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May 29th, 2017

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The marginal cost, oil and bears!
Dr Thomas Chaize
December 10th, 2014
Email: dani2989@voila.fr
www.dani2989.com

Once upon a time, bears and penguins, to explain the importance of "marginal cost" of oil production. On an ice floe, always smaller and has three fish producers : pandas, bears and grizzlies fishing for penguins.
Pandas fish 11 fish per day with a $ 20 fee (fishing canes, hooks ...).

Bears fish 10 fish per day to $ 60.

Grizzlies 10 fish per day at $ 85.

At $ 100, Ursidae fish 31 fish per day for the 30 penguins of the ice, so good, they are happy. Penguins, themselves, are the fish too much and cry for fisheries speculation!
Then lightly on fish production brought down the price of fish at $ 70, grizzly bear gradually stop the production, production falls mechanically to 21 fish.

Then the fish prices down to $ 55, production bears also stops. Production falls to 11 fish a day because only pandas can still sin at this price!
The penguins are happy, "yay fish at $ 55! "They congratulate each other, celebrating a new world, have a party and eat more fish. They now need 40 fish per day!
But pandas, bears and grizzly bears can not produce as many fish every day! It was then arrive polar bears who say we can sin 2-3 fish every day, but we must get him very far, the fishing technique is very sophisticated it costs us $ 120 ...


Today the price of oil per barrel to $ 64 (WTI). This price is too low to ultra-deep offshore (Nigeria, Angola, Gulf of Mexico, Brazil, Arctic projects), part of the Canadian oil sands and US shale oil (look at the graph of an oil company shale ...). It is 10 to 20% of world oil production is threatened (the present) and investments in exploration (the future).
With the peak of production, this situation can not last more than a few months ...




Dr Thomas Chaize
December 10th, 2014
Email: dani2989@voila.fr
www.dani2989.com

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