Here's some of it...
The world's petrol supply and demand system is such ...
It is only profitable for drilling companies to extract crude from below shale rock formations such as the Bakken in North Dakota when gasoline costs over approximately $3 a gallon, the same applies to companies extracting crude from Canadian tar sands.
At least that's what I gathered from reading article after article out of magazines such as Time, and National Geographic... Now it would take an entire page to explain the reasons but basically it costs one gallon for every gallon extracted, how tough the Canadian tar sands are to deal with... Then the shale is comprised of extremely hard rock that must be drilled through in some sort of sideways hydraulic process, which I don't understand what it all means except it gets expensive, fast.
Which, that is all I have to know.
It's the same with deep water drilling, those platforms alone cost in the millions or billions of dollars and we're talking about a device that stands atop a world of ocean in a situation where the pipe must go down about a mile just to reach the ocean floor, from there it's another distance before it finally taps the supply.
Hence it is very simple:
When fuel / petrol costs below a certain amount per gallon / barrel, certain companies will slowly but surely cease to explore and stop the more expensive drilling and exploration services that they simply can not afford to finance, until such a time the demand causes a rise in the price of oil, at which point it once again becomes profitable for said companies to find new ways to get petroleum out of the ground... Which will serve to stagnate the price, but it won't bring it down far because if it does it once again creates that imbalance.
In all of this, if you can't see the profit, just look at the past 5 years of petroleum.
So gas will not, petrol can not, come down past a certain point in price.
It can not do it because it is a financially impossible business proposition and if it does, it is temporary because it costs a minimum amount of money to put a drill in place that extracts a finite amount of product, thus so long said product sells at or above a certain dollar amount, all is well.
Now if you want cheap gas you can always move to Venezuela, I believe it's 25 cents a gallon there.
You see, the problems just don't end with this Industry.
Last edited by topsites; 04-10-2011 at 03:15 AM.