Sure, no one can predict the future, but oil is over $100 when we are in an invisible recession, what will it be when this economy is moving again. The past also did not have China and India and one billion more cars on the road, plus huge domestic demand for petroleum based products! These are world changing factors that have driven oil rigs to every corner of the Earth - like Cuba. We have also been drilling in the US for decades. So it is very likely this will continue for a long time.
They are producing about 400K barrels per day in ND, which is $40 million a day in revenues. In a state that has very few people. The reserves are huge and the prediction is one million barrels per day.
Just like the oil sands in Canada - it will go on for a long time, and it will enrich us, and weaken our enemies only if we can stop the green anarchists and their leader, Barack Obama.
As I said before: It will go on for as long as it is economically viable. You mention the Canadian oil sands. They have very high start-up costs, and pretty high ongoing costs. Here’s an example of the levels of crude prices they need to sustain themselves:
http://online.wsj.com/article/SB10001424053111904007304576498633288366042.html
A pipeline would help their profit margin, but absent that, they have some pretty high costs in those projects.
At the depths of the implosion in 2008-2009, oil was under $50/bbl. Add in the addition of Bakken oil at cheaper prices and the oil sands have a problem. If the Saudis want to gut the Bakken project, they could just turn on their excess production capacity for a year after the infrastructure is into ND and bleed them dry. The Saudi’s have done this crap before, BTW.
As I said, we’ve heard this “oil will be expensive forever” talk before. Farmers used to crow about how much money they were making in the late 70’s and early 80’s... people used to think that gold was going to the moon in the late 70’s.
And by 1986, all that talk was busted and gone. The oil patch in OK/CO/TX/NM saw a devastating five to 10 year period after ‘86. In ‘86, farmers were going bust left and right.
If you go back to the 1920’s, you’ll see the same pattern as well.
BTW - when the economy gets moving again will be much further out than economists are predicting. It always is after a debt deflation. Look at Japan for an example of a multi-decade period of economic mediocrity, despite massive “stimulus” of both fiscal and monetary varieties.
I suspect that in the near term, we’re going to see lower commodity prices across the board as the speculators are pulling in their horns. JP Morgan just issued a “get out of commodities” letter to clients this past week:
http://www.zerohedge.com/news/phase-shift-jp-morgan-downgrades-all-commodities-sell
People who live and have lived for decades in commodity-based local economies know this. They know about boom-bust cycles, and they’re smart to not rush into building a lot of housing that will become a problem in the future.