Will oil prices 3 to 5 years from now go down, down, down like natural gas prices have? I hope not. I don't personally think oil will go down in price as drastically as gas has done. Maybe it will settle down at around $80-$85 per barrel. What do you think? Come on don't be bashful. Comments welcome.
Clint Liles
The EIA says a slight year to year increase. They have not been right yet.
The old rule of thumb on oil as a commodity was that when a correction came, it was on the magnitude of 20%. Now the run up is quicker and the fall is deeper. Look at a historical chart since 2001 and you will see the corrections that I am talking about.
Clint:
I agree with what Buddy has to say and where these corrections level off is a guess. As a mineral owner for several years, I have investments in oil company's operating in the Bakken. My thinking is that over the next 5 years, the amount of oil being produced by the major shale plays to the North including the Bakken, Niobrara and Canadian, will produce massive amounts of crude. I believe that investments in company's that provide transportion services to get this crude to market would be a good investment.
I think the sustainable floor for oil at this point is $80.00. I also believe that oil would have to remain at $70.00 or higher for shale play wells to be cost effective. I would think if oil ever drops below $65.00 and stays at that level for a long period of time that all drilling/frac'ing would come to a screeching halt in the US
Another concern is that OPEC is very aware of our desire's to become independent from their oil, I suspect that will crank up the volume and do everything they can to bring oil prices down so that frac'ing and shale plays are not cost effective.
I am going to drink some scotch and try not to pay any attention..
Mr. Harrison, I think I will have one with you, thanks. With soda and a twist.
In spite of the spare capacity rhetoric by KSA the world uses 91 million barrels per day and we are producing wide open to meet those needs with very little margin for a hiccup. Every year, without fail, the worlds production capacity declines by 5% from natural depletion. That means the world has to find 4.5M barrels per day of new production each year just to stay even. And that is all the world has been able to do since 2002 is stay even. As 3rd world countries emerge they use more and more fossil fuels each year; don't quote me on this but I believe there will be 28M new cars sold in China this year and that means only about 9% of the population will have private transportation. The EIA says that by 2025 the world will need 40% more crude oil than it produces now each day... somehow we gotta produce 36,000,000 more barrels of oil each day by then than we do today. Don't forget decline rates. We are in deep, deep doo-doo. Whatever temporary reprieve the US gets from liquids out of uncoventional shale (not anywhere close to replacing the 8.9M barrels per day we now import from foreign countries), oil is a world commodity set by world prices.
In 5 years, by 2017, with no war between Israel and Iran, $150.00 a barrel and 5 dollar gasoline. After that, air up the bicycle tires.
It is hard for me to believe that Iran would nuke Israel when the Dome of the Rock - that Muslim holy place - is there. I think it is more likely they would nuke the Saudi oil fields. Iran has no love for The House of Saud either. I can not guess how high the crude price would go!
The Canadian, actually Saskatchewan govt has guaranteed price stability to operator s to attract activity. One way the do this is offering. 5% royalty and a 100000 barrel royalty holiday. I have to believe reserves will be stored up by companies. They’ll sell freehold oil cheeper oil prices and then sell the oil from their own land whenever prices are up. Its business.