posted on Oct, 4 2012 @ 09:58 PM
Originally posted by sylent6
What in the world is going on here??
It's complicated, but I expect the price will crash again akin to 2008 and return to the floor as it's a unsustainable price. expect this kind of
market to continue with prices rising dramatically and then falling again. The real problem is the cheaper oil is decling in production. This is no
fault of government, rather it's just the reality of finite oil. Eventually every well runs dry. Now, we are advancing technology to get more out
these wells, but it's expensive and the price gets passed on at the pump. The other problem is this: All other sources of oil are expensive. Read
analysis. The much vaunted Dakota oil shale boom is also adding to the problem. The main points in
the analysis I will attempt speak too.
Presently the estimated break even price for the “average” well in the Bakken formation in North Dakota is $80 - $90/Bbl In plain language
this means that presently the commercial profitability for new wells is barely positive.
In other words, to even make a minor profit with Bakken oil the price must be close to 100 dollars a barrel. Higher if you want a sustainable profit.
The “average” well now yields around 85 000 Bbls during the first 12 months of production and then experiences a year over year decline of 40%
It's live fast, die young at the Bakken fields and that doesn't help any.
With China and India fast becoming larger consumers than the U.S., there just isn't enough to go around. Could we dig new wells? Sure, but it's not
likely to be enough to cover increased demand. These wells are not conventional crude either. This would be more expensive oil and it's price will be
passed on at the pump. Furthermore, when prices go under 110 most of the Oil companies slow down new digging rigs as most of these new rigs require
higher prices to be profitable.
I have no magical fairy wand to wave at this and anyone who proclaims they have a simple solution is full of poop. It's a complex problem, and with
an uncertain future regarding the Earth's climate, I think the woe's are just going to keep stacking up as our population is ungovernable. No one has
the guts to tell American's the truth.
There is of course the problem of Oil companies, but you can't say anything about this without getting red baited around here so I will leave it at
edit on 4-10-2012 by antonia because: added a thought
edit on 4-10-2012 by antonia because: opps
4-10-2012 by antonia because: added a thought