Walter Morton

Oil & Gas Industry: Projecting What's Ahead in 2030

Interesting set of statistics and perspectives. $113 per barrel oil assumes that production can continue as it has for the last decade. The situation would shift dramatically if the "peak oil" theorists turn out to be correct. Even the most conservative energy analysts (Cambridge Energy Research Associates) say that we have reached a point where it will be very hard to do anything more than keep production levels where they are. And the oil companies admit:

"All the easy oil and gas in the world has pretty much been found. Now comes the harder work in finding and producing oil from more challenging environments and work areas.”

— William J. Cummings, ExxonMobil's spokesman in Angola, Dec. 2005

So given that production is going to be increasingly difficult, and costly or actually in decline by as much as 4% annually (Simmons) it seems impossible that oil will "only" be $113 a barrel in 2030. It seems equally likely it will be $280 a barrel. The only thing that may prevent that is a recession / global depression where oil consumption drops dramatically but this seems also unlikely to depress prices much since demand in the emerging markets will remain strong enough to absorb any "surplus" as supplies decline. The conclusion to take away is we will never see "cheap" oil again. Ever.