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Surprisingly, we can produce oil for even less than $5/bbl out of existing reservoirs. I can't imagine any new project every going ahead at a $5/bbl price, but
by iamthemonster 7y ago
Surprisingly, we can produce oil for even less than $5/bbl out of existing reservoirs. I can't imagine any new project every going ahead at a $5/bbl price, but the facility I work at could go for years and years at a lifting cost of $5/bbl. And if demand is in enough decline, then you don't even need any new projects. I'm not saying that $5/bbl is credible, but there is absolutely nothing to guarantee that prices will increase from here.
On another topic, unfortunately this is a 'massive moment for renewable energy' but not in a good way. Their great competitor, fossil fuels, have now just tripled their cost-effectiveness. And government subsidies for renewables are also being pinched to balance budgets.
In an interesting twist, the fossil fuel company I work at are now on the hunt for 'distressed assets' in the renewables industry.
I have no idea what our current situation means long term for climate change, but cheap oil is going to be with us for some time now.
- AnthonyMouse 7y agoI didn't mean to suggest that nobody can extract oil at $5/bbl but rather that not everybody can. When the people who can't do that go bust, supply goes down, price goes up. Also, $5/bbl would generally tend to stimulate demand -- not in the midst of this coronavirus obviously, but eventually that will pass. Oil was above $60/bbl three months ago. A rebound wouldn't have to be $60, it could just be $20 or $30. It would only stay around $5/bbl if we actually do the carbon tax or something of a similar nature. That could suppress demand to an arbitrary degree indefinitely and then wholesale prices might never rebound.