The Rising Influence of Rising Affluence

[OakesCS]

i think there is some spin here regarding the word 'supply' vs 'proven reserves'. Supply in this case refers to what is being produced versus what could be produced and that is where the money being discussed is spent.

I also dont understand why the author differentiated oils in the way that he did. From a downstream perspective, oils from deep/ultra-deep water, oil-sands, and 'conventional' reservoirs are a lot more similar to each other than to the 'oils' produced from shales like the Marcellus and Utica which are what i think he's calling NGLs. The costs of developing 'light-tight', oil-sands, and NGL reservoirs are all over the map so i think his 'distinction' is BS.

the bit about $/bbl prices is also deranged. I wouldnt be surprised if oil from oil sands is currently trading nearer to $50/bbl than $90. "Conventional" crude (what i think most folks would interpret as WTI, Brent, LLS, Arab, etc) generally trade at a premium to oil from oil sands or the Bakken (which i would consider to be 'light-tight'). I think condensate oils are trading in the $30s/bbl (again, what i think he's calling NGLs).

if crude prices get to $10/bbl, then it will be a world without automobiles with combustion engines. Batteries dont run on fairy dust so i don't see that being the cause of conventional automobiles disappearing.

the big capex is spent on oils which i suspect are generally <40 API whereas NGLs are generally >50 API. I think it would've been much wiser to differentiate the oils being discussed based on their average C number, viscosity, and sulfur content (or other compositional variables) rather than a mixed reference frame of reservoir types and gas association.

wikipedia has a nice graph in their 'price of petroleum' entry which shows crude oil prices in 2011 dollars which makes it look like oil is expensive now (e.g. similar to late 1970s thru mid 1980s), c.f. http://www1.eere.energy.gov/vehiclesandfuels/facts/2012_fotw741.html
I suspect that prices now will look like a bargain in another 10 yrs.

while i disagree with the title and its related points, i agree with the point that supply will have a hard time meeting demand and that will sustain and increase prices over the long haul.