harrisonlw wrote:The price now is quite low.
The price that consumers can afford to pay really is low.
However, there'a another price. The breakeven price for producers, in other words the cost of production. And that's the problem. The production price is high, and getting higher, that's the long-term trend.
You are not seeing the full effects of this yet, because actually you can further break down the breakeven price in two categories. Imagine you're producing oil, and you'll quickly find yourself asking yourself these two questions:
1. What price do we need to keep pumping oil from fields that we already developed and that are currently in production?
2. What price do we need to invest in new projects?
The second price is higher than the first price. That's why most oil producers can still keep pumping oil at $40 from currently producing oil fields, but they can't afford to invest in future projects.
Global oil and gas investments are expected to fall to their lowest in six years in 2016 to $522 billion, following a 22 percent fall to $595 billion in 2015, according to the Oslo-based consultancy Rystad Energy.
http://roughneckcity.com/roughneck-city ... on-in-2016harrisonlw wrote:Demand will surely increase in the coming years and decades, but will oil be replaced before then? If not, will it be economically viable to continue to extract unconventional oil?
The question is, is there even such thing as "the goldilocks range" anymore for oil prices? It seems that the prices that the producers need are so high that they end up crashing the economy ($100+). On the other hand, the prices that consumers can afford to pay are so low that they can drive producers out of business ($40-).
Goldilocks zone for oil prices is gone for good
http://blogs.reuters.com/great-debate/2 ... -for-good/harrisonlw wrote:It is worth noting the IEA, in WEO2015, predicts oil usage at about 103-107 mb/d in 2040 depending on price.
It's really
not worth noting that, since IEA has never made a correct prediction in the history of their existence. They can't guess what's gonna happen 4 years in the future, let alone 24.
harrisonlw wrote:The focus seems to have shifted from peak supply to peak demand. Is PD more of a threat to oil than PS?
Those who are trying to shift focus to peak demand are just desperate to paint a rosy picture. The idea of peak demand makes it sound like consumers are not buying more oil because they don't want to. In reality they can't afford to buy more.
harrisonlw wrote:And what about reserves?
Most will require a high price to produce. And it's worse than just being about money. EROEI is declining. Focusing on the cost of oil in terms of money is wrong, yet the entire oil industry is doing it because that's how the current economic system works. And that approach is working for now, while EROEI is still high enough.
Once (average) EROEI drops below the level needed to keep the world running, the whole thing will have to end. It's a matter of physics. You know, that real science? Laws of nature and all that? That silly little thing which is infinitely more important than the imaginary world of money that humans have constructed.
Once our energy system can't produce enough
net energy to keep things going, it's game over. It will leave a lot in the oil business scratching their heads going "But, but, but, my project was profitable in terms of money, gosh darn it!". And then they will die. The end.