• 6 minutes Saudis Threaten Retaliation If Sanctions are Imposed
  • 11 minutes Can the World Survive without Saudi Oil?
  • 15 minutes Saudis Pull Hyperloop Funding As Branson Temporarily Cuts Ties With The Kingdom
  • 2 hours WTI @ $75.75, headed for $64 - 67
  • 1 hour U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 20 mins Saudi-Kuwaiti Talks on Shared Oil Stall Over Chevron
  • 13 mins Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
  • 8 hours U.S. - Saudi Arabia: President Trump Says Saudi Arabia's King Wouldn't Survive "Two Weeks" Without U.S. Backing
  • 5 hours OPEC's No. 2 Producer Wants to Know How Buyers Use Its Oil
  • 31 mins UN Report Suggests USD $240 Per Gallon Gasoline Tax to Fight Global Warming
  • 6 hours Iranian Sanctions - What Are The Facts?
  • 4 hours China Thirsty for Canadian Crude
  • 20 hours How High Can Oil Prices Rise? (Part 2 of my previous thread)
  • 20 hours Shell, partners approve huge $31 billion LNG Canada project. How long till Canadian Federal government Environmentalates it into the ground?
  • 4 hours Who's Ready For The Next Contest?
  • 7 hours EU to Splash Billions on Battery Factories
Alt Text

How A Carbon Tax Would Be Implemented

A rather simple solution to…

Alt Text

Oil Markets Take A Bearish Turn

Oil markets appear to have…

Oil & Gas 360

Oil & Gas 360

From our headquarters in Denver, Colorado, Oil & Gas 360® writes in-depth daily coverage of the North American and global oil and gas industry for…

More Info

Trending Discussions

Why $50 Is The Right Price For Oil

Oil Rig

EnerCom Analytics’ September Industry Trends Report Examines Oil Prices

(Click to enlarge)

Crude oil prices: time spent above and below $50 – chart: EnerCom Analytics

The current price of oil may feel low given the fading memories of $100 per barrel oil back in 2014. But in a longer term historical context, we are on the high end of the curve at today’s prices.

EnerCom Analytics looked at historical monthly crude oil prices between 1974 and August 2016. The chart shows the histogram of prices for three time periods—1974 to 2016, 1990 to 2016 and 2008 to 2016, with the closing West Texas Intermediate crude oil (WTI) price on September 8, 2016 of $47.32 marked for comparison. The chart shows duration in months for every $5 price increment between $10 per barrel and $115+ per barrel.

July 2005 was the first time that U.S. oil prices hit the $50 per barrel mark. That was about the same time that the combo of horizontal drilling + hydraulic fracturing started to change the USA’s effect on global oil.

Companies forced by prices to innovate

At $100 per barrel, efficiency isn’t as much of a necessity to make money in the oil business as it is at $50. In sub-$50 environments, operators found a way to generate returns. Parke A. Dickey, a petroleum geologist, once said: “We usually find oil and gas in new places with old ideas. Sometimes, also, we find oil and gas in an old place with a new idea, but we seldom find much oil and gas in an old place with an old idea. Several times in the past we have thought that we were running out of oil and gas, whereas actually we were only running out of ideas.”

Right now there are a lot of good ideas being tested in the field. Low prices force companies to think of new ways to produce more oil while cutting costs, and operators are executing. Oil and gas c-suites are now looking to a $50 price environment as being a manageable commodity price for operators to return to a normalized growth plan. It was only 18 months ago when operators said oil needed to be $70 per barrel to be economic.

By Oil & Gas 360

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News