Gene Epstein usually puts together much better articles and for this one he should've looked around a bit harder for sources.
Current wisdom is that N. American and some Middle Eastern producers may raise production to pressure Russia. This may not work: 1. trying to supplant the #3 or #4 producer in the world may be difficult and 2. China, Iran, and Venezuela (the #4, 5, and 10 producers) may do some deals with Russia to contradict US and western European efforts.
Some factual problems with the article:
1. Growth in oil consumption is already very low (world wide growth of 0.6% 2012 to 2013 and expected 2.0 % growth 2012 thru 2014). Growing or shrinking huge numbers by more than single digits is difficult without unpleasant consequences.
2. The US consumes 18-20 million barrels oil/day. The US produces ~10 million bbls oil/day. Anybody that thinks the US will be energy independent via only US oil production is either uneducated, delusional, or dishonest. A large percentage of the oil being produced from "shales" is very light oil with a large fraction of that not being amenable to gasoline or diesel production without catalytic reformation. Morse does go on to include Canada and Mexico as enablers of "North American energy independence" but Mexico and Canada won't do anything outside of their economic interests so worldwide supply disruptions won't miraculously spare the US from price fluctuations. Oil goes to the folks paying the highest price. Some oils are exceptions, e.g. Bakken, and are treated more like natural gas but that is a temporary phenomenon.
3. Yes, combustion engines can burn stuff other than gasoline or diesel but in the US there is an effective ban on pipeline construction that would enable greater utilization of those fuels. Note GE toning down/backing away from their NGL refueling stations. If readers are thinking electrical or hybrid vehicles, then they should try to grasp that electricity has to come from something and the most efficient sources of electrical power generation with sufficient capacity are either natural gas, coal, or nuclear energy - 2 of which are also politically currently disfavored and the 3rd would be if it were possible. The truly interested reader could do the math to figure out what kind of increase in wind and solar electrical power production would be required to supplant 10% of US oil consumption (what I'm guessing would be necessary to produce sustained $75/bbl). The numbers are enormous and given the loss of efficiency, most consumers would not be happy with the integrated costs which would feed back and drive oil back to >>$75/bbl.
4. The statements "... unconventional sources of crude oil totaling more than a trillion barrels ... have been discovered in the past five years. The majority is recoverable at $75 or less, and much is now being tapped." may be true, however, many of those barrels are not saleable at $75/bbl. Chesapeake Energy would be solvent if their liquids sold for $75/bbl. Unfortunately, for them, the going rate is closer to $40/bbl. If it cost folks in the Bakken $75/bbl to produce, then they would be charities at current prices. I suspect the source has conflated proven recoverable reserves vs resources as well as treating all liquids and geographic locations as equivalent. Morse says 1 trillion bbls discovered in past 5 yrs. 33 billion bbls/yr world consumed so I guess this is where he gets his 30 yrs of discovered supply but he doesn't differentiate the percentage of the 1 trillion that is natural gas liquids or condensate or whether his 1 trillion is currently economic. Not long ago Forbes listed the top 10 world wide oil discoveries in 2013. Not 1 exceeded 1 billion bbls (the 5 biggest being 700 to 900 million bbls). Either somebody is lying/misrepresenting "oil" or 2008 to 2012 were spectacularly more successful exploration years than 2013. Given the world wide recession of 2008-2010, I don't think there was a substantial increase in oil discoveries in 2009-2010 (EIA data/estimates support). Wikipedia lists existing total world proven oil reserves as being nearer 2 trillion bbls. This number will probably be stable for at least 10 yrs but I think the claimed 1 trillion addition in the last 5 yrs is ludicrous.
5. Brazilian vehicles running on things other than petroleum? That is a seriously deranged argument. What does he think enables the costs associated with running those 15 million vehicles on ethanol? Apparently, Morse hasn't taken a look at where the cash generated by Petrobras goes and what generates that cash. As for contributions to world oil supply from Uganda and India: color me skeptical. I suspect Indian production will be mostly very light oils and NG. I hope Uganda will become a big real oil producer and does so in an organized and socially productive manner but oil production in Africa doesn't have a lot of good examples.
Costs for finding and producing oil will not drop. Conversely, these and low reserve replacements are the very things that keep oil prices >$100/bbl in the face of very low growth in consumption. I wouldn't be shocked if oil dropped to $85/bbl over the next 5 yrs but I have real money bet on that not being a sustained price. Conversely, avg prices >$110/bbl are much more likely although I think approaching $300/bbl (in 5 yrs) is as absurd as $75/bbl.
AI
