Why We May Never See $100-a-Barrel Oil Again
‘Race for What’s Left’ author surveys geopolitical fortunes in aftermath of a pricequake.
Pricequake: Recent turmoil could spell doom — not just for ‘tough oil’ projects now underway — but for some over-extended companies (and governments) that own them. Oil barrel photo via Shutterstock.
To put things in perspective, it was not so long ago — in June 2014, to be exact — that Brent crude, the global benchmark for oil, was selling at $115 per barrel. Energy analysts then generally assumed that the price of oil would remain well over $100 deep into the future and might gradually rise to even more stratospheric levels. Such predictions inspired the giant energy companies to invest hundreds of billions of dollars in what were then termed “unconventional” reserves: Arctic oil, Canadian tar sands, deep offshore reserves, and dense shale formations. It seemed obvious then that whatever the problems with, and the cost of extracting, such energy reserves, sooner or later handsome profits would be made. It mattered little that the cost of exploiting such reserves might reach $50 or more a barrel.
As of this moment, however, Brent crude is selling at $33 per barrel, one-third of its price 18 months ago and way below the break-even price for most unconventional “tough oil” endeavours [Editor’s note: Since this story first appeared, prices fell below $30 per barrel].
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