Crude Oil Becoming Much Harder to Find

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Eric Fry, reporting from Laguna Beach, California…

Contrary to popular mythology, we Californians do not live merely on love, sunshine and granola.

I mean, sure, we’ve all got our yoga mats, our quartz crystals and our “life coaches” (who doesn’t?), but life is just so much more than “namastes” and positive energy. Life is also about building enough windmills (somewhere else) and installing enough solar panels (somewhere else) to keep our yoga studios air-conditioned.

And, yeah, I guess we need SOME crude oil, cause our Priuses cannot ALWAYS run on electricity. So I guess its fine to use crude oil if we have to, as long as we can obtain the oil in an ecologically friendly way…like getting it from somewhere else. (OMG, remember the Santa Barbara oil spill in 1969? That was a SERIOUS bummer!)

So, yes, we Californians certainly understand that we cannot break our dependence on crude oil overnight. At least not until some “next generation” process comes along that can convert text messages into jet fuel. And even if we Californians use less crude oil, someone else is bound to use more of it…like all those reckless industrialists in the Developing World. Don’t they know how bad crude oil is for the environment?

But I guess there’s just no reasoning with these people. So I guess we’ll just have to keep finding and pumping crude oil for a long time to come.

Hmmm… I’m not sure how easy that’s going to be. When I was out recycling newspapers the other day, I saw an old headline that said crude oil is becoming much harder to find…and that oil production is falling off rapidly at many of the world’s largest fields.

So I did a little research and – would you believe – it’s true. Crude oil is becoming much harder to find and much more expensive to produce.

Eric Fry
for The Daily Reckoning Australia

Eric J. Fry
Eric J. Fry has been a specialist in international equities since the early 1980s. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short- selling. Mr. Fry launched the sometimes-abrasive, mostly entertaining and always insightful Rude Awakening.
Eric J. Fry

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9 Comments on "Crude Oil Becoming Much Harder to Find"

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prozak
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what an absolutely POINTLESS piece of trash!

I used to think the DR had some great analysis and insight.

Dan
Guest

A lot of what’s going on at the moment is hard to analyse actually. I’ve been digging around on some issues the past few days and finding it very hard to get good information. But yes, this is a bit light on the fizz!

prozak
Guest

Dan,
is it “actually”?
Or is it more that this writer cannot be bothered and therefore posts this trash as some sort of insight?

The article provides nothing. Not one bit of insight unless you count the fact that Eric dislikes or disregards californians in some way and is therefore probably from the East Coast.

Dan
Guest
Well, as two minutes of research shows, you can get any opinion you like if you look hard enough: http://www.runet.edu/~wkovarik/oil/ and http://www.nytimes.com/2009/08/25/opinion/25lynch.html It’s correlation versus causation. Increased oil extraction costs do not necessarily mean that peak oil (ie: natural supplies dry up) is true, nor that these costs will rise indefinitely. It’s likely that energy will continue to become more pricey (repairing pipelines and paying security firms to work in war zones costs money, though mainly there is a rising directly measured energy in/energy out ratio), but I think oil companies will continue to find the magical ability to discover… Read more »
Drew Weeks
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Eric J Fry I gave your piece a 10/10 because it made me laugh. I didn’t think the point of it was an in-depth analysis as others surely seem to think it should be as they brazenly decried its lack of content. However, the point seemed to be more glaring to me that there has been a lot of talk and speculation but noone provides any concrete analysis. I’m sure lots of readers would prefer a trash theory rather than the simple honesty you provided here (cloaked in its sardonic ridicule) that there are no good theories. A few insights… Read more »
Drew Weeks
Guest

Sorry I quoted you Dan not the writer. Dan wrapped it up actually — I didn’t scroll up far enough and read the wrong thing.

Coffee Addict
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“Reasonably priced crude” is difficult to find …. and reasonably priced silver, gold (and many other mined commodities) are also difficult to find. The following link IMO ties up a lot of what the paid (and unpaid) commentators at this site have been saying for years now. The guts of Steve St. Angelo’s article is that the “energy in” to “resources (or energy)” out ratio is increasing on a steep tangent. http://news.silverseek.com/SilverSeek/1257346165.php If you were to agree with Steve’s analysis you would invest in the (energy) cheap to extract stuff only. (my legal disclamer being that you may lose all… Read more »
prozak
Guest

CA,
You seem to be repeating a gold bug mantra.

There are MANY gold miners with a total cost of around $200 an ounce.
The most expensive I have seen (i don’t spend all day reading gold mining company reports, so there are probably more expensive miners) is around $500 an ounce.

Coffee Addict
Guest
Prozak Not really. The old gold bug mantra would be that marginal producers will make exponential gains IF prices rise. I don’t necessarily agree with everything Steve St. Angelo says BUT you dont need to be a genius to realise that many marginal miners (of any ore or energy source) are also high energy users relative to their peers. This means they may well be losers where a commodity price rise is driven (partly of in full) by higher energy costs. Carbon tax will also be an issue in extracting marginal resources in this category. Other marginal resouce miners (with… Read more »
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