Quote:
Originally Posted by Shifty86
I'm not an expert and there are a lot of people on this forum that can answer the question better then me but I will give it a shot.
Its a supply gut not an industry gut. Companies are just becoming more innovative and cutting costs with these tight margins.
With this logic why was oil ever over 50$.
These companies have billions invested into these projects and there is a lot of oil in the ground theyre not just going to leave, its not the same as auto makers packing up and relocating their plant to a different location. Government issues are a concern and there is certainly a need for more pipelines but politicians aren't stupid if they want to stay in power they're going to need to be built, Notely already said shes isn't agreeing to a Carbon Tax unless a pipeline is approved. Hopefully the Keystone gets built.
What makes you think oil demand is going to decline over the next 20 years?
The only reason it was over $50 is simple: supply and demand. Fracking wasn't allowed in the states, they had billions locked in the ground, then the goverment, so the states accounted for an extra 1-2million bpd, Iran was locked out until recently, accounting for another 4 mil bpd. Sluggish supply combined with china's incredible growth caused a sustained boom. Of course it overshot, leaving us in a current supply glut.
The jobs that come from the oil industry aren't from already operational projects, most jobs in Alberta's oil industry are from constructing these projects. There are a bunch of projects that have been shelved due to current economics, it'd require oil coming back to 70-80 to make them viable. However, at 50-60, a bunch of idle supply comes in from the USA. Also, the Saudis have extra supply.
My point is, Alberta is a high cost oil producer, and we are faced with excess supply and lower cost producers ready to jump in at certain price points. Thus, the only thing that might get us there is a huge increase in demand.
That brings us to long term oil forecast. Although we will always use oil in some form (energy, plastics, lubricants, etc etc), I think our global economy is moving away from oil. I look at companies like Tesla, which is just fantastic what they're trying to accomplish, against all odds, not only do they need to build electric cars...but they need the range, charging stations, replaceable battery packs, and slick cars that'll actually sell... and they're doing it, in a short span of time. I'm not saying it'll be tesla leading us away from oil dependency, but I am saying they will be part of it.