If history is any guide oil prices could range in $40-100 band for a long time
If history is any guide oil prices could range in $40-100 band for a long time. We have long described the peak oil arguments in terms of rising cost of marginal production. If one looks at long-term charts of oil prices we can see that despite volatility and a number of decade-long bull markets, once supply catches up with demand, prices retreat to wherever the cost of marginal production has increased to. 50-60¢ was the level at which demand returned to dominance prior to 1933. After WWII prices were held at $1.80. The 1970s saw a great deal of disruption and volatility but prices stabilised above $10, which represented the point at which marginal supply was no longer viable. The upper side of that 25-year range was around $40, which remains an important level. A great deal of offshore and unconventional oil is uneconomic below $40. Likewise a great deal of the same production becomes highly economic around $100. If history is any guide oil prices could range in that band for a prolonged period.
Fuller Treacy Money is one of the world's most highly regarded research services covering global strategy and investment trends. Produced by Global Strategists David Fuller and Eoin Treacy, Fuller Treacy Money analyses the major markets - stocks,...
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Fuller Treacy Money is one of the world's most highly regarded research services covering global strategy and investment trends. Produced by Global Strategists David Fuller and Eoin Treacy, Fuller Treacy Money analyses the major markets - stocks,...
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