01-10-2015, 01:29 AM
Kaliboo...
I have read that the oil "glut" or imbalance is about 2% (while the price has dropped about 50%). If that is true (2% imbalance), doesn't the marginal cost of production come into play very quickly (6 months)? In other words, there are high-cost fields that are just not economical to produce at sub $50/barrel oil. Once these producing assets are shut-in (or don't even come online ever), don't we come to an equilibrium point fairly quickly?
Now, all this discussion is moot if we are about to enter a world-wide meltdown that will reduce consumption by 20% !!! However, excluding the end-of-civilization-type scenarios, it would seem that oil pricing and supply/demand will work their magic fairly quickly - by which I mean 6 months or so.
That being said, what do I know !??! Hession may go from being the "dummy who sold EA gas in the ground for $1/mcf" to the "genius who sold EA gas in the ground for $1/mcf" since by the time TOTAL cuts the check, the price InterOil receives may look very lucrative indeed....
I have read that the oil "glut" or imbalance is about 2% (while the price has dropped about 50%). If that is true (2% imbalance), doesn't the marginal cost of production come into play very quickly (6 months)? In other words, there are high-cost fields that are just not economical to produce at sub $50/barrel oil. Once these producing assets are shut-in (or don't even come online ever), don't we come to an equilibrium point fairly quickly?
Now, all this discussion is moot if we are about to enter a world-wide meltdown that will reduce consumption by 20% !!! However, excluding the end-of-civilization-type scenarios, it would seem that oil pricing and supply/demand will work their magic fairly quickly - by which I mean 6 months or so.
That being said, what do I know !??! Hession may go from being the "dummy who sold EA gas in the ground for $1/mcf" to the "genius who sold EA gas in the ground for $1/mcf" since by the time TOTAL cuts the check, the price InterOil receives may look very lucrative indeed....