Comments on economics, mystery fiction, drama, and art.

Friday, May 30, 2008

The Future of Crude Oil

A very strong piece from the Federal Reserve Bank of Dallas, by Stephen P. A. Brown, Raghav Virmani and Richard Alm, on recent trends and reasonable expectations about the global market for crude oil. Their conclusion:

"The substantial development of these nonconventional oil resources could mean downward pressure on crude oil prices in future years. Actual and expected costs of nonconventional resources suggest it might be difficult to sustain oil prices above $70 a barrel. However, the relatively high costs of these nonconventional oil sources could inhibit development because producers fear losses during a price collapse. The production and use of nonconventional resources would also generate more pollution, which could mean conventional oil could command a premium.

"What’s the bottom line? Absent supply disruptions, it will be difficult to sustain oil prices above $100 (in 2008 dollars) over the next 10 years."


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