ASU2003

This might be a far off situation, but what happens if the price of a barrel of oil falls below what North American companies can drill a barrel of oil for?

I'm sure that there would be greater pressure to drill off-shore and in ANWR, but even that would cost lots of money to set up to get some oil. And with a large enough push towards conservation, fewer trips, hybrids, battery-cars,CNG cars and bio-diesel/e85/ethanol could reduce our demand for oil and reduce the price.

Would we let these companies go under and only leave OPEC selling their cheap gas? Do they have enough cash reserves to handle a downturn for a few years?

Yes, I know it sounds like a weird question, but I thought about this while driving to work today.

tisonlyi

They're international.

The old, 10 years old standard, of profit for drilling a barrel of oil was $10 per barrel... for easy oil in a friendly area...

That is not, ever, ever going to happen... too much demand, too little supply.

The end of the oil is upon us. I'm 32, by the time i'm 40 the world will be hurtling towards an oil-fuel-less existence, by the time i'm 50 it'll be complete.

Probably before.

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kurty[B]

Considering these oil companies are still reporting record breaking profits while the rest of the economy is taking huge hits?

I would hope like any other company they are smart enough to save themselves (invest in these new energies, offer new services). Sure the initial expense is great, but if they do not do it, someone else will. If they happen to get left behind so be it. If a company isn't willing to change with the times I hope they are willing to dissolve into history.

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Baraka_Guru

I think the industry is probably weathering a transition. This is why you see Shell and Chevron touting the potential of alternative energies.

It would be wise for oil companies--if they believe in peak oil, etc.--to reframe themselves as "energy" companies.

I don't see them going bankrupt; I see the divesting and reinvesting.

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Leto

I agree with Baraka_Guru. These companies are in a nascent transition from "Big Oil" providers to "Energy Asset Managers". Their business model is going to be targetted towards delivering energy solutions to the customer at the lowest per unit cost. The type of energy source will not matter. What will come into play for them is their real or perceived capability and best practices around delivering these energy solutions.

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highthief

This is already happening to some extent in Canada - the tar sands are a very profitable operation, as long as a barrel of crude sells for more than a certain amount. But the labour and process intensive requirements of extracting oil from tar sands means that if the price falls, the tens of billions invested no longer look like a good deal.

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