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The downside to the current price of oil.

techs

Lifer
Sep 26, 2000
28,563
3
0
As I explained a year ago companies seeking to build or buy or manufacture energy need to have a baseline low price that they can assume oil won't go below.
While people on this board kept saying how the high oil price would spur the creation of many new sources of energy, I kept pointing out that a peak high didn't mean anything.
In fact, about a year ago I said that energy companies were still using 45-50 a barrell as a low when they figured out if it was worth putting billions into an oil shale operation, etc.
Well, now that oil is at 64 it tells energy producers the risk may be too great to spend large amounts of money on energy producing facilities that need oil to remain above, say 60 per barrel.
In fact, the 16 month spike in oil prices was actually just about the worst thing for the long term price of oil. Consumers paid the huge prices, but prices didn't say consistently high long enough for companies to begin large scale projects to produce energy only economically feasible at the higher prices.
 

Engineer

Elite Member
Oct 9, 1999
39,234
699
126
Originally posted by: techs
As I explained a year ago companies seeking to build or buy or manufacture energy need to have a baseline low price that they can assume oil won't go below.
While people on this board kept saying how the high oil price would spur the creation of many new sources of energy, I kept pointing out that a peak high didn't mean anything.
In fact, about a year ago I said that energy companies were still using 45-50 a barrell as a low when they figured out if it was worth putting billions into an oil shale operation, etc.
Well, now that oil is at 64 it tells energy producers the risk may be too great to spend large amounts of money on energy producing facilities that need oil to remain above, say 60 per barrel.
In fact, the 16 month spike in oil prices was actually just about the worst thing for the long term price of oil. Consumers paid the huge prices, but prices didn't say consistently high long enough for companies to begin large scale projects to produce energy only economically feasible at the higher prices.
While that may be true, OPEC cutting 1.5 million barrels per day starting in November and the statement that they are willing to continue to cut until it is above $90 per barrel again will keep people's attention. At some point, enough people will realize that it's only a matter of time before the crap becomes too expensive to use or will be tired of the ME bullshit and push forward a new solution. Might take a few solutions until it's right, but it will happen. Next 10 years? Maybe 20? Maybe 50 but it will happen.
 

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