Two barrels of oil are used for each one found. $100 oil anyone?
For the peak-oil crowd, that merry band of doomsters who believe global oil production is about to go into irreversible decline and plunge us into a new Stone Age, the timing couldn’t have been better. As the Association for the Study of Peak Oil and Gas was holding its conference in Cork, Ireland, earlier this week, oil prices conveniently set record prices. By midweek, they had gone as high as $82 (U.S.) a barrel.
The conference speakers were no doubt thrilled. If oil prices had been falling, their message would have been laughed out of court. As it were, Ronald Oxburgh, the British lord and geologist who is the former head of Shell U.K., one of the world’s biggest oil companies, looked like something of a prophet. He said oil prices could hit $150 as supplies fail to keep pace with soaring demand. Another speaker, CIBC World Markets chief economist Jeff Rubin, predicted prices of “around $100 a barrel by the end of next year.” Talisman Energy chief executive officer Jim Buckee talked about rapidly declining production from once-prolific and seemingly stalwart oil fields.
For years, decades even, the peakists have been considered the lunatic fringe by the mainstream oil and gas industry, with its visions of endless gushers. The industry had a simple but compelling argument: If you don’t believe us, listen to the economists.
The economists said - and still say - there is no shortage of oil; there is just a shortage of oil at low prices. If the price, say, doubles, the reserves will rise accordingly (though not necessarily on a 1-to-1 ratio). Higher prices means expensive reserves, like Alberta’s oil sands, can be commercially produced. Higher prices finance fatter exploration budgets and better oil extraction technology, and lure more talented geologists into the business.
Read the full story at: Globe and Mail
