Because nothing, especially nothing of this extraordinary magnitude, ever does.
........
Well, I don’t know if you were around in the 70’s but imho today is a reversal of what happened in those years.
I’ve done some studying up on the oil industry. American oil production went straight up after WWII...until 1970 when it was stopped cold. I mean if you look at a graph of American oil production it looks like it was cold cocked in 1970.
What happened?
Saudi oil production started going up by a million barrels @ day just like american oil production is going up by 1 million barrels @ day today. But Saudi oil production went straight up for six years through 1975. Each year they raised oil production by 1 million barrels a day. They went from oil production of 3 million barrels a day to 9 million barrels a day. Then for the next five years between 1975 and 1980 their oil production went up another 3 million barrels a day.
Here’s the kicker.
It cost the saudis between .25 and .50 a barrel to get the oil out of the ground. It cost them 1.25 to ship the oil anywhere in the world. That’s why US oil production died. US driller couldn’t compete. But once the Saudis gained control of production—then they jacked up prices in two moves in 1973 and and 1979.
Now the demand for oil is so high around the world—that the saudis can’t keep up with it and prices are high.
This has left a tremendous opening for high cost US oil drillers where there was no opening before. So US drillers will be able to raise production for the next couple years without prices getting cut.
Falling prices is what will kill US oil production. But that’s not going to happen until until other countries learn to frack in volume. That won’t happen for at least another five years.
So you’re right that it will end at some point.
In the bakken the best estimates that I’ve seen so far is that production will keep rising for roughly another 2 years until 2016 and peak out at roughly 1.3-1.6 million barrels@ day. Then it be pretty steady for the next ten years—before going into decline.
I think that after 2020—the oil industry is going to be faced with steadily falling prices as competition from natural gas houses trains trucks and buses plus electric cars take the first tiny bites out of demand. But the fall will be a decades long process.
By 2020 bakken costs should be down far enough to withstand the first rounds of oil price cuts. But the impossibly amazing days will have passed by then anyhow.
Not till 2025-30 will oil start to appear in the rear view mirror of North Dakota history.
In the meantime, these are the good old days for oil in North Dakota. Tell everyone to sock away as much money as they can. Because when its done. Its done.
In the meantime, North Dakota and a half dozen other places around the USA are steadily re capitalizing the USA.
That’s serious thing. Whereas the fed is playing with funny money. The fracking revolution is creating real wealth again for the USA. That’s why the dollar has been going side ways for the last couple of years. The the downward pressure on the dollar caused by the feds many QE’s is being met by the upward pressure on the dollar by steadily increasing US oil production—which is literally shifting capital flows around the world—in favor of the US dollar.
(This as I didn’t quite get around to mentioning is a reversal of the situation in the 1970’s when the dollars went overseas—and the USA was forced off the gold standard.)
I don’t think we disagree much.
I’ve just gotten old enough now that when I hear someone (not you) say, “It’s different this time,” I begin to edge toward the exits.
The thing that bothers me most is that, as I said in the other post, these days up is down, good is bad, lies are truth...the whole world seems at cross purposes and there is this grave cold sense that something is dreadfully wrong.
There was a sense that something was out of kilter during the dotcom boom, which was supposed to be different.
There was a similar sense in the year leading up to the 2008 collapse.
But in those cases it was mostly the air of gold rush fever that made one uneasy. Now we have certain segments of the economy in which the fever seems even more heated...but on top of that we have a president who actively disdains achievement and accomplishment, we have a leftist party in charge of much of the nation that values weakness over strength, destruction over construction, poverty over prosperity, irrationality over good sense and raw power over anything else.
The world is out of plumb, my FRiend. I still think very hard times are coming sooner rather than later.