Peter Tertzakian: ‘Expect many years of ups and downs’: A toast to future oil price volatility

, Canada

Half a dozen major oil producing countries have the potential for sudden collapse, for example, Venezuela.

An economist, a business school professor and a physicist walked into a bar.

Why does Canada, the fifth largest oil producer in the world, have to buy crude?

Peter Tertzakian: Our oil production far exceeds our needs but only a trickle makes it east. Here’s why Canada can’t achieve energy self-sufficiency on its own. Continue reading.

They ordered a round of drinks. The bartender smiled and asked, “Is this like a three-people-walked-into-a-bar joke?”

Nobody laughed. Televisions were tuned into a headline news feed talking about oil prices. Eyes were glued to a chart showing how a barrel of West Texas Intermediate had risen over 25 per cent in the past six weeks. The question on the nacho plate was simple: Where are oil prices going?

Sheila, the economist gave her assessment. “Oil prices were too low,” she said, “US$30 for a barrel of oil is well below the marginal cost of finding meaningful new reserves and bringing them onto production, so is US$45.”

She continued with some theory: “General equilibrium occurs when price equals the cost of bringing the last barrel consumed out of the ground.” Sheila’s punch line came next, “The problem is that supply can’t respond as fast as demand – the two sides are not reacting to price signals sympathetically, both are always out of sync. Over the next year oil prices are going to go much higher, pushing through general equilibrium.”

The other two nodded.

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  • whizzinator 12 / 03 / 2017 Reply

    We opened a bunch and C-wager took down just a few pots, three bet just a few etc and
    so forth.

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