- Sep 26, 2000
- 28,561
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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 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.