From CrudeOilPeak
In Fig 4, oil supplies are stacked by 2014 economic cost of oil, starting with Saudi Arabia ($25/barrel, green) and going up to Canadian tar sands ($80/barrel, dark red). The colors have been extended over the whole period to 1980 so that the production history can be seen. Lines in various styles show 4 different cost levels, whereby their lengths are indicative only to show corresponding production levels for the last years.
It seems that oil supplies up to around $75 have peaked (all countries up to Brazil). In other words, if the world is willing (or able) to pay only $75 a barrel, corresponding oil production declined since 2012 – at around 1.6% over 2 years. $50 oil was up and down, but at only 56 mb/d or 60% of current demand. What is important here is that affordable oil does not appear to increase in volume. That has serious implications for economic and transport planning
http://crudeoilpeak.info/peak-affordable-oil
That chart looks a lot like the "rule of thumb" I offered a while back: $1 gets 1mm barrels per day of supply.
here in a different format:
This creeping price floor I didn't read into the original Expert Peaker Prognostications. I took their forecasts to be that price would jump to some unfathomable level and civilization would be over. I can say I've always been a little dubious of that view (and most other methods of Overnight Armageddon) simply because if the price was too high for anyone to afford, they couldn't afford it and that would kill demand, (Demand Destruction in turn being the killer of civilizations) but the lower demand of course would lower price, At least to a degree.
On the other hand, looking at price and the cost of extraction from the bottom up seems to make much more sense. It also invites a different "collapse" scenario.
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This from seeking alpha is about investing but is the same basic story.
What does this all mean for investing? It means to me that $25 Peak Oil is behind us. You couldn't really hit and maintain that number in the 1986 crash when many more virgin conventional reservoirs of oil were available. Despite the last three oil crises, not one of them could get WTI oil to $25 and keep it there. Now, using much more expensive oil resources (shale fracing, deep water drilling, arctic development, etc), it doesn't seem like the last two disasters have been able to press WTI oil much below $50 for a material length of time. In this recent crash, the 50$ floor was able to be reached only with several years of hyper investment made possible by the twin forces of sustained high prices and access to ultra-cheap capital. Both of these forces are no longer present in the oil markets.
Give that a read, he makes a simple and convincing case that the floor, once $10, then $25, is now $50 (that is in real, inflation adjusted dollars BTW). No big surprise, just another explanation.
One more, from bloomberg, maybe a bit of stock pumping PR but still relevant:
Vitol Group, the world’s biggest independent oil trader, said crude prices won’t drop below $50 a barrel for sustained periods because that’s a level some producers need in order to invest in new supply. Gunvor Group said a rout is over.
“We still subscribe to the likelihood that over time prices still have to go back up again because you still need to invest,” Vitol Chief Executive Officer Ian Taylor said in an interview at the FT Commodities Global Summit in Lausanne, Switzerland on Tuesday. “People won’t invest unless they can make the upstream business work and it’s not just U.S. shale; at $50 a barrel it doesn’t work.”
Just more of the detail of PO. As usual the comment boxes are amusing, especially the seekingalpha where folks key in on attacking the "Peak Oil" headline, without refuting the points laid out. Because they can't.
The "collapse scenario" I'm thinking of is not the overnight armageddon of massive permanent price spike but the economic oscillations (just like we are in) caused by speculative markets and consumers not understanding the "price signals" and jumping from one tactic; small cars, hybrids, conservation—to another—big horsepower, SUVs, Sunday drives.