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Algora Publishing - Equilibrium oil price about $80
                                               For a Kinder, Gentler Society
Tuesday,
Equilibrium oil price about $80
At just over $100/barrel reserves are massive, with shale oil alone able to meet requirements for many years.
The Financial Times

From Mr Barrie Bain.

Sir, Ed Crooks’ interesting article and the accompanying graphics (December 22) would, to a simple eye, seem to suggest that at $70-$80 per barrel we have more than adequate reserves of oil for the foreseeable future, if established unconventional reserves such as oil sands and shale oil are included.

At just over $100/barrel reserves are massive, with shale oil alone able to meet requirements for many years. Clearly there is not enough oil to meet global requirements at $40, but at $100 the economics for vast quantities of unconventional oil are good. This would suggest an equilibrium price somewhere between the production cost of conventional oil and the mid-range cost of unconventional oil – probably somewhere around $80.

Prices at these levels would appear to provide sufficient stimulus for developing unconventional production (and enhanced recovery at established conventional oil fields) ensuring adequate oil supplies at under $100/barrel. The data presented undermine the arguments of “peak oilists” and those who argued we were heading for long-term pricing of $200/barrel.

Barrie Bain,
Director,
Fertecon,
Tunbridge Wells, Kent, UK

Equilibrium oil price about $80