oil and gas equilibrium

• Figure 2 is a more explicit representation of the long-run supply curve as we work to provide the world with 96 million barrels of oil per day.[2] The first reserves developed are the least expensive, from the on-shore Middle East at $10-$25 per barrel, then the Offshore Shelf at $40, and then from a variety of sources that keep price near $50 until we need 85 million barrels per day. Then the price to bring on new supplies rises rapidly, with U.S. shale at $65, oil sands at $70 and Artic oil at $75. These marginal suppliers all find themselves on the cusp of the 96.3 million barrels produced in 2015. Looking back, it is hard to imagine the long-run price of oil slipping under $50. Looking forward, global growth in demand at 1.0 to 1.5 million barrels per year will require higher prices near $65-$70.