Credit: Eco News
Supply & demand tells us that rising costs of production lead to higher prices.
Crude oil is getting harder, & more expensive, to extract. Witness investment in tar sands & fracking.
Apparently in contradiction of the preceding 2 paragraphs, crude, petrol (gasolene) & other petroleum fuel prices are at long term lows.
Not surprisingly, those who have invested in the most expensive means of crude production are experiencing cost pressures, leading one commentator to claim that 97% of fracking operations are experiencing a loss at current oil prices:
http://m.dailykos.com/story/2015/01/06/1355814/-97-of-fracking-now-operating-at-a-loss-at-current-oil-prices#?detail=facebook
Gail Tverberg, an acturary interested in depletion of oil, natural gas, & water & climate change explains that decreasing quality of oil reserves accounts for falling prices:
http://ourfiniteworld.com/2014/12/29/how-increased-inefficiency-explains-falling-oil-prices/ / If the Saudis crush America America’s shale oil industry West Texas Intermediate 2014 peak $107.73 June dropping as low as $49.77 today New York Mercantile Exchange grade settled at $50.04 a barrel below break even break-even price 38 U.S. shale oilfields Bloomberg New Energy Finance shale oil fracking Canadian tar sand most expensive dirty oil production planet conventional Persian Gulf oil cheapest to produce Warren Henry spokesman Continental frackers spending money faster than they can make current oil prices not a sustainable long term trend Bob Tippeee editor Oil & Gas Journal Saudi Arabia Saudis no incentive lower supply defend price of crude oil not going to rescue the market other major producers Russia Iraq boosted oil production highest levels in decades seems certain low oil prices are here to stay at least for now oil patches red states Texas North Dakota projecting 100,000 layoffs energy sector slump painful regional recession Michael Feroli chief U.S. economist at JPMorgan Chase & Co. New York report Texas pumps 37 percent of U.S. oil output IEA International Energy Agency data show oil and gas industry effects housing other businesses majority of Texas energy production conventional means relies heavily on fracking oil rigs shut down U.S. rig count at risk R.T. Dukes an upstream analyst Wood Mackenzie Ltd. Houston tough year for operators employment support services oil and gas operations oil and gas extraction most job creation fracking industry comes up-front job losses before production falls most labor-intensive labor labour intensive oil-field industry construction and completion process new wells bulk of investment provides most income local economy ramifications oil slide companies will complete works in progress according to contract price began crashing layoffs notices Dallas Federal Reserve projects Texas slowdown state budgets Texas Wyoming Louisiana Oklahoma North Dakota Alaska oil sales production sold months years ahead of time temporary drop steep immediate effect when oil futures agreed geology traditional oil drilling shale oil taps out very quickly average decline world's conventional oil fields booming Bakken shale oil field production declines of 70 percent or more in the first year shale gas wells swift depletion rateso drillers plumbing new wells shortfall 2,500 new wells into production every year just to sustain production increasingly become more expensive to drill supplies require a higher breakeven price current price of oil frackers sinking new wells out of business high-yield high yield debt cheap credit shut out of the bond market Gary C. Evans chief executive officer Magnum Hunter Resources Corp funding squeeze increased inefficiency reducd efficiency crowding out effect more resources are required for the increasingly inefficient sectors of the economy, fewer resources are available to the rest of the economy. As a result, wages stagnate or decline. Central banks find it necessary lower interest rates, to keep the economy going /
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