Source: draws our attention to The Skyrocketing Cost of New Oil Supply.

Drawing upon recent data from the US Energy Information Administration, he points out that the cost of finding an additional barrel of crude oil or equivalent (natural gas, natural gas liquids) started to rise rapidly over the past decade.

The reason for this would seem pretty clear.  We are now relying more and more on more expensive forms of fossil fuels as we must dig deeper on land and sea to reach them or utilize expensive new technologies to extract them: deep water oil and gas in the South Atlantic and the Arctic, heavy oil sands in Canada and Venezuela, and shale gas across the world are prime examples.  Added to that are the environmental costs they impose that must be priced into the extraction calculation.

As Gregor states:

These resources are difficult to access and extract precisely because a more aggressive disturbance of the earth must be undertaken to secure them. Ultra-deepwater, tar sands, shale-rock fracturing (fracking) are touted as technological miracles. But, as so often is the case, they produce wide-boundary environmental damage (negative externalities) whose “price” must be paid by society.


UPDATE: Reuters reports that more and more major oil companies are now considering $100 a barrel crude oil the “new normal”. A BP executive says: “We believe the price of energy, while it will be volatile, will be strong going forward. Growth in Asia and the emerging markets continues very, very strong.”  Three years ago BP was using $60 a barrel in its forecasts but now uses $100.

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