and that it may not necessarily be a bad thing at all :

If that’s the case it’s time to start burning some more fossil fuels to get the temperatures up By the way, I read an interesting article this weekend on CNN Money about the cost of oil. A barrel of oil is now selling for almost $100 on the international markets but the production costs are mostly much lower. The real reason why oil prices have skyrocketed so much is the increasing demand from all over the world, especially from rapidly growing countries like China and India, and speculation.

The article unveils world’s cheapest oil comes from Saudi Arabia (like the huge Ghawar field) and costs only $2 a barrel (+ capital and other costs). The Saudis pump about 8 million barrels a day – roughly 10% of the daily oil consumption – so it’s pretty obvious that these guys are making shitloads of money these days.

For Western firms oil is a bit more expensive. According to Fadel Gheit, senior energy analyst at Oppenheimer, oil from easily accessible oil fields in places like Venezuela or Azerbaijan typically costs about $5-$7 a barrel. However, pumping facilities cost quite a bit of money so you’ll need to add another $5-$7 a barrel to get the true cost and then you also need to factor in taxes:

Gheit said taxes and royalty payments can range from 40 percent of profits in places like the United States to 90 percent or more in places like Russia or Libya.

“It’s a very complex equation,” he said of trying to figure out just how much it costs oil companies to produce oil.

The reporter also talks about the production costs of oil from more expensive and/or deep water fields like those in Texas, the Gulf of Mexico or the tar sands in Alberta, Canada. The extraction costs from these fields varies a lot, with prices ranging from the low teens to mid $20s. A few years ago when a barrel of oil cost less than $20 it wasn’t economically sound to extract oil from some of these fields but these days with prices above $90 these fields have become more profitable.

Here’s another funny GW image:

The last couple of days/weeks have been pretty busy by the way. DV Hardware keeps me pretty occupied and there are quite a lot of distractions which prevent me from getting all the work done in time… Like TV shows, movies, games (need to get my hands on CoD4 and Crysis later this week!). And then there’s also Darco who needs quite a lot of attention.