Friday, December 20, 2013

Oil industry caught between high and low, will need more government subsidy

Low price means they can't afford to drill, high price means more recession and demand destruction. They need money but have to pay more dividends to keep nervous investors from deserting. The next step will be more government subsidy.
The Real Oil Extraction Limit, and How It Affects the Downslope | Our Finite World: "Because of diminishing returns, the cost of oil extraction keeps rising. It is hard for oil prices to increase enough to provide an adequate profit for producers. In fact, oil prices already seem to be too low. Oil companies have begun returning money to stockholders in increased dividends, rather than investing in projects which are likely to be unprofitable at current oil prices."
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