Archives December 2014

Economics of Oil

Advances in technology such as seismic imaging with Dawson Geophysical and horizontal drilling with Schlumberger have dramatically changed the economics of oil and gas extraction. The change in oil economics is so profound that the cost structure of hydrocarbon fuels will reverberate through the global energy market and impact pricing of renewables energies and investment decisions. So profound are these changes that the US has surpassed Saudi Arabia and emerged as the world’s largest oil producer.

With the price of oil falling as a result of large production gains in US oil production. The price of oil is may fall below $40 per barrel according to an article in Barron’s The Case for $35 a barrel Oil suggesting further oil price declines are possible.

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