Anders Lindman
01-10-2007, 01:03 AM
Cheap oil is oil that is located under high pressure. Since the pressure is so high, much of this oil can be pumped out very easily and therefore for a low cost. Cheap oil reserves have probably peaked a looong time ago, but it takes many years before that has any significant effect on the oil price because even though the cheap oil has peaked, it can still be pumped out of the ground in the same easy way and in equally large quantities, all the way until the high natural pressure is no longer high enough.
The last years we have seen a tremendous increase in oil price and today the price is something like $80 per barrel. One guess is that cheap oil can be produced for under $10 per barrel and a price as high as $80 indicates that the cheap oil reserves are really becoming depleted and that more expensive oil extraction methods now have to be used for a significant part of the world's oil production.
The question is how difficult it is to extract the non-cheap oil. Cheap oil only makes up a fraction of the oil reserves, so there should be huge reserves of oil left in the world, and if it costs say $40 per barrel to produce this oil, the reserves would still last for a long time if the oil price remained around $80 per barrel. But if the non-cheap oil is exceedingly difficult to produce, then the oil price would have to increase tremendously for the production to be profitable.
So how difficult is it to produce non-cheap oil? Isn't that something that is extremely important for the public, economists and politicians to know? Why haven't we heard any info about this? Is important info about oil production being hidden from the public?
http://www.ncmedia.com/images/oil.gif
The last years we have seen a tremendous increase in oil price and today the price is something like $80 per barrel. One guess is that cheap oil can be produced for under $10 per barrel and a price as high as $80 indicates that the cheap oil reserves are really becoming depleted and that more expensive oil extraction methods now have to be used for a significant part of the world's oil production.
The question is how difficult it is to extract the non-cheap oil. Cheap oil only makes up a fraction of the oil reserves, so there should be huge reserves of oil left in the world, and if it costs say $40 per barrel to produce this oil, the reserves would still last for a long time if the oil price remained around $80 per barrel. But if the non-cheap oil is exceedingly difficult to produce, then the oil price would have to increase tremendously for the production to be profitable.
So how difficult is it to produce non-cheap oil? Isn't that something that is extremely important for the public, economists and politicians to know? Why haven't we heard any info about this? Is important info about oil production being hidden from the public?
http://www.ncmedia.com/images/oil.gif