For the most part almost all the cheap, easy oil is gone, with a few exceptions which are usually in politically risky places (like Iraq)
So it is reasonable to expect long term oil prices at or above $50, (not crashing to $20) which makes many of the alternatives economically viable.
One of the other objectives is to get enough renewable energy to help hold down the price of oil. The world economy works much better at $70 than at $100, and the lower price reduces the wealth transfer the oil producing nations.
If the world is willing to pay $120 a bbl, and increase that a few dollars each year, production will not peak for many years - there are Canadian oil sand, sub-salt, Bakken, offshore Africa, more North Slope, etc. But as much as a third of world GDP would go to the energy industry, and this would crowd out investment in other areas, like health care, roads, education, clothing, etc.
So we have more of an economic peak oil, not so much a physical peak oil.
If we look at some fields like Cantarell in Mexico, and the North Sea, those have real physical limits, and can't increase even 5 times the capital investment.
But the rest of the world oil supply has made for the declining field so far.
The scenario where world oil production would slide off a cliff in the next few years - (this has been promoted by Knustler and some others) has been reduced to a very small probability.
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One problem for us on the investing side - many investmnets, like oil sands and alternatives, have break even at various prices, some at $40, some at $60, some at $80.
The long term oil price moving a few dollars can mean going poor investment to a great one or vice versa. |
