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27 comments on From One of Our Insiders: Some Thoughts and Data about Prices and Exploration

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Rick on November 1, 2005 - 6:29pm Permalink | Subthread | Comments top
These insider posts are very helpful. For a change, I can actually see see a silver lining in this situation.

There's no doubt that less oil onstream now will cause price rises, eventually causing more conservation. What's a little different is the fact that this influence on price will result from a restriction in supply rather than an explosion of demand.

This would be good because we'd get fewer emissions now, and the oil is 100% conserved until a later time when it's more precious. Hopefully we'll have economic and strategic reasons to use this oil more efficiently and wisely when we do drill these fields. If we tap them today, they'll simply fill the Silverados and F150s, and be gone in a flash.

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NC on November 1, 2005 - 6:41pm Permalink | Subthread | Parent | Comments top
I don't agree this is a good scenario.  I would prefer a steady, but shallower decrease in supply with the resulting upward trend on prices.  Very sharp changes tend to destabilize the economy, close businesses and put people out of work.

The problem as I see it is that we have an artificial amount of product (oil and gasoline) in the system right now.  With no market signals to curb demand.  We are living off stored reserves that can't be maintained or replaced.  When we come to the end of this artificial supply there will be a cliff drop off of supply that will really force less consumption and spike prices.  

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Rick on November 1, 2005 - 7:22pm Permalink | Subthread | Parent | Comments top
NC-I agree entirely, and I did not mean to imply this restriction in supply would create a sharp increase in price. It probably would not, because the projects being deferred are smaller finds with smaller impacts. And our oil conservation for the future would be more like a jar of pennies than a serious 401K plan.

Steady pricing is the most important factor here. Sustained high prices will cause serious conservation. Volatile prices will cause less conservation as people react to uncertainty: "I'll keep the pickup because gas prices will go down eventually" or "I'll trade down to a small car when gas prices stay really high."

Unfortunately, I expect long-term price volatility (trending sharply up, but choppy), which may give us the worst combination of more pain that results in less conservation.

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ABAPer on November 2, 2005 - 11:04am Permalink | Subthread | Parent | Comments top
Could be like a mini 'Peak Oil' OR 'Peak Reserve' if you like...
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27 comments on From One of Our Insiders: Some Thoughts and Data about Prices and Exploration

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