That $35/barrel figure is "not counting inflation" but still projects a significant drop in oil over the next 20 years.
That presumes some things that I think are questionable, and certainly entail considerable uncertainties at this point. A $35/barrel price implies either decreased demand, increased supply, or both. The increased supply part is possible, but limited, because the cost of bringing new deposits to market will eventually tend to discourage producers from doing so, because it just won't be worth it. The decreased demand part is also possible, but this would require a prolonged global economic slowdown. Not impossible....
There is at least one factor that could cause a significant and prolonged suppression of oil prices: a fundamental shift in energy dependence away from petroleum. Personally, I think this is the only realistic long-term solution. If we remain virtually completely dependent upon petroleum, then in about 50 years (plus or minus 10 years), all the worlds' proven oil deposits will have been totally exhausted, and we will have to close up shop and park all our cars forever. Any residual oil found will likely be prohibitively expensive due to drastically decreased supply. This will also tend to work against the $35/barrel figure, because as the world's reserves are depleted, price will gradually rise, and probably this will be somewhat exagerrated since the dilemma is not a temporary drop in supply, and the markets will discount this fact more and more as the end gets closer.
This scenario also carries a lot of uncertainties... for example, we know the extent of the proven reserves, but we don't know the extent of the total reserves.
But regardless, I maintain that a shift from petroleum dependency is the only viable long-term solution. Oil can drop to $1/barrel and stay there, and we can pump out every single last drop of oil, but the fundamental problem (we are dependent on a resource that is limited and finite) will not be solved at all. It will just be cheaper getting to the end of the road.
JMVHO....
T |
