Heh yeah, Mad Max stuff. --------------- I can see crude dropping a bit. Tomorrow's speech will be a red-letter day. This is gonna' suck ass, boys and girls, if he doesn't give details.
You are confusing things here. The marginal cost of extraction is going down for the oil we have at and near the surface, this is the economical oil. As we dig deeper over time, and I'm talking the next 50 years here, the oil will become more and uneconomical. As we get deeper into the surface the marginal cost to extract this oil will go parabolic and since price = marginal cost that means the price of will will go parabolic. This is not disputable.
Yes, you are talking about forward hedging. I'm talking about the "shape" of the curve. The shape of the curve dictates if and when to store and when to produce.
Forwards do NOT predict prices. The SHAPE of the curve DOES indicate the incentive to store now and sell later or sell now. Just as the shape of the yield curve indicates economic conditions, the shape of the energy curves indicates the supply and demand balance.
Over the next 50 years...yes. This is not really disputed in the economics community although some will say we will be using very little of that oil and that is likely the case but we will run out of "economical oil" and that is a fact.
Commercials are not getting it wrong. They are not in the business of "predicting" oil. They produce oil at cost and sell on the margins. BP is one slight exception as they have historically been aggressive in the paper markets as well as the physical. But firms like Trafigura, Vitol, Glencore, Gunvor are VERY informed, VERY aggressive and VERY profitable.