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Oil prices aren't particularly low by historical standards. https://imgur.com/a/twnV7GZ https://imgur.com/a/twnV7GZ So I'd guess that the "decade of losing mo

Oil prices aren't particularly low by historical standards. https://imgur.com/a/twnV7GZ https://imgur.com/a/twnV7GZ So I'd guess that the "decade of losing money" is due to poor economics of individual wells, where production dramatically falls over time. That requires more and more capital for new wells just to maintain constant volumes. If you only look at aggregates it can appear there's a boom, when in reality it's a bit of a shell game that only works as long as you're constantly drilling new wells.

mirimir 8y ago
> Oil prices aren't particularly low by historical standards. True. But I think that fracking only became financially viable (or at least, plausibly so) when oil prices were at historic highs. Similarly for tar sands. But there have also been subsidies, to help ensure adequate domestic production. For the oil and natural gas industries overall. And this will be the go-to technology as traditional oil and gas reserves dwindle. At least for petrochemicals.
- xref 8y ago
  Shale became economically viable due to fracking, whereas previously shale had to be steam heated to release the oil which is extremely energy intensive and thus expensive, which is why Shell tried it in the 70s but abandoned the tech.
- hermitdev 8y ago
  Fracking is a more expensive means of extraction than traditional drilling. IIRC, the oil is also of lower quality. I dont recall the precise price, but fracking is only profitable if crude is over ~$80/barrel.
  - CuriouslyC 8y ago
    The number for at least one major petrochemical company is closer to $30/barrel
Nasrudith 8y ago
Really it is a matter of diminishing returns of cheaper oil - the easier wells and methods of extraction get depleted and while it is possible to reduce the extraction costs through technological advancement it is very unlikely it will ever reach historic lows. Just like how surface deposits of copper and bronze and especially native ore were quickly depleted in areas with long term civilizations.

mirimir 8y ago

> Oil prices aren't particularly low by historical standards. True. But I think that fracking only became financially viable (or at least, plausibly so) when oil prices were at historic highs. Similarly for tar sands. But there have also been subsidies, to help ensure adequate domestic production. For the oil and natural gas industries overall. And this will be the go-to technology as traditional oil and gas reserves dwindle. At least for petrochemicals.

xref 8y ago
Shale became economically viable due to fracking, whereas previously shale had to be steam heated to release the oil which is extremely energy intensive and thus expensive, which is why Shell tried it in the 70s but abandoned the tech.
hermitdev 8y ago
Fracking is a more expensive means of extraction than traditional drilling. IIRC, the oil is also of lower quality. I dont recall the precise price, but fracking is only profitable if crude is over ~$80/barrel.
- CuriouslyC 8y ago
  The number for at least one major petrochemical company is closer to $30/barrel

Nasrudith 8y ago

Really it is a matter of diminishing returns of cheaper oil - the easier wells and methods of extraction get depleted and while it is possible to reduce the extraction costs through technological advancement it is very unlikely it will ever reach historic lows. Just like how surface deposits of copper and bronze and especially native ore were quickly depleted in areas with long term civilizations.