Oil prices are set to spike again - The Economist

The Economist, Nov 6th 2008

Oil prices have plunged. Another spike may be on its way
AP

WITH the price of crude mired at half the peak of $147 it reached in July, this may seem like an odd time to invest in oil wells. Despite trimming its output along with other members of the Organisation of the Petroleum Exporting Countries (OPEC) in an effort to prop up prices, that is just what the United Arab Emirates plans to do. Short-term price movements, its oil minister insists, should not distract from the world’s enduring thirst for oil. Indeed the collapse of oil prices, one of the few reasons around for economic cheer, may be setting the stage for another spike.

The article notes that the prices below $70/barrel are not sustainable for investing in such projects as oil sands (ca $90/barrel). While the cost of raw materials drops, the cost of capital rises, thus further deferring the investementt.