I'm starting a pool to guess the date when oil is free.
Oh, it will be free to Exxon and the likes, but you and I will still have to pay 0.95$ a litre to get it
I am betting on volatility..... I don't think anybody has a grip on what is likely to happen.
Time perhaps for those who have not read it to get their hands on a copy of Jeff Rubin's The End of Growth
About ten years ago (when oil was trading around $50 a barrel) Rubin was guest speaker at an oil company executives convention. He predicted to them that shortly, oil would trade at about $100, perhaps all the way up to $150. He was almost laughed out of the podium. Yet, within two years, his prediction had come true.
So what does he postulate in The End of Growth? He postulates that the way the oft predicted "end-of-cheap-oil" scenario will develop is not the ever increasing price of oil forecasted by most, but rather a series of wild swings between ever higher and ever lower oil prices, in more and more rapid fashion. In short, volatility of markets at ever more accelerated pace.
He comes to this conclusion on the basis that, as oil prices get very high, ever more companies jump in to develop methods to get at the more difficult to exploit oil. When the prices go down, they don't want to lose their market so all start to dump oil in vast amounts in the market, all of them hoping to be able to survive the ride and come out the winners when the price goes up again. However, too many of them then go bankrupt at the low point and the resulting production drops below the demand and the price shoot up like crazy.
One figure missing in the information to determine if, or when, we enter this "swinging market" phase is the ultra -secretive figures on the state of Middle Eastern easy to pump oil. The Saudis absolutely refuse to talk reserves, except to reassure people that they have more than enough. But nobody knows for sure, and as the Saudis have developed a huge nanny state to keep their subjects happy, they need increasingly large amounts of cash to satisfy their budgetary needs. As a result, the temptation is always there for the Saudis to dump increasingly large amounts of oil in the market when prices swing down regardless of the amount of their reserves, just to keep good order inside the Kingdom.
All this to say: yes, oil markets will likely be volatile and wild for quite a few decades to come.
God (if there is such a woman) pray for Albertans.