<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>beat</author><text>What&amp;#x27;s lost in your analysis is that oil extraction is becoming increasingly expensive. Magic tech isn&amp;#x27;t making it cheaper; it&amp;#x27;s making it viable at all.&lt;p&gt;Consider EROEI (energy returned on energy invested). This is how much energy it takes to extract a barrel of oil from the ground, whether by pumping or by melting in the case of tar sands and shale. In the 1950s, EROEI was about 100 - the energy of a barrel of oil could extract about a hundred barrels. The Canadian tar sands have EROEI of about 3.5. They weren&amp;#x27;t profitable until oil became expensive enough to make it worthwhile.&lt;p&gt;Once EROEI dips below 1, price is negative. It becomes impossible to extract the oil profitably. Some of those &amp;quot;trillions of barrels&amp;quot; you talk about are in that camp. They don&amp;#x27;t count as reserves, because they&amp;#x27;re useless.&lt;p&gt;Meanwhile, oil is going to keep getting more and more expensive and difficult to extract. Offshore deep-water drilling, tar sands, stuff like that, it&amp;#x27;s incredibly hard and often environmentally dangerous&amp;#x2F;destructive. And renewables get cheaper and cheaper, as there&amp;#x27;s a lot more room for improvement in technology and manufacturing scale.&lt;p&gt;Eventually - and I don&amp;#x27;t think that point is far away - it will be impossible to produce fossil fuels cheaper than the cost of solar&amp;#x2F;wind.</text><parent_chain><item><author>bryanlarsen</author><text>Everybody assumes that oil prices are going up.   However, there are several large effects that could cause the price of oil to decline.&lt;p&gt;1.  Economics predicts that the price of something will be the same as the price of its cheapest substitute.  For a long time, fossil fuels were the substitute, keeping the price of renewables &amp;amp; nuclear down to unprofitable levels.   However, renewables, storage and electric cars are all rapidly decreasing in cost, depressing their prices and the prices of their substitutes.&lt;p&gt;2.  Carbon taxes or other similar schemes are looking more likely in the future.   They shift the demand&amp;#x2F;supply curve, causing fewer barrels to be sold at higher prices, but the price doesn&amp;#x27;t go up enough to cover the full increase, leading to depressed prices before the tax.&lt;p&gt;3.  Economics says that the price of a commodity is the same as the marginal cost of production.   In other words, the highest cost producer of oil that meets current demand makes $0 in profit, all lower cost producers make &amp;gt;$0 profit.  If demand is low, then that marginal cost is $10 Saudi oil.   If demand is high, then that marginal cost is $100 Canadian oilsands oil.   So if demand drops because of climate change mitigation and&amp;#x2F;or renewable substitution and&amp;#x2F;or electric vehicle substitution, there is supply of lower cost oil, meaning prices can drop.&lt;p&gt;4.  We&amp;#x27;re not running out of oil, we never have been.   As mentioned in #3, the price of oil is the marginal cost of production.   Anything that costs more than that price isn&amp;#x27;t counted in reserves because it&amp;#x27;s uneconomical to extract.   So by definition we always have almost no reserves and never will have.&lt;p&gt;There are trillions of barrels of oil in the Canadian and Venezuelan oil sands alone that aren&amp;#x27;t counted as reserves for this reason.    We&amp;#x27;re less than 2 price doubling periods away from making this economical, keeping a fairly low ceiling on prices.&lt;p&gt;And of course technology marches on, continually decreasing the price of extracting that oil...</text></item><item><author>marcus_holmes</author><text>It&amp;#x27;s not like the oil is going anywhere, either.&lt;p&gt;I can imagine a point in 30 years where there are new, safer and better ways of getting the oil out, and oil is necessary for processes that don&amp;#x27;t involve burning it into the atmosphere, and the price is considerably higher than it is now.&lt;p&gt;I despair of (my current home country) Australia&amp;#x27;s attitude of digging up all the resources it possibly can and selling them for cheaper than everyone else. And being proud of this, like it&amp;#x27;s a good thing. These resources are irreplaceable and belong to the whole nation. Maybe leave some in the ground for later when the prices have gone up?</text></item></parent_chain></comment><story><title>Norway Is Walking Away from Billions of Barrels of Oil</title><url>https://www.bloomberg.com/news/articles/2019-04-08/norway-is-walking-away-from-billions-of-barrels-of-oil-and-gas</url></story>
<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>alphakappa</author><text>Let’s not forget that oil is not just used as an energy source. It’s the basis of plastics, drugs, cosmetics and many more things, not all of which have substitutes.</text><parent_chain><item><author>bryanlarsen</author><text>Everybody assumes that oil prices are going up.   However, there are several large effects that could cause the price of oil to decline.&lt;p&gt;1.  Economics predicts that the price of something will be the same as the price of its cheapest substitute.  For a long time, fossil fuels were the substitute, keeping the price of renewables &amp;amp; nuclear down to unprofitable levels.   However, renewables, storage and electric cars are all rapidly decreasing in cost, depressing their prices and the prices of their substitutes.&lt;p&gt;2.  Carbon taxes or other similar schemes are looking more likely in the future.   They shift the demand&amp;#x2F;supply curve, causing fewer barrels to be sold at higher prices, but the price doesn&amp;#x27;t go up enough to cover the full increase, leading to depressed prices before the tax.&lt;p&gt;3.  Economics says that the price of a commodity is the same as the marginal cost of production.   In other words, the highest cost producer of oil that meets current demand makes $0 in profit, all lower cost producers make &amp;gt;$0 profit.  If demand is low, then that marginal cost is $10 Saudi oil.   If demand is high, then that marginal cost is $100 Canadian oilsands oil.   So if demand drops because of climate change mitigation and&amp;#x2F;or renewable substitution and&amp;#x2F;or electric vehicle substitution, there is supply of lower cost oil, meaning prices can drop.&lt;p&gt;4.  We&amp;#x27;re not running out of oil, we never have been.   As mentioned in #3, the price of oil is the marginal cost of production.   Anything that costs more than that price isn&amp;#x27;t counted in reserves because it&amp;#x27;s uneconomical to extract.   So by definition we always have almost no reserves and never will have.&lt;p&gt;There are trillions of barrels of oil in the Canadian and Venezuelan oil sands alone that aren&amp;#x27;t counted as reserves for this reason.    We&amp;#x27;re less than 2 price doubling periods away from making this economical, keeping a fairly low ceiling on prices.&lt;p&gt;And of course technology marches on, continually decreasing the price of extracting that oil...</text></item><item><author>marcus_holmes</author><text>It&amp;#x27;s not like the oil is going anywhere, either.&lt;p&gt;I can imagine a point in 30 years where there are new, safer and better ways of getting the oil out, and oil is necessary for processes that don&amp;#x27;t involve burning it into the atmosphere, and the price is considerably higher than it is now.&lt;p&gt;I despair of (my current home country) Australia&amp;#x27;s attitude of digging up all the resources it possibly can and selling them for cheaper than everyone else. And being proud of this, like it&amp;#x27;s a good thing. These resources are irreplaceable and belong to the whole nation. Maybe leave some in the ground for later when the prices have gone up?</text></item></parent_chain></comment><story><title>Norway Is Walking Away from Billions of Barrels of Oil</title><url>https://www.bloomberg.com/news/articles/2019-04-08/norway-is-walking-away-from-billions-of-barrels-of-oil-and-gas</url></story>