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Oil will be priced according to supply and demand. There may still be use cases which require oil. And however cheap the competition can produce oil it will be priced. This is non-news.
Oil will be priced according to supply and demand. Supply, demand, and subsidies.
Oil will be priced according to supply and demand. There may still be use cases which require oil. And however cheap the competition can produce oil it will be priced. This is non-news.
Oil will be priced according to supply and demand. There may still be use cases which require oil. And however cheap the competition can produce oil it will be priced. This is non-news.
It can't be priced below the cost of extraction (not without subsidies anyway).
"Cost of extraction" is a fuzzy term. If it costs $100 to set up a well that lasts 10 years and $1 to pump 1 barrel of oil a year, then is the economic cost is around $11 per barrel (loosely estimated) and the marginal cost $1 per barrel.
This is how an existing well can price below the economic cost of extraction but above the marginal cost. It doesn't make sense to compete with them by setting up new pumps. But pumps last a long time, and there are a lot of pumps out there.
Earlier quoted context omitted.
Oil will be priced according to supply and demand. Supply, demand, and subsidies.
Isn't that the case for everything, including green energy tech?
Oil will be priced according to supply and demand. There may still be use cases which require oil. And however cheap the competition can produce oil it will be priced. This is non-news.
The moment renewables are cheaper than oil extraction they have won. The issue is just that oil extraction costs, while exant, are quite low for some types of oil. As a long term trend though I guess we'll see energy become cheaper and cheaper in a competitive race, driven by the wish for the market to adopt renewables. So hopefully we'll soon live in a world where energy is cheap and green :).
Earlier quoted context omitted.
Not quite. Oil and its derivatives are also subject to heavy subsidies and taxation. These "corrections" are supposed to take into account external costs and benefits that wouldn't be otherwise in the price but, unfortunately, it is also susceptible to corruption. In the case of oil the external costs are so large that taxation can completely take its competitive edge.
Claiming that oil is subsidized is a tired trope. Yes you can argue that the Iraq War was done for oil, it's just not a strong argument. Many oil producing nations use oil revenue to subsidize everything else they (the government) wants, so the subsidy argument stands on weak footing for both consuming and producing nations. Oil has unpaid for economic externalities, specifically climate change. This is not the same…
(The article also discusses some of the indirect subsidies that you're describing as a 'tired trope', but the main theme is economic stimulus that directly supports extraction, exploration, distribution, transport and consumption of fossil fuels).
https://www.vox.com/energy-and-environment/2017/10/6/1642845...
Oil will be priced according to supply and demand. There may still be use cases which require oil. And however cheap the competition can produce oil it will be priced. This is non-news.
OPEC are much less powerful than the decades of past - thankfully - but it'll be a while before oil will be _truly_ priced by supply and demand and nothing else.
Earlier quoted context omitted.
It can't be priced below the cost of extraction (not without subsidies anyway).
> It can't be priced below the cost of extraction "Cost of extraction" is a fuzzy term. If it costs $100 to set up a well that lasts 10 years and $1 to pump 1 barrel of oil a year, then is the economic cost is around $11 per barrel (loosely estimated) and the marginal cost $1 per barrel. This is how an existing well can price below the economic cost of extraction but above the marginal cost. It doesn't make sense to…
Earlier quoted context omitted.
> It can't be priced below the cost of extraction "Cost of extraction" is a fuzzy term. If it costs $100 to set up a well that lasts 10 years and $1 to pump 1 barrel of oil a year, then is the economic cost is around $11 per barrel (loosely estimated) and the marginal cost $1 per barrel. This is how an existing well can price below the economic cost of extraction but above the marginal cost. It doesn't make sense to…
For oil the cost of extraction isnt as simple as you seem to imply. The diversity of what oil can be used for and the value of those things, far exceed to the cost of extracting it. No other material is as valuable and diverse as oil.
This is a statement about demand, not cost.
Nobody is saying oil is going to zero. And the cost curve for oil production varies greatly from well to well. Many wells are already extracting at total costs above price.