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The math is pretty simple: the world consumes 36 billion barrels of oil a year and there are like 2 trillion barrels of known reserves. We have enough reserves
by hippo22 10mo ago
The math is pretty simple: the world consumes 36 billion barrels of oil a year and there are like 2 trillion barrels of known reserves. We have enough reserves for 55 years of current consumption. There’s 0 incentive to find more.
- mothballed 10mo agoThere's a $60+ / barrel incentive to find and extract more.
- twodave 10mo agoOstensibly not all known oil fields are actively being extracted. This fact alone makes it unlikely that discovering a new source would affect the price of oil, unless it can be retrieved using cheaper than the existing methods. It’s also worth pointing out that “oil” as a resource isn’t this homogenous substance. Basically every different source of oil has a different (and expensive) refinement process on the other end. It’s a lot more variables than the Reddit-style armchair oil tycoon would probably expect.
- DANmode 10mo agoNobody was talking about changing the price of oil, though. Just someone getting paid market rate for the additional barrels.
- twodave 10mo agoFair enough, though production does impact price to a degree. For oil this is less important than some other commodities, but it’s still a factor. But this is really a tangent from the central argument that is: oil exploration isn’t so important if we already aren’t producing from many existing known sources, and exploration itself is only sort of loosely tied to selling the end-product in terms of sales.
- mothballed 10mo agoI'm sorry, Reddit-style armchair oil tycoon? I've been using the word "oil" commodity the same way as everyone else has, why did you pick out my comment for that aspersion? Why not upthread when people were discussing 0 incentives? You are applying this aspersion and standard asymmetrically.
- twodave 10mo agoAm I? I think I used it in 100% of my comments before this one… it was not meant as an offense, but more as an acknowledgement that almost nobody here (including myself; I’ll happily take the moniker if you won’t) has the appropriate knowledge to argue this topic.
- igftiuhugfduh 10mo agoNew exploration is in the $35-40 break even range, not $60. A well with $60 break even is a poor investment right now.
- mothballed 10mo agoIncentive != break even point. $35-40 takes into account the risks and time value of the investment, potential price fluctuations, and the preference for (all else equal) lowest cost extraction. I would not expect someone to dump in a shit ton of money, hope the well works out, and nothing else go wrong right at an expected cost at $60/barrel with amortized investments/operations included.
- manwe150 10mo agoTo follow up on that, I think that 50 year horizon number has even been the case for something well over 50 years now. It seems we are incentivized currently to extract from deposits around that threshold of years? One professor I had even claimed this will always hold true indefinitely, since at some point we’ll switch away from oil, this holding constant there being about 50 years of known reserves left, once it become economically infeasible to extract that oil.