Originally Posted by JetPiedmont

As oil is extracted from an oil field, the internal pressures that aid in the extraction process decrease so that as more oil is extracted, the extraction process becomes slower and more challenging. Newer and more expensive technologies have to be researched, developed and utilized, significantly increasing the cost.

These extra costs migrate from the previous profit side if the equation to the current cost side of the equation. IOW, the oil companies use previous profits to fund current research and development in order to extract oil from less accessable and more challenging oil reserves.

As the current oil reserves continue to deplete, this extraction process will continue to become more difficult, which will continue to put upward pressure on the costs of extraction.

New oil reserves have been located, however their locations are geographicly very challenging. One is under the Siberian permafrost; another is off shore Brazil under historicly deep water for extraction. Both of these senarios make future extraction very difficult and costly.

It is difficult and dangerous work.