Posted on 02/18/2015 4:31:56 AM PST by thackney
Yes, oil companies typically have to invest significantly in years before the production completes. 2015 reduction is spending will have a greater impact in 2016 and beyond production than 2015.
Well as a column in USAToday said
“Republicans talked a lot about drill baby drill but President Obama was the one that made it happen”
By Nov 2016 a majority of American voters will believe that.
Yep, that's expensive, too, but can be done.
In addition, the techniques learned in the past 15 years of experimentation and research on how to more efficiently exploit the current unconventional reservoirs being will prove to be adaptable to other more conventional reservoirs which have had some vertical well field development.
Especially in Carbonate reservoirs, the anisotropic reservoir properties of the geological formation will determine just how much oil can be recovered from existing and older plays thought to be tapped out.
I’ve felt for a year that Tesla was a slam-dunk short, but I’ve learned never to bet against a regime affiliate.
Obviously without the California/Northeast states mandate they would probably not even exist.
Agreed, and price will determine how fast it happens.
yeah so electric cars are not a slam dunk. I’m sure there’s also problems with the conversion of oil based trucks buses trains and buildings over to natural gas.
So its probably safest to say that high priced oil invites competitors.
Maybe with today's tech, but not at today's prices. (BTW, some of that tech was around in the 80s). Also, expect considerable environmental opposition, especially in that end of Colorado, and further complications of Federal Leases....
Cost and fuel storage mostly.
So its probably safest to say that high priced oil invites competitors.
And lower oil prices makes it tougher for them.
So its probably safest to say that high priced oil invites competitors.
And lower oil prices makes it tougher for them.
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Therefor oil prices will fluctuate wildly for the next decade.
Possible, if we knew for sure we could all be John Paulson.
Depending on your meaning of “wildly” that has always been the case of oil. Given the inelastic nature of the demand and supply, it is the reality of the commodity.
Given the inelastic nature of the demand and supply, it is the reality of the commodity.
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My understanding of energy demand has always been that the cheaper the price — the greater the demand. Conversely, the higher the price the lower the demand. This cause and effect is not immediate but rather plays out over several years. That this state of affairs is what we mean when we say that oil demand is elastic.
Oil supply is more inelastic because it is constrained by the limits of technology, natural resources -— as well as the cost of drilling.— But as the fracking revolution has shown—there is some elasticity to supply.
Further, the relative costs of starting and stopping fracking operations are not so great that projects that were halted when oil dropped below $70@barrel won’t be quickly restarted again when oil prices climb again over xxx level. That is, fracking lends an elasticity to supply that wasn’t available before.
how and why do you understand oil supply and demand to be inelastic?
I think the inelastic demand side is the easiest to understand, from a personal level. When prices are high, individuals still need to drive to work, to the grocery store, etc.
They may not take a vacation that year, or combine some trips, but the amount of fuel they buy six months after a price rise, is not that much different than six months before.
In the long run, the population will put higher value on better mpg, living closer to work etc, but that takes a lasting price increase to see the impact.
On the supply, smaller independents can act fairly quickly. Drilling contracts may be out several months but individual land rigs are not typically contracted for many years at a time. But the wells already in service, especially the newer wells are not getting shut down until the expense of keeping them in service exceeds the profit. Most of the money on shale wells is spent prior to production. Once it is in service, it will take a lot to shut them down.
The majors tend to chase bigger projects like offshore platform that can have a ten year window from first dollars spent to production. 6 years into a multiple billion dollar project with 70% of the dollars already spent rarely stops even with the price of oil cut in half. Major projects will more likely slow down than shut down. End the overtime and expediting while excepting some increase in schedule.
blah blah blah
Okay, I was just rolling my eyes on the headline.
If the headline said “Why Prices Will Go Up” and explains that oil will become more costly to find and exploit, I can buy it. I can even expect it. But the headline said prices MUST go up, which sounds like the author is trying to will it back up.
Okay enough about the headline.
Yes, oil prices will likely go up at some point, that is a really safe prediction.
The author is wrong that we desperately need to be pumping a lot more oil from Iraq. There is plenty of untapped oil under the ground, and it might be cheaper to exploit than trying to stabilize Iraq.
I find it more informative to concentrate on the article and not so much on a headline. After all, the headline’s only purpose is to get you to read the article, rather than convey the information contained in the article.
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