http://thechronicleherald.ca/canada/1414...g-activity
Admin, thanks for forwarding these articles, especially the one above.
This is one of the first signs of what I predicted about 2 years ago that will drive us beyond $100 oil. There is an abundance of oil and gas that can be discovered, developed and brought on production in the world. The technology improvements have made it easier to outpace demand. The two critical variables that will control prices going forward (short of wars and depressions/recessions) are investment levels and availability of trained, experienced people. This article is one of the firsts I've seen that specifically speaks to the last point. It's happened before. Bidding wars start for companies to hire people with super attractive pay/benefit offers and "golden handcuffs" to keep the key employees they have. This shortage of people will drive futures and eventually spot prices sharply upward as this new fear sets in. When I hired into industry in 1979, I recall such a time. Engineers and geologists received 3 across the board pay raises in one year just to keep up wiht the market rate. But still turnover was high. Today in the meantime rigs and equipment has been scrapped and existing equipment is 2 years older. Experienced staff are 2 years closer to retiring or have. The longer low prices persist, the more severe the price recovery and the longer high prices will last.
My original prediction in ~Feb 2015 was $100 oil within 2 years (i.e., by Feb 2017). I think that is still possible but not likely. I underestimated the ability of companies with a strong US onshore asset base to adapt and survive, but also didn't see the Iranian deal coming. We now have the Trump factor to add in, whatever that will be.
Another article you posted a while back commented on the world oil replacement ratio being closer to 50% rather than the needed 100+% to replace consumption and accomodate growth. This confirms very high prices are being fully baked into the cake. It will take years to catch up as demand passes a shrinking supply.
I suspect the "fear wave" of an oil shortage will precede the reality by many months.
Three technology breakthroughs, however, could doom the industry: (1) solar technology step energy efficiency improvement, (2) battery technology breakthrough yielding step increase in energy density, (3) mass adoption of self driving cars. Collectively, acting together these could do to oil and gas, what gas has done to coal. Any two of these might do the job as well. IMHO.