6
Oil Prices
Petroleum economics is the field that studies human utilization
of petroleum resources and the consequences of that utilization.
In the simplest scientific terminology, petroleum use allows the
production of energy. Resources can be viewed as renewable or
depletable; petroleum falls into the latter category, which as an
effect on pricing strategies. However, the projections of running
out of oil are based on geology, not price. Most crude oil reservoirs have more than 50% of the original oil in place; many reservoirs have more than 60% of the original oil in place. These are
resources that are known to exist. Much of the oil that is left is
trapped in tiny pores and cannot be recovered by simple pumping, but requires more advanced and costly techniques covered
under the umbrella of enhanced oil recovery (EOR) (Chapter 3).
As noted in previous chapters, petroleum is the energy source
that dominated the 20th century, and barring unforeseen incidents,
will continue to be a major source of energy for the first fifty years
of the 21st century. In fact, petroleum is also the single largest commodity in international trade but price volatility shows the tenuous
nature of the trading floor when petroleum is the focus of attention.
159
An Introduction to Petroleum Technology, Economics, and Politics
by James G. Speight
Copyright © 2011 Scrivener Publishing LLC.
Oil Prices
Petroleum economics is the field that studies human utilization
of petroleum resources and the consequences of that utilization.
In the simplest scientific terminology, petroleum use allows the
production of energy. Resources can be viewed as renewable or
depletable; petroleum falls into the latter category, which as an
effect on pricing strategies. However, the projections of running
out of oil are based on geology, not price. Most crude oil reservoirs have more than 50% of the original oil in place; many reservoirs have more than 60% of the original oil in place. These are
resources that are known to exist. Much of the oil that is left is
trapped in tiny pores and cannot be recovered by simple pumping, but requires more advanced and costly techniques covered
under the umbrella of enhanced oil recovery (EOR) (Chapter 3).
As noted in previous chapters, petroleum is the energy source
that dominated the 20th century, and barring unforeseen incidents,
will continue to be a major source of energy for the first fifty years
of the 21st century. In fact, petroleum is also the single largest commodity in international trade but price volatility shows the tenuous
nature of the trading floor when petroleum is the focus of attention.
159
An Introduction to Petroleum Technology, Economics, and Politics
by James G. Speight
Copyright © 2011 Scrivener Publishing LLC.