experts to seek a deeper meaning
www.worldnetdaily.com/... Sustainable Oil?
www.wired.com/wired/ar... Fuel's Paradise
We do not know much about derivatives, complex instruments involved in the oil futures market. Further we get all types of players in the market now. They play paper trading almost 24 hours per day. On top of that speculators and new players also very active now.
Very soon there will be burst in the commodity market together with oil.
Already people are converting their vehicles to LPG gas, replacing their cars to scooters and bicycles, using pool cars to work and more careful now in managing their fuels through out the world. Airlines are reducing capacity and travel routes. Some factories and plants are finding difficult to run their operations and planning to shut down soon. People are unwilling to pay current price for oil. If that is so will they pay $200 dollar per barrel. No way. If it happens not only there will be total collapse in the oil market but also in other sectors.
In addition Saudi Arabia is going t announce increase of oil production in next meeting.
Even these people have realized higher oil price going to hit them back hard in the long run. US Dollar will go up in next 12 months and even Fed will increase interest rate.
Currently we see rapid rise in some commodities. Similarly there will be rapid decline in these commodities in next 12 months. You can also see volatility in the market. What all these meant for?
So instead of going oil barrel to $200 it will come down below $70 a barrel of oil very soon.
Time to time people bring different theory to mislead people. In 1980s also they talked about peak oil. We know what happened to oil market then.
Still there is no scarcity in oil as such and can produce oil to meet demand.
and for you, mr. PHD: Why have economist been sooooo wrong modeling oil prices?
Cheers
Swiss Gnome
1. I am not certain we can trust reported reserve numbers from some countries. (Bullish)
2. One of the few things I remember about commodity pricing from my micro economics classes is that commodity pricing tries to balance where marginal prices equal marginal cost to produce. So what is the marginal cost to FIND, drill and produce a new barrel of oil? Given the complexity of the calculation, I'm not sure anyone knows for sure anymore. Given the depths to which they are drilling these days, the fact that very little refinery investment for the sours crudes or bitumen that makes up an increasing percentage of reserves, its probably much higher than it used to be. Add to this the risk factor that oil is a political commodity and when it is found it is always at risk of some sort of expropriation or re-negotiation. (Bullish - too much uncertainty.)
I dunno, seems to me that there are grounds to believe that the price could come down hard. Also, there are pretty good grounds for thinking otherwise. Without a really big strike or increase in short term easy to use reserves or inventories, seems to me to be a dangerous trend to bet against. Just don't see the event for an inflection point yet.
en.wikipedia.org/wiki/...
www.msnbc.msn.com/id/4.../
million budget, how much can big oil and big government with their trillions? Follow the money, dummy!
What's not real is all the hoopla that goes around it such as mass starvation etc.
There *are* solutions in the form of mass transit and electrified cars.
Even hydrogen cars would work if they weren't so expensive and we didn't need to install so much infrastructure.
No, the risk right now is that some idiot starts a war and causes a fast shutdown of oil exports before we have had enough of a chance to switch over to alternatives.