Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Yes, I see your previous post--and my clever comment! My point, regardless of whether the curves of supply/production or demand/consumption are theoretically  or practically correct, is that there is an assumed price for oil in, say, 2020, that is not exposed in Jerome's chart.

Who cares if there is plenty of oil to be burned if it costs $1000 per barrel? Who cares if I am forced to turn off my furnace and never travel? I'm sure that the millionaires in China will be driving around in their Buicks.

General Motors says it has become the first global automaker to sell 2 million vehicles in China in a single year.But the bigger news is GM is on track to sell more cars in China than in the U.S. this year.

Through October, GM has sold 1.8 million vehicles in the U.S.October sales of Shanghai GM's Buick brand jumped 35.7% on an annual basis to 54,490 units. Demand for both the new LaCrosse sedan, seen in that photo above, and the smaller Excelle, known as the Regal in the U.S., rose more than 40% year on year.

http://content.usatoday.com/communities/driveon/post/2010/11/gm-general-motors-china-buick-lacrosse- regal/1

by asdf on Thu Nov 11th, 2010 at 01:22:40 PM EST
[ Parent ]
in that graph. It relates to the "discovered, but yet to be developed" component. This stuff (most of it) would never be developed if the price were not high enough, because it's too expensive to extract, or was until recently.

That's another significant element of the equation. If oil is $100 a barrel, then it's worthwhile spending $80 to extract the difficult stuff. But it's not a fundamentally very productive endeavour. In fact, it's a matter of pouring more and more resources (skills, machinery, energy etc) into a vanishing resource. Not a very smart strategy.

This is what they mean when they say that the market will provide if the price is right. Though I think that they are materially wrong on that. Canada has the world's second biggest hydrocarbon reserves. But they just can't seem to ramp up production the way the economists predicted. It's just too hard.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu Nov 11th, 2010 at 05:31:38 PM EST
[ Parent ]


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