RC, I'm going on the assumption that we are at or near peak and that the reason investment in exploration and drilling is low is because it is unlikely there are any large finds left. Certainly no one wants to invest in a bunch of dry holes, in oil that cannot be produced because it does not exist, at least not in any large, easily accessible agglomeration.

And I don't think many people feel that any combination of "renewable" or alternative energies can scale up at a rate fast enough to at least keep up with the ongoing declines in overall production.

So I see the Saudis and the other exporters with declining production continually exporting less and less, but at ever higher prices. This is the first part of Westexas' breakdown, where the exporters will still see increasing income in spite of declining exports. Westexas suggests a point where their exports will decline that the cash flow will also, but I suspect that this will come quite late in the game, if it does at all.

Actually, I suspect that we will blunder along as we have, with oil prices swing up and down, but mostly up, with shortages and crises cropping up more and more frequently and working up the worldwide economic food chain. I can see this continuing for 2-7 years; at some point in this timeframe it will become clear that we are not only post-peak, but a critical mass of the investor/financial world will realize that the 200+ years of more or less continuous economic growth is over, forever. Markets will crash and a worldwide depression would ensue. Oil might go to $5 bucks a barrel, but at that point it won't matter, as $5 then would likely be the equivalent of $500 now. And in seven, or even ten years time, there is nothing that alternative energies, electric cars, hybrids, etc. will be able to do avert any of this.

If the Saudis are afraid of electric cars, battery tech, hybrids, etc., then they are afraid of shadows.

Antoinetta III