The end of cheap oil? (and the perils of making predictions)

[jerp]

I was going through a box of old National Geographic magazines in my attic and ran across this one from 2004. The cover story was titled "The End of Cheap Oil". The article quoted a long list of experts on why we were at the "beginning of the end" for cheap oil. WTI was trading around $40 at the time and these experts made compelling arguments on why it would hit $100 within 5 years and as much as $200 in ten years. It was very alarmist "peak oil" theory with catastrophic ramifications for economies around the globe. They were looking pretty smart when it first broke $100 a few years later - I'd like to see what they have to say now with oil at $31 and dropping. To me it is a reminder to take all long term predictions with more than a grain of salt. Technological and geopolitical changes - "unknown unknowns" - make even the smartest futurist's crystal ball very foggy.

[Philip-TX]

Just something for them to put on magazine pages by someone they found that is an expert.

Last week coffee was bad for ya, this week it is beneficial...

And there's this...

"Five years ago at a UN Conference on Climate Change, Al Gore predicted that, global warming having reached such an unbridled pitch, the North Pole might be completely ice-free during the summer of 2014. This climate change crusader had made the same claim when he accepted the 2007 Nobel Peace Prize."

[Shane]

Just about every time widespread "for sure this time" predictions about oil or stocks or real estate or anything else start to gain traction, it's usually a sign that the opposite is about to happen.

[jerp]

Just about every time widespread "for sure this time" predictions about oil or stocks or real estate or anything else start to gain traction, it's usually a sign that the opposite is about to happen.

And now once again, all the predictions seem to be on the same side - that really cheap oil is going to be with us for at least the next few years.
(there is a contrarian voice in my head trying to get my attention but I'm trying to ignore it)

[Shane]

Mine too. I thought a year ago that we'd be back to $60-80 oil by now. That was way wrong, but I never dreamed that the Saudis would hurt themselves so badly in their effort to hurt everybody else. They have a lot of money, but they can't hold out forever. Oil is all they have.

[Ætheling]

Its funny you bring that up.

The only constant in the oil business is its cyclical nature. No matter how long and how severe, declines cannot go on forever. Current oil stockpiles are large, but with production levels in decline and investments long deferred, they will dissipate — setting the stage for a large gap that will require operators to boost production. “The scale of project deferrals suggests that companies will have real growth issues toward the end of the decade,” warns energy adviser Tudor, Pickering, Holt & Co.

So by the end of the decade you just may see your 200 dollar a barrel oil. Supply and demand.

[jerp]

I guess there is just no way to smooth out the boom/bust cycle. Who knows when, but at some point demand will improve due to an improving global economy and the excess production will get worked off. Prices will start to rise and E&P companies will scramble to get rigs back in the field that have been stacked for years. There will once again be talk of shortages and the next boom will be on. Of course the only question that matters is, does that happen in 2018 or 2020 or 2025, or...?

[Jaybo31]

I'll admit....saw the title and got excited

[BrianL]

For anything that has been sold as long as crude has, you can figure out an average historical price. There will be booms and bust, but everything will average out in the end.

[Ksbowhunter]

History tells us that every oil BOOM is followed by an oil CRASH