21 Oct 2006

Rational Perspective on Oil Prices and Supplies

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UPI 10/20:

A University of Washington economic geologist says there is lots of crude oil left for human use.

Eric Cheney (Y ’56, Y Ph.D. ’64) said Friday in a news release that changing economics, technological advances and efforts such as recycling and substitution make the world’s mineral resources virtually infinite.

For instance, oil deposits unreachable 40 years ago can be tapped using improved technology, and oil once too costly to extract from tar sands, organic matter or coal is now worth manufacturing. Though some resources might be costlier now, they still are needed.

“The most common question I get is, ‘When are we going to run out of oil?’ The correct response is, ‘Never,'” said Cheney. “It might be a heck of a lot more expensive than it is now, but there will always be some oil available at a price, perhaps $10 to $100 a gallon.”

Cheney also said that gasoline prices today, adjusted for inflation, are about what they were in the early part of the last century. Current prices seem inordinately high, he said, because crude oil was at an extremely low price, $10 a barrel, eight years ago and now fetches around $58 a barrel.

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