Two things to throw into your analysis:

1. China is just starting to drive. There's a lot of demand yet to happen
there. The Saudis could be siphoning gasoline straight out of puddles and it
wouldn't matter if demand continues to rise.

2. Right now most analysts estimate we are seeing about a $10/bbl "terrorism
premium." If a large portion of production shifted to Canada, then we would
see that premium decrease as less of the world's oil production is
concentrated in such high-risk areas.

I also wonder whether we're anywhere near the efficiency frontier with
regards to shale oil extraction technologies. So long as it's cheaper to go
divining for liquid petroleum we won't see maximum commercial investment in
this area. Most technologies don't reach full efficiency until they're
scaled into major commercial applications.

-cwk.

"Mike Rapoport" wrote in message
ink.net...
Actually shale oil will be produced when it is economic to do so.
Assuming
that prices remain at $50, we will start seeing oil from tar sands and
shale. BTW the largest Saudi fields are now making about 60% water, the
days of cheap energy are behind us.

Mike
MU-2