Real Wealth #092 02/19/2007
If only 8% of the world's oil has been discovered. Why is every one worried about oil supplies?
I hope your having a great holiday weekend.
I just came across this story, Financial Times of London reports a newly released study confirming what I've been saying for the past several years. Which is: only 8% of the world's total oil supplies have been discovered.
This may sound like extremely good news, but the fact is the rest of the world's oil resources are going to be much harder to locate and much more expensive to extract.
The easiest and most inexpensive sources of oil have already been found. New oil fields will come from either deep below the world's oceans, or from enviromentally sensitive locations. This reminds me of an old friend in the oil industry and how he used to tease me by saying...
"Yes, Peter, but at $1,000,000 a barrel to go, get it and bring it back, its not likely to be worth it." .
"Then we'll just have to ALL move to Mars."
"But Peter, its lke 100 below zero on Mars."
"We'll James, I didn't say it would be easy. Atleast it was an idea."
Study sees harmful hunt for extra oil
By Carola Hoyos in London
Published: February 18 2007 22:05 | Last updated: February 18 2007 22:05
All the world's extra oil supply is likely to come from expensive and environmentally damaging unconventional sources within 15 years, according to a detailed study. This will mean increasing reliance on hard-to-develop sources of energy such as the Canadian oil sands and Venezuela's Orinoco tar belt.
Meanwhile, demand/consumption is rising steadily therefore we remain bullish on the oil for the long term and believe any short term fluctuations will do little to subside the longer term upward trend in prices. Energy over the next several years will be one of the hottest sectors in the world's financial markets.
One should not make the mistake of thinking of energy as a primarily politically driven commodity. Yes, supply interruptions caused by conflicts, terrorism and political chaos in the major oil producing regions and states have the power to drive oil prices much higher. Those forces however are short-term and transient in nature. The longer term funadamentals of supply and demand can only mean higher, much higher oil and energy prices.
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