21 October 2006

Yeah, Sure, "Cheney"

A University of Washington "economic geologist" claims that the Earth has "lots and lots" of oil.
Eric Cheney said Friday in a news release that changing economics, technological advances and efforts such as recycling and substitution make the world's mineral resources virtually infinite.

For instance, oil deposits unreachable 40 years ago can be tapped using improved technology, and oil once too costly to extract from tar sands, organic matter or coal is now worth manufacturing. Though some resources might be costlier now, they still are needed.

"The most common question I get is, 'When are we going to run out of oil?' The correct response is, 'Never,'" said Cheney. "It might be a heck of a lot more expensive than it is now, but there will always be some oil available at a price, perhaps $10 to $100 a gallon.
It's not apparent whether this is economics or geology speaking. It is basic economics that we will never run out of oil, we'll just pay more and more until substitutes are found that make sense at a given price. As far as that's concerned, I'm told by friends in the oil business that they need to be assured of long-term prices above $60 per barrel to make investments in substitutes pay-off. As OPEC must know that, too, I suspect that it'll be a while before we see long-term prices above $60 per barrel.


Hey Skipper said...

Saudi Prince Faisal (sp?), undoubtedly no fool, said this when OPEC was first flexing its muscles:

"The stone age didn't end because men ran out of stones."

Susan's Husband said...

That would explain why $60/barrel was in fact OPEC's target price. The Saudi Entity has always known this and has opened its spigots when possible to keep down prices for precisely this reason.

Bret said...

David wrote: "I suspect that it'll be a while before we see long-term prices above $60 per barrel."

Every NYMEX crude contract from this December's through Dec 2012 is over $60/bbl and has been for quite a while.