PDA

View Full Version : Oil at $135 (and rising)...


airship
22nd May 2008, 11:49
I just don't get it. OPEC, Russia and other oil producers are operating a de facto cartel.

When BA and Virgin illegally colluded on fuel surcharges, the US / EU came down relatively hard (on BA). The EU does not allow Microsoft an inch (or 25.4mm) of leeway when it's considered that they've broken EU competition laws for example. Supermarket chains have most recently been in the firing line.

Yet, when it comes to oil, apparently none of our laws are applicable. Where's the problem? The Saudis and Gulf states have plenty of assets overseas which could 'be frozen' pending a court case if necessary. As for the Russians, every other 50 metre + luxury yacht berthed in European ports today apparently belongs to them too...

So how come we don't simply prosecute all these countries for their unfair and illegal acts under our various competition laws?

And if that doesn't have the desired results, might I suggest that the Republican nominee for the next US Presidential election seriously consider a 'controlled-exit' strategy for Iraq combined with a 'controlled-entry' into first Saudi Arabia, followed by the Emirates and say Kuwait during his 4 year mandate - I believe that even Nicholas Sarkozy would show some support?!

The way things are going, the impression I have is that all that money we're sending over there in payment for the oil is coming almost straight back here and being used to buy important holdings of what some might call strategic interests in the very fabric of our economies (at least what isn't being spent on Royal palaces and yachts). I hate to remind everyone, but Arabs were once very involved in the African slave trade. And I don't especially wish to become a (modern European) 21st Century equivalent... :}

ZFT
22nd May 2008, 12:04
..because the world's governments are more worried about Public Servants well being than the rest of us and VAT and Sales Tax goes towards their pensions etc.....

Roll on the revolution.

Avitor
22nd May 2008, 12:09
I have heard reports that big business speculators are deeply involved in oil prices.
Don't ask me how, it's all above my head, not my pocket though!

Big Tudor
22nd May 2008, 12:10
Do you really think the sheiks of the OPEC Cartel would give a shiny sh1te what the EU said? If the EU stopped importing Middle East oil they would just sell it to the Indians, Chinese, etc.
The sheiks are sitting in their palaces fat, dumb and happy at the minute, safe in the knowledge that what they produce is selling at prices even they couldn't have dreamt about. The last time they increased production significantly the price of oil fell by half in 2 months. The won't jeopardise their pension funds like that again.
Remember when the first $100 barrel of oil was sold. That was all down to some smart arse buyer who wanted to tell his grandkids that he was the first person to pay $100 for a barrel of oil. And we trust these idiots to trade in one of the most valuable commodities the world has on offer? :=

Rollingthunder
22nd May 2008, 12:11
Shock/horror - bottled water now at $360 a barrel.

Just supplying Americans with plastic water bottles for one year consumes more than 47 million gallons of oil, enough to take 100,000 cars off the road and 1 billion pounds of carbon dioxide out of the atmosphere.

Turn a tap, buy a Brita.

Aaaaaaaaaaaaaaaargh!
22nd May 2008, 12:15
I agree 135%

Avitor
22nd May 2008, 12:18
"I agree 135%"

You can't, there's only 100 in a percent. :cool:

Big Tudor
22nd May 2008, 12:21
I think it's spelt S_A_R_C_A_S_M.

And anyway, there is only 1 in a percent. ;)

Avitor
22nd May 2008, 12:24
Shucks...you're right. :eek:

G-AWZK
22nd May 2008, 12:24
Rumour has it that Big Oil has accepted that there will be a Democrat in the White House who is likely to be less <ahem> supportive of the oil industry, and that oil co.s and the big producers are making hay while the sun shines.

The amazing thing is that capitalism has done for more airlines than terrorism ever has. Kind of ironic really.

airship
22nd May 2008, 12:25
Just blaming the Americans for this is very tempting (Oh Lord, help me ;)) but I don't really believe that it's because of plastic water bottles...?!

The Arab oil sheikhs may indeed be sitting fat dumb and happy in their palaces at present but I'm pretty sure that their 'pensionable' assets are mostly held and invested in the USA, Europe and some parts of Asia. As such, they should be relatively-easily accessible to our law-enforcement agencies.

How about some 'you invest more in developing your production facilities, increase production, lower the oil price' and then we'll consider releasing your frozen assets in order to pay the chandlers who supply your floating gin-palaces? :8

PS. You keep pumping, we keep buying until it gets cheaper. That way we don't have to tell your people just how much of your 'asses' we're holding onto in case they begin asking for more than just democracy and also want a piece of yo' ass...?! :E

You know, sometimes I astound even myself. I too could be a world-statesman. Sort of along the lines of Jimmy Carter (but with more venom...?! :ok:

under_exposed
22nd May 2008, 12:38
So why should they sell us their natural resources cheap?

tony draper
22nd May 2008, 12:39
Well,we know where all these Oil Sheikhs live.:E

D SQDRN 97th IOTC
22nd May 2008, 12:42
prosecute them?

the EU and the USA are more likely to invade them first....

hey! now there's thought.

but forget about $135 oil.

It's going to $500 dollars in a couple of years, and $1000 dollars within 10 years.

Binoculars
22nd May 2008, 12:42
I own a significant number of shares in what is quite possibly the only oil producer in the world whose price refuses to rise. Anybody want a winner on the weekend? :confused::confused:

Big Tudor
22nd May 2008, 12:48
Wouldn't happen to be a company called Dragon Oil would it Binos?

Binoculars
22nd May 2008, 12:52
Nope. Small time Oz producer called Drillsearch. Nice assets, utterly hopeless management. Fortunately sold half my original holding at a nice price guaranteeing I can't lose much even if they go out the back door. I just shake my head at how a company that's actually producing, not a spec explorer, (though they do a fair bit of that too) could possibly be going downhill while the POO has gone from $80 to $130.

I sure can pick 'em!

airship
22nd May 2008, 12:54
Perhaps if Americans all bought small diesel cars adapted to run on used frying fat, what could be recovered from McDonalds, KFC outlets etc. might be enough to lower world oil demand sufficiently to ward off $150+ oil...or how about obligatory liposuction directly plumbed-into the fuel injection for good measure?! :ok:

PS. con-pilot could probably run his car free on all the old fried turkey fat...?!

(God, why has Thou forsook me - I could not help myself) :(

The rest of you, behave - this is a serious thread and concerns the life or death of oil producing sovereigns and governments! :=

SpringHeeledJack
22nd May 2008, 13:09
How much of the current price rise is due to the fact that oil is traded in US$ and the nominal value of that currency is going down the tubes (so it would seem) ?

It just seems that the powers that be let 'this' happen and aren't too inclined to take some kind of action to soften the blow or have an alternative (plan) in the wings to bring on-line in such scenarios.

If things carry on as they are at present, then our leaders really will have bigger things to worry about from the proletariat as each and every one of them are affected in regards to the quality of their lives. Cue 'citizen smith'......


Regards


SHJ

tony draper
22nd May 2008, 14:04
Yup, I have a bad feeling about this,I think the west has had its day in the sun, the next few decades are going to be very interesting,one can only wish those who will participate in same, good luck.:E

Lydia Dustbin
22nd May 2008, 14:32
Don't worry the limit will soon be reached within the next few weeks. Prices will rise rapidly from '135 dollars' a barrel to 'The West is Bent over' a barrel.
Not long to go!

SpringHeeledJack
22nd May 2008, 15:15
It really makes me wonder how hauliers, especially those in the UK (which seems to have the highest prices in the world) are able to keep operating, especially the smaller ones. I heard from a german HGV driver that his company (a large logistics concern in the EU) were using polish and other east-european drivers and their lorries to bypass the punitive UK petrol prices.

They do this by tanking in their home country, carry extra tanks and are able to go the length and breadth of the UK on this diesel and thus save major money for the haulier. Downside is, of course that there's going to be less yorkie bars being sold in the very near future due to lack of customers (UK TV commercial of old).

Regards



SHJ

Lydia Dustbin
22nd May 2008, 15:39
Springheeled

I think this will bring back the memories for you:ok:

I Like Trucking! (http://www.youtube.com/watch?v=ozVxiQcqFQ8)

Rwy in Sight
22nd May 2008, 18:51
I read a number of times that the price of oil is due mainly to the trading in a commodity exchange (and people/organizations taking positions towards raise fall in price). I am not sure about the terminology but I hope you understand what I am saying.

In view of this situation a (very steep) tax on those transactions may reverse the situation.

Rwy in Sight

Rough Driver
22nd May 2008, 20:22
"In view of this situation a (very steep) tax on those transactions may reverse the situation."


Sadly complete tosh.

First point is that the rise in oil prices is 85% due to supply and demand. i.e not enough oil in the sandpit and too many little people wanting to drive around in re badged Rover 75's.

Second point is that the hedge funds who are now entering the energy market as a hedge against poor equity and credit. Prices are not driving up the market that much. If they where the price would have been at $200 per barrel long ago.

Also if these funds where driving up the price so much what could any goverment on this planet do about it. Most of these funds are off shore and unregulated. As for a tax on energy futures that would hit the airlines etc who are doing exactly what hedge funds are doing and buying forward contracts at $200 per barrel.

We are now entering the $120> oil price world and it will be with us for a very long time.:}:}

Parapunter
22nd May 2008, 20:39
The answer SPJ is they aren't.

Failures in the road haulage industry since March his year:

Pawson Group
Ramage distribution
Smith of Whiteinch
CB Morgan
JDR Distribution
Caledonian Express
Harper Haulage
Clipper Freight (Reading)
JMT European
Page Group.

Ramage & Pawson saw the loss of about 800 jobs between them. I predict this is the beginning of the worst year in my business since I began trading.

ehwatezedoing
22nd May 2008, 20:43
For those wondering about our future in general, you should google:

"Life after the oil crash" :E :E :E

"Are We 'Running Out'? I Thought
There Was 40 Years of the Stuff Left"

SpringHeeledJack
22nd May 2008, 21:13
parapunter

Wow that's quite a few companies gone to the wall in a short time :uhoh: From your previous posts i had an inkling that you were in the trade and i imagine that it will take a lot of concise planning to keep ahead of the curve. It must be a nightmare for you right now with costs (fuel) going up by the day almost.

I drove a rental van 4 months ago a distance (motorway, minimal stopping) of 1000kms. 2 years ago i drove same van over 2200kms. Everything was the same more or less, but i spent only 12 more on the longer journey. I drive pretty economically and was shocked as to how the price of diesel had risen.

For me it was an annoyance that i was able to forget within a short time, but for it to be a reoccuring expense, well what can i say. I wish you the best in the current climate and a clear head.


Regards


SHJ

con-pilot
22nd May 2008, 21:16
I heard from a very knowledgeable source that oil will top out at $141.00 and stay there until the end of the summer and then slowly start dropping to the $100.00 a barrel range for the foreseeable future.

Then he asked if I wanted fries with that hamburger.

Big Tudor
23rd May 2008, 07:47
To be honest con-pilot your average burger server is probably just as qualified (if not more so) to give advice on the price of oil than most people. For sure, I'd listen to them before I listen to some of the mouthpieces on CNN, BBC, ITV, etc.

IB4138
23rd May 2008, 07:58
If speculators are a root cause of these price hikes, then why not make the practice illegal, punishable by long terms of imprisonment(some counties may make it a capital offence), huge fines and profit seizure from such trading.

These people are just lining their own pockets at everyone else's expense and pain.

BlueWolf
23rd May 2008, 08:11
Rumour has it that Big Oil has accepted that there will be a Democrat in the White House who is likely to be less <ahem> supportive of the oil industry, and that oil co.s and the big producers are making hay while the sun shines.

:confused: but McCain is a Republican, isn't he? :confused::confused:

The only people who believe the Democrat candidate will win, are the Democrats and the media....but then I repeat myself ;)

Hokulea
23rd May 2008, 08:30
Firstly, I apologize for what is going to be a completely naive question. I wouldn't stand a chance of passing an economics O' level even if I was handed the answers in the exam (economics 101 for my US friends).

No matter where I go, I see people with opinions about the cost of oil now and in the future and it's nearly always based on what "speculators" are doing, how much oil is available by other means (e.g., oil tied up in Alaska or in Canadian sand) etc.

I rarely see anything mentioned about there being a fairly major conflict in the middle east involving the US, UK and allies yet can't help thinking that this might have something to do with the problem as the middle east is where most of the western world's oil comes from.

In my mind there's little doubt the current crisis is a combination of several factors yet I'm suprised the "war on terror" is rarely, if ever, mentioned as a contributing factor.

Am I being stupid? This is a genuine question.

Track Coastal
23rd May 2008, 08:35
Speculators are needed on commodity (futures) markets to add liquidity. $9788USD gets you away with a 1000 barrels of Light Sweet (long or short). Thats a $130,000 worth of black gold you controlling now.

http://www.nymex.com/lsco_pre_agree.aspx

The key problem is that hedge funds and institutions are using the Crude Oil and Gold markets as a hedge against the collapsing greenback. Oil retreated a day ago because the USD rallied. The Euro/USD foreign exchange market is close to being 96% correllated to the Oil market and it may even be now a leading indicator (eg the Euro is up go long on oil, the euro is down go short etc). This relationship has only really existed since Dubya went into the sand in 03 with his "shock and awe". Oil has now overtaken Gold in liquidity on futures markets.

Blame the feckwits in DC (Whitehouse and Federal reserve) that have screwed the US economy and particularly the USD (1 dollar actually bought a Euro and then some when Mr Halfwit came into office in 2000, now it buys less than 2/3s) and don't forget the feckwits in the street that voted/enambled that all to happen in two elections.

A war with Iran will get your mind off who is giving it to you in the blurter and why. And if I can be 'short' on every stock index (ASX200, FTSE, S&P 500, Nikkei etc) and 'long' on Crude and Gold, the Canadian ($), Aussie ($) and Euro when that happens I will be. Don't blame speculators or institutional investors (trying to make money for YOUR pension funds) for the abject stupidity of the American voter in 1999 and 2003.

If you don't understand why commodity/futures markets exist, go here:
http://en.wikipedia.org/wiki/Commodity_markets

IB4138
23rd May 2008, 09:11
That's bollox Track Coastal.

Don't blame speculators or institutional investors (trying to make money for YOUR pension funds) for the abject stupidity of the American voter in 1999 and 2003.

I do. The markets are not tightly regulated enough to stop rogue trading and speculators making a fast buck.

MY pension fund, or anyone else's for that matter, does not appear to be performing to even off set the huge oil price hikes. Additionally, at this stage last year, the = 1.40. It's now 1.25. The stock markets also appear deficient in regulation today. Don't tell me how to suck eggs, I know how the markets are meant to run.

The problem is they no longer do. There are too many crooks and so called "analysts"( who know f**k all about their "specialist area", other than how to ensure they are paid a fat bonus) all out there, making fast bucks. Regulators need to catch up, realize that time has moved on and sort the crooks out.

Track Coastal
23rd May 2008, 11:18
if I can be 'short' on every stock index (ASX200, FTSE, S&P 500, Nikkei etc) and 'long' on Crude and Gold, the Canadian ($), Aussie ($) and Euro when that happens I will be.
me

MY pension fund, or anyone else's for that matter, does not appear to be performing to even off set the huge oil price hikes.

Britons voted to NOT be part of the Euro, hows that going? - Tuffsky Sh!tsky mate you reap what you sew. See the currencies above? The pound is southbound against the uero maybe your pension needs to look at its hedging? The USD is an anchor chum and the pound is tied to it.

I must admit that I have bo friggin idea why speculators are abandoning the pound. Betcha the Irish are laughing though.

frostbite
23rd May 2008, 11:50
Remember that the bulk prices take around 4-6 weeks to filter through to the retail price, so pump prices in June/July could be eye watering.

BenThere
23rd May 2008, 16:28
The price of oil will rise to the point where the reward to its suppliers is optimized, as it should.

When demand falls sufficiently as a result of the price being too high, as it will, then the price will come down. I thought that price point was $75/barrel a year ago, but I was wrong.

Our economies and infrastructure may take decades to build around alternatives, which will likely be nuclear electricity, natural gas, wind, solar and coal, but the transition will occur if today's high relative price of oil is sustained.

Speculators, the exchange value of a dollar or pound, and derivitive financial vehicles have little or nothing to do with it. It's basic economics at work, inexorable and apolitical.

ORAC
23rd May 2008, 16:51
http://d.yimg.com/us.yimg.com/p/uc/20080523/lpo080522.gif

con-pilot
23rd May 2008, 17:06
Cold hard fact is that the environmental movement and the associated radical groups are having a drastic impact on the price of oil in the United States. Please consider the following issues.

1. No new oil refinery has been built in the U.S. since 1975. Reason, the draconian regulations of the EPA has made the building of a new refinery cost prohibitive.

2. Over 85% of the US coastal areas restricted for any type of oil exploration and production. An estimated 115 billion barrels of oil are contained the offshore reserves that due to environmental laws cannot be accessed.

2.b. Over 1000 offshore oil rigs were destroyed or severely damaged by Hurricanes Rita and Katrina. There was not one incident of any type of pollution and/or oil spills.

3. The Alaskan Wilderness Area, an estimated 85 billion barrels of oil that cannot be produced due to environmental laws.

4. Wyoming, Montana, and other northwestern states have reserves in excess of 30 billion barrels of oil, that guess what? Cannot be drilled for due to environmental restrictions.

5. Coal. Now talk about raising a red flag and causing the environmentalist folks to go ape, just mention coal. The United States along with the U.K. have the one of the largest, if not largest reserves of coal in the world. And what are we doing with all of this energy sitting under the ground? Nothing.

Other related facts are that someday we will run out of crude oil, however that is a long time from now. All the cheap easy to produce crude oil is gone. However, due to the advanced drilling technology we have today we can access oil that was considered impossible as little as ten years ago. Another example of this is the oil shale/tar-sand areas in North America. Until recently it was cost prohibitive to produce oil from these areas, not any more. But it will cost us, then again it is already costing us.

airfoilmod
23rd May 2008, 17:11
What He said. The rest is smoke and mirrors.

Overdrive
23rd May 2008, 17:18
Over 1000 offshore oil rigs were destroyed or severely damaged by Hurricanes Rita and Katrina.



:eek: It was that many?! Jeez. My mate in La. told me about 200.

Some good points you raised... but what will be done?

con-pilot
23rd May 2008, 17:23
It was that many?! Jeez. My mate in La. told me about 200.

I'll have to recheck my sources, however, I believe the number of 200 was the count of the oil rigs that were destroyed. The number of 1000 I posted was counting all the rigs destroyed and badly damaged by the two hurricanes.

In any case no matter the number the point is that no oil escaped.

Chimbu chuckles
23rd May 2008, 17:23
Between ANWR/US continental shelf/Oil shale/Tar sands/Tupi oil fields of South America/new discoveries in the lower 48 etc (totaling trillions of barrels) the US could be independent of Saudi oil in short order except the Democrats won't let the oil companies off the leash.

It's their left wing ideology getting in the way of common sense...and maybe why the Dems will lose the unloseable (sic) election in November.

Instead of encouraging the oil companies to drill where ever they please, with good practical environmental safe guards in place, these idiots want to slap wind fall profit taxes on the oil companies and verbally abuse them on Cspan...how long before Chevron et al move offshore like Haliburton already has?

The world has SHITLOADS of oil and this current spike is a commodities bubble ready to burst...driven by big banks and hedge funds trying to recover losses from their subprime greed fest and using a huge loop hole in the futures trading rules that allow completely unregulated, highly leveraged and uncontrolled futures trading.

Boeing's experts in this field are predicting $60 oil in the near future. Plenty of others predict sub $100 oil.

Can you blame the Saudis for not increasing production? Their biggest worry at the moment is the bottom dropping out of the market not $200 oil.

con-pilot
23rd May 2008, 17:25
Excellent point CC.

v6g
23rd May 2008, 17:29
4. Wyoming, Montana, and other northwestern states have reserves in excess of 30 billion barrels of oil, that guess what? Cannot be drilled for due to environmental restrictions.

- if it can't be drilled (for environmental reasons) then how come we know how many barrels of oil are down there?

Chimbu chuckles
23rd May 2008, 17:41
The realistic view

http://oil-gasoline.typepad.com/george_clemen_oilgasoline/

v6g
23rd May 2008, 17:54
The world has SHITLOADS of oil...
- correct, there's plenty left, there's almost half still left. The trouble is that the second half isn't cheap to get at. There may indeed be plenty of the black stuff under the sea but deep ocean extraction is way more expensive than just digging a whole in the Ghawar field.

... and this current spike is a commodities bubble ready to burst...driven by big banks and hedge funds
- quite possibly, but remember that no hedge fund or big bank is actually hording the stuff - they just buy the option to buy it a fixed price a couple of months before it's delivered and sell it once it's ready to leave the port.

Boeing's experts in this field are predicting $60 oil in the near future. Plenty of others predict sub $100 oil.
- Boeing's product line is dependent on a long-lasting abundant supply of cheap oil, I wouldn't take too much of what they say as truth.

Can you blame the Saudis for not increasing production? Their biggest worry at the moment is the bottom dropping out of the market not $200 oil.
- very valid point but a bigger problem for the Saudi fields is the geological problems caused by over-production. By producing too much oil from a field you actually cause the field to prematurely age and lessen the total amount of oil recoverable (Google: "Ghawar water-cut"). The last publicly available information on the Saudi super-giant fields from 1980 suggests that they were showing the early signs of an increasing amount of water presence (the so-called "water-cut") in their reservoirs back then. The Saudi's claim that their fields are not susceptible to these problems. If they're right then they've got the first magical field in the history of global oil production that doesn't suffer from these problems of over-production. Every single field of similar geology does.

The points you make are very valid ones and you may turn out to be absolutely right (I hope so) but there are equally good and reasoned arguments, based on independently verifiable data, that suggest the world has hit an oil crunch point in both supply and demand.

Lydia Dustbin
23rd May 2008, 17:54
Con,

you mention above about some 230 billion barrels of oil, that are available to the US but cannot be drilled for because of environmental laws. It sounds like a very clever ploy by someone to make sure that ME (and any other) oil is used first at all costs, then when the oil does run out, the environmental ban will be lifted, and hey presto the US will have sole access to 230 billion barrels of oil.
Remember where you heard it first:ok:

Chimbu chuckles
23rd May 2008, 18:11
Ahh V6g you've read 'Twilight in the desert' then...a load of bollocks right up there with Erlich's 'Population Bomb', Club of Rome's world starvation by 2000 and Anthropogenic Global Warming...doomsayer rubbish.

Get a book called 'Skeptical Environmentalist' by Bjorn Lomborg. The world has 1000s of years worth of oil/coal etc left.

Every year the world finds more oil than it uses...every year. The oil companies never have and have never had more than 30-40 years worth of oil because it would be wasteful in the extreme of company resources to go looking for it with so much 'in the bank'.

You know when the first PO scare did the rounds?

1908.

100 years ago we were not using much oil/natural gas and in 100 years we won't be either...think about what technology has bought us in the last 100 years and try to imagine what it will bring us in the next 100 provided the left wing isn't allowed to stand in the way with their biblical end of the world horseshit.

con-pilot
23rd May 2008, 18:43
- if it can't be drilled (for environmental reasons) then how come we know how many barrels of oil are down there?

Just ask any geologist, they will be happy to tell you. One does not find oil by just going around drilling holes in the ground haphazardly. Well, maybe a 100 years or so perhaps they did, not anymore.

v6g
23rd May 2008, 19:19
The realistic view

http://oil-gasoline.typepad.com/geor...n_oilgasoline/
Thanks for that link, I've taken a look. Whilst I agree with some of the arguments against the current sharp spike (even though some of his economic theories confused me I'll give him the benefit of the doubt), his arguments about the long-term view don't make sense.

Ahh V6g you've read 'Twilight in the desert' then...a load of bollocks ...doomsayer rubbish.
Yes - I've read that book. What is the fundamental flaw you are claiming in the authors perspective? Is it that he drew the wrong conclusion from the papers published by the Society of Petroleum Engineers (SPE)? Or that the SPE papers are factually incorrect? Or is it that the increasing water-cut is not a problem for Ghawar? Or is it that Saudi Aramco's massive investment in secondary and tertiary recovery technnology serves no purpose? Really - I'd like to know.

Get a book called 'Skeptical Environmentalist' by Bjorn Lomborg.
- Thanks - I'll have a look - although this debate isn't about environmentalism and I don't doubt that much environmentalism is based on hearsay rather than fact.

The world has 1000s of years worth of oil/coal etc left.
- maybe true, but that doesn't take into account the cost of extraction or the anticipated rate of demand.

Every year the world finds more oil than it uses...every year.
I disagree. The worlds major oil companies are finding less each year than they produce. OPEC-owned companies don't report reliable figures for their exploration efforts.

The oil companies never have and have never had more than 30-40 years worth of oil because it would be wasteful in the extreme of company resources to go looking for it with so much 'in the bank'.
- that "40 years left" assumes that the rate of extraction over the next 40 years will stay constant until the very last drop is extracted. That assumption is incorrect. The claim that discovering larger reserves would be wasteful of company resources is based on the assumption that oil companies deliberately go out to find smaller and smaller reserves. That, again, is incorrect. Despite record exploration expenditure the big oil companies are finding less and less reserves. In the rare examples where a company has increased it's reserves it has generally been via an acquisition.

You know when the first PO scare did the rounds? 1908.
- quite possibly, but it was again predicted in the US in the 1960's and turned out to be correct. But let's not allow past performance to be an indicator of future performance. Even if it turns out that everything is just fine on the supply front, it doesn't account for the sudden and massive increase in demand from the populations of the developing world. And it's the price of oil, after all, that is the debate here.

100 years ago we were not using much oil/natural gas and in 100 years we won't be either...think about what technology has bought us in the last 100 years and try to imagine what it will bring us in the next 100 provided the left wing isn't allowed to stand in the way with their biblical end of the world horseshit.
Let's hope that's correct but it doesn't explain why today 60% of the worlds oil producing nations are in decline.

Chimbu chuckles
24th May 2008, 05:42
Skeptical Environmentalist is not just an environmental book it is a critical look at the state of the world written by an economist/statistician...don't let that deter you, it is a remarkably good read.

It looks at all the worlds resources using empirical data and lays to rest the green rhetoric that the worlds resources are being used up at an unsustainable rate. Lomborg is greeny public enemy No 1 as a result of this book and his latest effort. Interesting to read attacks on him by various high profile environmental groups...they never attack that voracity of his data only him personally.

While it seems intuitive that the world resources are indeed finite, you can't look at a picture of earth taken from space and feel any other way, that doesn't mean supply (of whatever) is limited in a way that should have us concerned on any meaningful human time scale.

I cannot remember the exact numbers because it has been a year or more since I read a borrowed copy but the nuts and bolts of 'oil' was that, as of 2000 when the book was released, we had used up roughly 2% of then proven oil reserves in the entire oil age, roughly 130 years. Bare in mind those 'proven' reserves of which he speaks were based on the price/bbl in 1999/2000, $12/bbl...there is vastly more oil in the 'proven' column of oil company ledgers now than there was then because the $/bbl is many times higher now than then.

What has changed in the world in the last 9 mths or so since oil was circa $70/bbl?

Nothing bad is the answer.

The Iraq situation is improving, world demand is dropping as the price/bbl forces people to moderate their use...and we are finding more (new) oil at the same time as technology is improving recovery rates from circa 10-30% of known oil in old wells to figures that approach 80%.

Cost of extraction varies from circa $2/bbl in the ME to circa $30/bbl for the tar sands in Alberta.

So where does $135/bbl come from?

The answer is a falling US$ and the fact that the oil price is set ONLY by the Futures Market...a market that is largely unregulated because they have found ways around the regulatory controls by utilising loop holes in legislation written by politicians that range from just plain thick to complicit. A relatively small amount of oil is traded on the NYMEX which is regulated...much more is traded through the ICE in the UK and the Dubai bource.

When a trader buys an oil future it is much like you or I ordering an actual barrel of oil...except the trader doesn't actually want to own a barrel of oil he is only interested in selling on the instrument for a handsome profit. As a result 'demand' for oil is artificially elevated beyond real demand....that artificial demand hides real (falling) world demand.

Maybe that is why oil tankers are sitting offshore in the Gulf of Mexico full of oil nobody actually wants?

Why this frantic unregulated trading in oil futures?

Well do you think that Morgan Stanley et al are just sitting licking their wounds from the sub prime meltdown?

No, they are driving an equally artificial bubble in oil to try and make that money back, once again, like sub prime mortgages, at our expense.

Don't they feel guilty?

NO!!!!!

Google 'Industrial Psychopath' to learn about the mentality of the people running these huge financial plays...they have a sense of entitlement and a disregard for others that is breathtaking to behold...the reason we need regulation in the first place.

Where will it end?

I feel it is close...if $135/bbl is sustained we are facing the meltdown of the aviation industry...don't underestimate the flow on effects of that to the world economy.

It would accelerate the subprime mortgage fiasco out of control...even that is not finished yet...mortgage resets are set to give sub prime a big kick along in the next 12 mths or so...Morgan Stanley et al know that too:mad:

Sir Lee Bstard
24th May 2008, 10:42
With respect to the knock on effect of disruptively high aviation fuel, I recall hearing (some 10 years or more ago) that a 10% activity drop in the tourist industry would destroy 80 million jobs world wide. just what developing tourist orientated nations need!

Krystal n chips
24th May 2008, 13:06
Tesco's..who else, profiteering :mad:.....114.9 for 4star......Asda...8miles away....110.9......no doubt a catalogue of well honed excuses as to why the slight disparity of course :yuk::rolleyes:....and you can bet that if and when the price does start to fall....it will come down a bloody sight slower than when it went up......in the meantime......for those brainwashed into worshiping at the Shrine of St Tesco.....you are being well and truly screwed.

Of course, if HM Gov't actually listened and cared enough about the economy, they might take a closer look at this profiteering.....there again, as the beneficiary's they couldn't care less I suppose.

Mariner9
24th May 2008, 14:17
Its a free market economy KnC, Tescos can set whatever price they like. If they set them too high, their market share will fall - simple economics.

Surely you don't think laws should be intoduced to make all petrol retailers sell at the same price instead of the ~4% difference you've identified?

If the did, what would be the benefit to the customer when garages could no longer undercut each other?

frostbite
24th May 2008, 14:38
Don't assume that all Tescos will be selling at that price because they won't. They set their prices according to the local competition - some will be charging more, some less.

BAMRA wake up
24th May 2008, 15:39
Getting parochial here but just drove round the local filling stations with nothing on the gauge but the maker's name, in desperation pulled in at the cheapest - 1.37 for diesel, 1.26 for petrol!

dazdaz
24th May 2008, 16:12
For the older readers (as myself) 114.9 per litre works out at 5.17p per gallon. It's all going crazy.

Krystal n chips
24th May 2008, 17:13
Mariner,

I agree it's a free market economy and that, in theory, if the price is too high the consumer can shop elsewhere......however.....the point I was trying to make ( other than the usual one about Tesco being far from the "best for everything bolleaux" that constitutes their advertising strategy and which people seem to believe :ugh: ) is that with the price of fuel now high on most people's budget....and possibly even more so after the great exodus this weekend...then such a disparity cannot be justified other than for pure profiteering under the guise of exploiting the publicised rise in the cost of oil which "has to be passed on to the motorist" as per the usual mantra.

I know that it's not possible to legislate on prices, but I am sure there are "ways and means"....ok arm twisting if you like....for the Gov't to convey to Tesco that such a disparity is not warranted in the current climate. I should add the location is not in a rural area either. In this case, clearly Tesco's beancounters feel they can sell at the price they are doing and may well be doing elsewhere in the UK....but cannot, as far as I can see, justify the price other than to exploit the public if a site 8miles away can sell at the lower price.

Their breakfast quality has gone for a can of s4t as well...but that's got sod all to do with this thread. :E

Mariner9
24th May 2008, 18:27
But 4% is not a big disparity. The price of bulk gasoline varies hugely day to day and deal to deal - Tesco's (and everyone else) have complex price calculations and local market conditions to factor in when deciding on their prices.

I'm certainly not an apologist for Tesco (or indeed any other supermarket); being in the industry and having knowledge of their fuel formulations, I buy most of my Mogas for my aircraft from BP and Diesel for my car from Shell (though Mrs M9's car runs mostly on Asda mogas despite my advice:ugh:)

The Tesco's deteriorating breakfast :yuk: may well have something to do with the price of oil too, transport/production costs are obviously increasing and perhaps they're substituting cheaper, lower quality ingredients in an effort to keep the prices as they were.

airship
24th May 2008, 23:03
Is con-pilot a closet NIMBY (Not In My Back-Yard)...?! Cold hard fact is that the environmental movement and the associated radical groups are having a drastic impact on the price of oil in the United States. Please consider the following issues.

1. No new oil refinery has been built in the U.S. since 1975. Reason, the draconian regulations of the EPA has made the building of a new refinery cost prohibitive.

2. Over 85% of the US coastal areas restricted for any type of oil exploration and production. An estimated 115 billion barrels of oil are contained the offshore reserves that due to environmental laws cannot be accessed.

2.b. Over 1000 offshore oil rigs were destroyed or severely damaged by Hurricanes Rita and Katrina. There was not one incident of any type of pollution and/or oil spills.

3. The Alaskan Wilderness Area, an estimated 85 billion barrels of oil that cannot be produced due to environmental laws.

4. Wyoming, Montana, and other northwestern states have reserves in excess of 30 billion barrels of oil, that guess what? Cannot be drilled for due to environmental restrictions.

5. Coal. Now talk about raising a red flag and causing the environmentalist folks to go ape, just mention coal. The United States along with the U.K. have the one of the largest, if not largest reserves of coal in the world. And what are we doing with all of this energy sitting under the ground? Nothing.

Other related facts are that someday we will run out of crude oil, however that is a long time from now. All the cheap easy to produce crude oil is gone. However, due to the advanced drilling technology we have today we can access oil that was considered impossible as little as ten years ago. Another example of this is the oil shale/tar-sand areas in North America. Until recently it was cost prohibitive to produce oil from these areas, not any more. But it will cost us, then again it is already costing us. Conveniently, none of these resources appears to be located in Oklahoma...?! ;)

Well, I'm glad that so many have been able to 'vent their spleen' in this thread. But may I just remind everyone of what I wrote in post #1 (http://www.pprune.org/forums/showthread.php?t=327919) and drawing attention specifically to: So how come we don't simply prosecute all these countries for their unfair and illegal acts under our various competition laws? Only, I understand that just yesterday or the day before, some US congressmen (or were they senators :confused:) were considering action along similar lines... :ok:

Like Jay Leno said last week, how come we're sending all those probes to Mars in order to discover whether or not there is any water or ice there - when all we should really want to know is whether there's any oil out there?!

PS. con-pilot, is that far enough away from your back-yard buddy...?! :)

brickhistory
24th May 2008, 23:12
airship, do a quick google of Oklahoma

(some folks call it north Texas, but I still call it Oklahoma, ummhmmm ((Slingblade imitation)).

Ever heard of oil wells? Tulsa? Wild catting?

Even more specific, look at the state capitol grounds.........funny how only Americans can be accused of ignorance of the world here...........

D SQDRN 97th IOTC
25th May 2008, 09:26
Chimbu

There is probably some truth in what you say....
Futures markets can exacerbate volatility - and right now that is to the upside.

I have a little knowledge in this area, as I was the compliance officer for the International Petroleum Exchange 'IPE' in the early 90s (during Gulf War 1), and before the IPE was bought by ICE.

During that Gulf War, the EU energy commission, I think it was DG (Directorate General) XVII or DG XVIII, tried to shut the IPE down - as they argued that trading would cause a price spike. IPE fought back, and said that visibility of pricing would stop a fuel panic as happened in the 70s. IPE won.

But that was before hedge funds and others shoved their money into the "pit", as it were. (Or screen now for ICE.)

There is talk that this trading - or psychology premium - adds about $40 to $50 bucks a barrel. I probably agree to that.

Bottom line -if you are Russia, or Saudi, pumping out 10 million barrels a day, at record prices. And you can build your economies up from the really low levels they were once at, because the western economies had been having your "black gold" for not much......would you feel charitable? Or does charity begin at home?

BTW....
Some of your comments regarding how the physcial market is priced off the futures price are a bit wide of the mark. In London, the front month ICE contract is settled by reference to the Brent physical "15 day" and "dated" markets, not the other way around. I accept that for the USA, a lot of crude oil is priced off the Nymex contract. But big difference is that Nymex is a deliverable contract - the ICE Brent contract is only cash settled.

helimutt
25th May 2008, 14:13
Well this is a VERY interesting Read ...



Posted Sat May 24, 2008 11:12am PDT

BUSKIRK, N.Y. - A few years ago, Kathleen Breault was just another suburban grandma, driving countless hours every week, stopping for lunch at McDonald's, buying clothes at the mall, watching TV in the evenings.

That was before Breault heard an author talk about the bleak future of the world's oil supply. Now, she's preparing for the world as we know it to disappear.

Breault cut her driving time in half. She switched to a diet of locally grown foods near her upstate New York home and lost 70 pounds. She sliced up her credit cards, banished her television and swore off plane travel. She began relying on a wood-burning stove.

"I was panic-stricken," the 50-year-old recalled, her voice shaking. "Devastated. Depressed. Afraid. Vulnerable. Weak. Alone. Just terrible."

Convinced the planet's oil supply is dwindling and the world's economies are heading for a crash, some people around the country are moving onto homesteads, learning to live off their land, conserving fuel and, in some cases, stocking up on guns they expect to use to defend themselves and their supplies from desperate crowds of people who didn't prepare.

The exact number of people taking such steps is impossible to determine, but anecdotal evidence suggests that the movement has been gaining momentum in the last few years.

These energy survivalists are not leading some sort of green revolution meant to save the planet. Many of them believe it is too late for that, seeing signs in soaring fuel and food prices and a faltering U.S. economy, and are largely focused on saving themselves.

Some are doing it quietly, giving few details of their preparations afraid that revealing such information as the location of their supplies will endanger themselves and their loved ones. They envision a future in which the nation's cities will be filled with hungry, desperate refugees forced to go looking for food, shelter and water.

"There's going to be things that happen when people can't get things that they need for themselves and their families," said Lynn-Marie, who believes cities could see a rise in violence as early as 2012.

Lynn-Marie asked to be identified by her first name to protect her homestead in rural western Idaho. Many of these survivalists declined to speak to The Associated Press for similar reasons.

These survivalists believe in "peak oil," the idea that world oil production is set to hit a high point and then decline. Scientists who support idea say the amount of oil produced in the world each year has already or will soon begin a downward slide, even amid increased demand. But many scientists say such a scenario will be avoided as other sources of energy come in to fill the void.

On the PeakOil.com Web site, where upward of 800 people gathered on recent evenings, believers engage in a debate about what kind of world awaits.

Some members argue there will be no financial crash, but a slow slide into harder times. Some believe the federal government will respond to the loss of energy security with a clampdown on personal freedoms. Others simply don't trust that the government can maintain basic services in the face of an energy crisis.

The powers that be, they've determined, will be largely powerless to stop what is to come.

Determined to guard themselves from potentially harsh times ahead, Lynn-Marie and her husband have already planted an orchard of about 40 trees and built a greenhouse on their 7 1/2 acres. They have built their own irrigation system. They've begun to raise chickens and pigs, and they've learned to slaughter them.

The couple have gotten rid of their TV and instead have been reading dusty old books published in their grandparents' era, books that explain the simpler lifestyle they are trying to revive. Lynn-Marie has been teaching herself how to make soap. Her husband, concerned about one day being unable to get medications, has been training to become an herbalist.

By 2012, they expect to power their property with solar panels, and produce their own meat, milk and vegetables. When things start to fall apart, they expect their children and grandchildren will come back home and help them work the land. She envisions a day when the family may have to decide whether to turn needy people away from their door.

"People will be unprepared," she said. "And we can imagine marauding hordes."

So can Peter Laskowski. Living in a woodsy area outside of Montpelier, Vt., the 57-year-old retiree has become the local constable and a deputy sheriff for his county, as well as an emergency medical technician.

"I decided there was nothing like getting the training myself to deal with insurrections, if that's a possibility," said the former executive recruiter.

Laskowski is taking steps similar to environmentalists: conserving fuel, consuming less, studying global warming, and relying on local produce and craftsmen. Laskowski is powering his home with solar panels and is raising fish, geese, ducks and sheep. He has planted apple and pear trees and is growing lettuce, spinach and corn.

Whenever possible, he uses his bicycle to get into town.

"I remember the oil crisis in '73; I remember waiting in line for gas," Laskowski said. "If there is a disruption in the oil supply it will be very quickly elevated into a disaster."

Breault said she hopes to someday band together with her neighbors to form a self-sufficient community. Women will always be having babies, she notes, and she imagines her skills as a midwife will always be in demand.

For now, she is readying for the more immediate work ahead: There's a root cellar to dig, fruit trees and vegetable plots to plant. She has put a bicycle on layaway, and soon she'll be able to bike to visit her grandkids even if there is no oil at the pump.

Whatever the shape of things yet to come, she said, she's done what she can to prepare.

Peak Oil: http://www.PeakOil.com

con-pilot
25th May 2008, 17:28
Is con-pilot a closet NIMBY (Not In My Back-Yard)...?!

First off thanks for your reply to this Brick. :ok:

Now, my dear Airship, may I inquire on just what planet you domicile? It is very obvious you have absolutely no knowledge of Oklahoma, sometimes referred to as a northern suburb of Texas. Oklahoma is the third largest producer of natural gas in the United States. Oklahoma has more refineries per population than any other State in the United States and we would be more than happy to be allowed to build more refineries if allowed by the EPA. Billion of barrels of oil has been produced from under the ground from all over the entire State.

There are active, working natural gas and oil wells being drilled on the grounds of Will Rogers Airport, KOKC. Until very recently there was an active producing oil well on the grounds of the State Capital. This well finished out a couple of years ago, however, the oil derrick is still there as a reminder to all of Oklahoma's ties to the oil and gas industry. Many of the "Big Oil" companies such as Phillips 66 started in Oklahoma. The left-wing's, liberal and all correctly thinking person's evil devil's spawn organization known as Haliburtion started in Oklahoma.

PS. con-pilot, is that far enough away from your back-yard buddy...?!

As usual my friend you have it exactly backasswards. Not In My Back Yard? Hell no, we love it in our back yard and looking for more to be found in our back yard.



(Remember, Google is your friend.)

arcniz
25th May 2008, 20:35
So... do we have a new nominee for the Paula Abdul Global Consciousness Award? Seconds, anyone?

airship
25th May 2008, 21:48
Many thanks to brick and con-pilot for Google - great minds think alike. BTW, how's the fishing in Oklahoma...?! ;)

con-pilot
25th May 2008, 21:58
how's the fishing in Oklahoma...?!

For me it sucks, :( but everyone else does just fine. Bass, trout, catfish for most folks, me, I usually end up with dead bait.


(Was going to try TNT once, but a nice guy with a badge said he'd use parts of me for bait if I did.)

G-CPTN
25th May 2008, 21:58
The corn is as high as an elephant's eye,Just how many elephants are there in Oklahoma?
http://kids.niehs.nih.gov/lyrics/ohwhata.htm

con-pilot
25th May 2008, 22:04
Just how many elephants are there in Oklahoma?

Well, would yooooooooou believe? Actually there are quite a few in Oklahoma city currently. Besides the zoos in Oklahoma City and Tulsa which have I guess a couple of dozen, the Barnum and Bailey Circus is here for a month getting ready for the season, so I guess we got close to 50, give or take a few.

Oh, none in me back yard (garden), I just looked. :p



(You can never tell when one might sneak in.)