3
Exploration, Recovery,
and Transportation
Recent variations in the price of petroleum and of petroleum products have once again raised controversy and public displeasure.
The increasing and decreasing trends in oil prices will continue and
consumers must face the problem of continued oil price variations
and the inevitable economic problems they cause. Price increases
cause economic hardship to the consumer, while price decreases
may seem to be a form of relief to the consumer, but there is another
often unseen cost: the elimination of jobs.
With the estimated exhaustion of known oil reserves in about 30
to 50 years, there may be fluctuations in prices and periods of price
declines, but the overall upward trend is unlikely to be reversed.
There is the possibility that higher oil prices make it economical
to drill for more oil at a higher cost and thereby increase supplies.
However, it is not always recognized by economists and technical
persons alike that finding and producing new oil may require a gap
of several years, during which time field development is proceeding in a logical and non-wasteful manner.
It must be recognized that it is not appropriate to deal with the
issue of petroleum pricing as an isolated entity. Petroleum pricing
is a summation of many variables and must be considered in the
65
An Introduction to Petroleum Technology, Economics, and Politics
by James G. Speight
Copyright © 2011 Scrivener Publishing LLC.
Exploration, Recovery,
and Transportation
Recent variations in the price of petroleum and of petroleum products have once again raised controversy and public displeasure.
The increasing and decreasing trends in oil prices will continue and
consumers must face the problem of continued oil price variations
and the inevitable economic problems they cause. Price increases
cause economic hardship to the consumer, while price decreases
may seem to be a form of relief to the consumer, but there is another
often unseen cost: the elimination of jobs.
With the estimated exhaustion of known oil reserves in about 30
to 50 years, there may be fluctuations in prices and periods of price
declines, but the overall upward trend is unlikely to be reversed.
There is the possibility that higher oil prices make it economical
to drill for more oil at a higher cost and thereby increase supplies.
However, it is not always recognized by economists and technical
persons alike that finding and producing new oil may require a gap
of several years, during which time field development is proceeding in a logical and non-wasteful manner.
It must be recognized that it is not appropriate to deal with the
issue of petroleum pricing as an isolated entity. Petroleum pricing
is a summation of many variables and must be considered in the
65
An Introduction to Petroleum Technology, Economics, and Politics
by James G. Speight
Copyright © 2011 Scrivener Publishing LLC.