Liam Denning, Columnist

The Long-Term Price of Oil Is ...

The old cost-plus-return model doesn't work any more.

June 15, 2017 at 6:40 PM UTC

Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.

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What's the right way to think about the long-term price of oil?

This question consumes the industry -- and markets -- no matter what prices are on any given day. Back in 2000, when mega-mergers formed giants like Exxon Mobil Corp., it was typical to plug roughly $20 a barrel into valuation models. Only a few years ago, we were being told that "$100 a barrel is becoming the new $20". One crash later, no oil major's slide deck is complete without a pledge to fund itself at $55 or less.