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The world is "awash" in oil at $110, but that oil simply can't be produced fast enough to meet demand. That's the fundamental problem.
by jofer 13y ago
The world is "awash" in oil at $110, but that oil simply can't be produced fast enough to meet demand.
That's the fundamental problem.
- liber8 13y agoThis is provably false. If oil couldn't be produced fast enough to meet demand, the price of oil would not be $110 a barrel, it would be $110+x per barrel, where x is the maximum number of dollars people are willing to pay to use the available supply of oil. This thinking generally leads people to miss OP's point, which is that the world will never run out of oil. Price will always fluctuate to meet demand (so long as we let the market set the price).
- fleitz 13y agoThe oil business does not get disrupted by 3 kids in an apartment with $20K. If you want to open an oil field or a refinery you need billions of dollars and a financial projection that says the oil will stay at $X dollars for at least Y years. Since most people aren't convinced that oil will stay at $110 dollars for the foreseeable future they'd rather not risk billions of dollars. If you can accurately predict oil prices stop reading hacker news and open a commodities account.
- jofer 13y agoYou misunderstood what I'm saying. It has nothing to do with economics or disruption. It has _absolutely everything_ to do with geology. The hydrocarbons that become economic at higher oil prices fundamentally cannot be produced as quickly as conventional reserves. It's a matter of permeability. Not a matter of economics. Also, I'd wager I'm far more aware than you think of the investments required to explore, develop, and produce a prospect. (I know nothing about refining, though.)