Oil below $100 If oil prices were to stay near $100 barrel (in constant US dollars) for approx 1 year it would enormously increase the available oil supply, thereby decreasing the cost. An example of the immense increase would be the addition of the massive amounts of oil in oil shale to the available reserves (there is more oil in oil shale then ALL known conventional oil reserves, but most of these reserves are not generally exploitable below about $60 - $70 barrel using current technology) In addition, a massive number of "capped wells" would be reopened as the price of oil climbed, most of these still contain oil but require steam and/or pressure to extract the oil. At well below $100 these would again prove economical and surprisingly they have huge amounts of oil remaining. Next, low grades of oil (heavy & sour) which cost more to pump/refine would become economical. The amount of oil that COULD be pumped is far less then is pumped. A good example is the US. The US has approx 2% of the world''s proven oil reserves, but up until a year or so ago, we were the number 2 producer in the world, just behind Saudi. Now (because of the price run up) we are number 3, just a hair behind Russia. Finally, at a point even lower then the current $50 - $60 per barrel you pass the break-even point for the Coal to Oil conversion using Fischer-Tropsch technology. (break even is about $35 - $40 a barrel). However, considering the start up costs no one is going to invest the several billion it takes to build these plants until it is clear the price of oil will STAY above this point. That day, even with today''s high oil prices, has not yet happened. Arthur |