Oil at $100 a barrel means there will be more of it

Just as the oil price approaches $100 a barrel in the market we hear that Brazil has found substantial reserves, which could turn this considerable oil user into an oil exporter.

This level of price also makes the exploitation of tar sands, and the conversion of coal to fluid hydrocarbon more likely. The doom mongers who think the great oil economy is soon to be undermined by a lack of raw material should think again.

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6 Comments

  1. Tony Makara
    Posted November 9, 2007 at 10:39 am | Permalink

    John, are you in any way concerned that the ever upward surge in oil prices could have a knock-on effect and lead to recession in the way that OPEC's 400% increase in prices undermined national economies after 1973?

    Reply: Unlikely, as oil costs are a much smaller percentage of Western economies than in 1974, and monetary policy is more accommodating. It will only create recession if Central Banks want it to.

  2. Neil Craig
    Posted November 9, 2007 at 7:15 pm | Permalink

    I agree with you on this. The Israelis say they can produce oil from shale at $17 a barrel. In which case we should expect a long term drop in oil prices.

    The current price may owe more to various troubles in Iraq, particularly the Turks gathering on the border near Mosul & politics elsewhere such as the western refusal, for environmental reasons, to allow the building of new refineries, than to any technological problem. The only problem could be that political volatility may create a greater disincentive to investment than high prices create an incentive.

  3. Bazman
    Posted November 9, 2007 at 10:36 pm | Permalink

    In Canada, the tar sands were thought to have reserves of millions of tons. Now are thought after further investigation to have billions. Insane 'Oil Rush' going on.
    Take a look at the Canadian 'Road to Hell'
    http://www.nrdc.org/onearth/07fal/alberta1.asp

  4. Bazman
    Posted November 10, 2007 at 6:21 pm | Permalink

    At school I was taught that there was enough coal to last Britain 300 years.
    Why is this resource on our own shores not being used?
    We would also not be able to be held to ranson by russia and the Middle East. Got to be cheaper than nuclear.

    Reply: I agree – clean coal technology, allied to new ways to remove it from underground should be an important part of our future energy plans.

  5. schober
    Posted November 11, 2007 at 4:59 pm | Permalink

    hmmm…………that oil (tupi)wont see the light of day for a long time – 5 years at the very best, but 8 y more likely or even 10? and then lifting costs will be very expensive. this ids not "easy oil" like texas used to be! – lots of "challenges" in store http://www.chron.com/disp/story.mpl/business/5290http://www.dailytimes.com.pk/default.asp?page=200

  6. schober
    Posted November 12, 2007 at 7:08 pm | Permalink

    expansionof tar sands? hmmm…….the problem is getting enough water and natural gas, not to mention getting staff and capital equipment and of cours the alberta govenrment has just reneged on hte tax breaks promises for the early entrants like suncor

    oh and dont forget most oil is owned by state oil cos whose priority is cash today and not exploration
    oh and alot ot these states have a rapidly increassing home consumption, often subsidised eg iran

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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