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Is Saudi Arabia finally winning the global oil war?

Consumption

Sometimes in global financial markets, change can be brutal as the market adjusts to a completely new reality. The second half of 2014 was one of these periods and witnessed the beginning of what would become one of the largest declines in global oil prices on record.

Is Saudi Arabia finally winning the global oil war?

For many years, markets had focused on ‘peak oil’, whereby escalating costs of production as new oil deposits became harder to source and rising levels of depletion meant that an increasing amount of production would be needed each year to keep overall supply unchanged.

In the International Energy Agency’s (IEA) 2008 World Energy Outlook, it published for the first time a study of depletion rates in the top 800 global oil fields. It concluded that depletion rates had risen to 5.1% p.a. from 4.5% a few years previously and forecast that this would continue to rise over the coming decades.

This meant that the global oil market balance would naturally tighten every year by 4-5m b/d (million barrels per day) and the IEA report concluded that, “it is becoming increasingly apparent that the era of cheap oil is over”.

However, in the background, a technology, which was initially discovered in the mid 19th century, was already gaining traction: hydraulic fracturing. The US shale oil revolution crept up on markets in the following years and then rapidly accelerated from 1.2m b/d in 2010 to a peak of 5.36m b/d in March 2015.

 hart 1  shale oil production Chart 1 US shale oil production

 

Saudi Arabia reacted to the shale oil revolution with a well-publicised strategy, increasing production into an already oversupplied market and driving oil prices sharply lower. This is a critical difference between the recent oil price slump and historical episodes, that this one is clearly supply-driven, rather than being caused by declining global demand. In fact, after dropping to 84.8m b/d in the 2009 financial crisis, demand is forecast to have increased by over 9m b/d by 2016 to a record 94.2m b/d.

hart 2 orld oil demand m bd Chart 2: World oil demand (m b/d)

Furthermore, demand growth is widespread and strongly responding to lower prices. For instance, in January 2015, OPEC expected 2015 global demand to grow 3.6%, or 1.15m b/d, but by the end of that year it increased the forecast to 1.53m b/d.

Its current forecast for 2016 is for an additional 1.3m b/d of demand, but with the IMF expecting global economic growth to accelerate in 2016 to 3.4% from 3.1% in 2015 and with oil prices at such low levels, that forecast could well once again prove conservative.

It is noteworthy that one important source of incremental demand is China’s effort to increase its strategic petroleum reserve — the capacity of which is expected to double this year — and could lead to total incremental demand from that country of 70-90 million barrels in 2016.

 

This is also backed up by private sector forecasters such as Goldman Sachs:

hart 3 emand forecasts  oldman achs 000 bd Chart 3: Demand forecasts – Goldman Sachs (‘000 b/d)

 

On the supply side of the equation, Non OPEC supply rose in 2015, although about 300,000 b/d less than the increase in global demand. In 2016, however, the weakness of prices and the decline in investment should lead to a contraction in Non OPEC supply of 660,000 b/d. For instance, between its December and January reports, OPEC reduced its forecast for US production sharply, from a decline of 170,000 b/d to a decline of 370,000 b/d.

 

However, considering the decline in the US rig count relative to production (see chart below), this still could prove an overly optimistic forecast. Shale oil producers operate at a higher point on the production cost curve and despite the recent decline in oilfield services costs and efficiency gains driven by technological advancements, current crude oil prices make incremental investment uneconomic for many shale operators.

Another characteristic of shale wells is a higher depletion rate. When combining the higher depletion rate with the disincentive current prices provide for incremental investment, there should be a sharp decline in production by the end of 2016.

Indeed, even before the further swoon in oil prices in December and January, US shale oil production declined by an average of nearly 90,000 b/d per month (and at an accelerating rate) in the six months to November, so, in our view, it is likely that OPEC’s forecast for US production will soon be revised significantly lower.

hart 4  shale oil production vs rig count Chart 4: US shale oil production vs rig count

The removal of most sanctions against Iran will, of course, increase global oil supplies. Iran is currently producing about 2.8m b/d and has official capacity of 2.9m b/d. It is estimated, though, that Iran currently has 50m barrels of oil in storage (down from 70m a few months ago), which indicates that excess supplies have already impacted the market. Furthermore, the Iranians have stated that within a year they will be able to increase production back towards the 3.8m b/d that they were producing before sanctions were introduced.

The fear of this upcoming supply has already contributed to declining oil prices, but the US Energy Information Administration (EIA) disputes this estimate and believes that 600,000 b/d of additional production is more realistic at end 2016, as the country’s old oil fields naturally deplete at a rapid rate and as the lack of regular maintenance has taken its toll.

 hart 5 ran oil production 000 bd Chart 5: Iran oil production (‘000 b/d)

Assuming, as we do, that OPEC ex-Iran production for 2016 is unchanged from 2015 and Iran adds an average of 600,000 b/d (assuming additional production ramps up towards 1m by year end), then, given stronger global demand, the oversupply of oil in the market would decline from the current 2m b/d to 600,000 b/d.

Moreover, if Iranian production increases are disappointing (as we believe is likely), the US production decline is larger than expected, or global demand growth actually trends above current expectations (as it did for 2015), the market could be even close to fully balanced by the end of the year. In our view, even if the market remains in slight surplus, it should be positive for crude oil prices from their currently depressed levels.

Recent US Policy Changes

Despite the numerous headlines in the media, the recent end of the crude oil export ban in the U.S. is likely to have minimal near-term impact on the global balance. Given the costs associated with transporting crude oil from the U.S. to Europe and Asia, and that both benchmark grades of Brent and WTI currently are priced nearly equally, it seems unlikely that the removal of the ban will encourage U.S. supply growth or increase demand for US crude oil. In fact, given the surplus in global supply and the minimal storage capacity outside the US, it seems likely the US will remain a net importer of crude oil. Some potential impacts of the lifting of the ban are less seasonal volatility in Brent-WTI spreads and increased incentive to build pipeline infrastructure from the Midwest to the East and West coasts.

OPEC vs the IEA

Given the data presented above it may seem quite strange to read recent headlines from the International Energy Agency which is quoted as saying that, “the oil market could drown in over supply.” Presumably it is looking at very different data or has wildly different forecasts? The answer to that is no. In 2016 the IEA expect world oil demand to grow by 1.2m b/d to 95.7m b/d whilst they expect Non OPEC supply to drop by 0.6m b/d so it is also expecting a significant draw on OPEC supply.

International Adviser



46 Comments on "Is Saudi Arabia finally winning the global oil war?"

  1. bs on Thu, 28th Jan 2016 1:15 pm 

    US shale had a significant number of drilled uncompleted wells (DUC) as of June 2014. It was estimated to be about 2500. With the sharp decline in active rigs, the required ~1200 completions/month to replace the high depletion rates, the DUCs are now coming near exhaustion (hard to know exactly). When that happens, the shale decline rate will go from the current 2-3% up to 5-6% per month. So I believe the production decline will be twice OPECs estimate for 2016.

  2. shortonoil on Thu, 28th Jan 2016 2:44 pm 

    “So I believe the production decline will be twice OPECs estimate for 2016.”

    Oil is a commodity that drives the economy. When production goes down, the economy must go with it. As production goes down so also will demand. If OPEC is waiting for the market to balance they are going to go bankrupt in the process.

  3. penury on Thu, 28th Jan 2016 4:13 pm 

    The title of the article asks if SA is winning the war, I think the proper answer is no one is winning. A drop in the available amount of oil will be a disaster for the world (as we know it)m The proper question would be “who lost the first battle” in the oil wars?

  4. makati1 on Thu, 28th Jan 2016 6:57 pm 

    This “war” was lost the day that ‘for profit’ capitalism became the system of most of the Western world. It was seen as a never ending mine of black gold. The wish granting genie in a black lamp. The West designed a whole culture around it’s products. Now that culture is dying and there is no replacement.

    Hundreds of trillions of those petro dollars that are invested in everything of no real value, are vanishing as the ability to consume oil disappears. After all, take away the factories, mines and the ability to produce, distribute and sell, and the 1% go financially extinct along with most of us. It’s fun to watch. Are you prepared for that day?

  5. theedrich on Fri, 29th Jan 2016 2:00 am 

    For the world outside of Allahland, the Middle East is all about oil;  the ideology, warfare and intrigues there are secondary.  However, for the Kingdom of Saudi Arabia, Qatar, and their close allies around the Persian Gulf, the reverse is true.  Submission (“Islam”) is the factor which matters above all others.  America and the rest of the Cartesian West divides societies into various parts, with the main division being between religion and government, followed by “science” (which is whatever anyone wants it to mean), sexuality, perhaps education, and so forth.  The ragheads do not see things this way at all, which is why Westerners, especially genosuicidist Whites demanding an end to history, fail to understand what is going on in that culture.  Drunk on the fantasy that Yankeedom is the pinnacle of evolution because we have murdered all the nasty Nazis and the godless Japs, we cannot understand that World War II was not, as they said of WW I, the war to end all wars.

    A couple of days ago I read an interesting French interview by one Frédéric Pons with an elderly but extremely perceptive Melkite Catholic priest from Egypt.  It seemed to me that one or two readers of this site might have enough insight to recognize the truth of what the man was answering, so I (rather hastily, perhaps) translated the interview for such readers.  It is appended below:
    *********************
    20 Décembre 2015, 8:44am · Toulouse, France

    Islam:  According to Father Boulad, the West is on the edge of a civil war.
    Syrian-Italian in birth, of Egyptian-Lebanese nationality, Melkite Greek Catholic Church (Byzantine) in religious rite, and French in culture, Father Henri Boulad, 84 years old, is the ex-provincial of the Jesuits of the Near East, director of the Jesuit Cultural Center of Alexandria and of Caritas Egypt.  He is giving an interview to Frédéric Pons in Current Values (Valeurs Actuelles) magazine, appearing tomorrow.

    Q:  What lesson do you draw from the attitude of the French after the Paris attacks of November 13?

    Fr. B.:  Without being snide, and with the greatest respect for the great number of victims, I would say that it was completely foreseeable.  It was a question of time.  It has been thirty years that I have been warning the French about the stealthy penetration of Islam in France, about the systematic plan of the invasion of Europe.  They wanted to hear nothing about it, and I was treated as an islamophobe.  It is necessary to realize that we are helping the beginning of a phase of jihadism which is in danger of expanding.  Right now, reality is striking the French with full force.  Will it perhaps awaken them?  Given the political and media discourse of radical denial which is restarting with even greater force, one has a right to doubt it.

    Q:  In saying this, are you thinking about the French in their totality or are you differentiating between the people and the elites, specifically the political rulers?

    Fr. B.:  Oh, certainly I differentiate.  But I would say that a people has the rulers it deserves.  When one lives systematically in denial and one refuses to see clear realities staring one in the face, one cannot complain about the consequences.  France has become soft.  She is letting herself be manipulated too easily by the majority of the media which diffuse disinformation, even produce propaganda, all year long.  I think that the Western media are handsomely paid or are under orders, just like the politicians.  In the end, what matters is money.

    Q:  Precisely what are you saying?

    Fr. B.:  It is self-contradictory and extremely dangerous to engage in profitable economic, commercial and military treaties with countries like Saudi Arabia and Qatar and, at the same time, to adopt a clear dhimmitude (submission) vis-à-vis them, especially when one knows that they are at the source of the disturbing fundamentalism which is prospering in France.  The denial of reality will only allow this evil to become worse.  Islamism comes from a certain reading of Islam “imported” from those countries.  It is a form of allegiance, one of obligation … or is it the Stockholm syndrome? […]

    Q:  But can the West speak freely about Islam?

    Fr. B.:  No, alas.  I do not believe so.  Today’s “political correctness” muzzles those who see clearly and wish to speak.  Behind a pretext of tolerance and openness, the West — just like the Catholic Church, by the way — has fallen into a trap — I might say into the “fad” — of the ideology of the liberal Left and also of a certain Right, one that has in the past favored the UOIF [Union of Islamic Organisations of France], that is, the Muslim Brotherhood.  The trap lies in that naïveté and otherworldliness of believing that one can succeed in achieving a “French-style Islam” with this Muslim Brotherhood organization, when one knows that the ideology of that Brotherhood is fundamentally nihilist, profoundly aggressive and characterized by a stealthy and creeping proselytism.  The case of Egypt is the best example of this.  We are no longer free to speak.  One no longer seeks truth;  rather, one seeks to please, to satisfy everyone in the name of social peace.  Be clear that, beneath the apparent calm on the surface, the cancer is growing.

    Q:  Why is it so difficult to speak freely?

    Fr. B.:  Because, as soon as one engages in a certain discussion, one is immediately classified, labeled, in a pejorative manner.  The French are perhaps known for their critical sense, but they seem, in this case, to have lost all discernment.  The majority of the people are prisoners of popular opinion, of ideology.  When, then, will we have the courage of expressing ourselves with complete freedom?  Jesus, after all, told us, “The truth will make you free.”  The problem of the Mohammedans and the partisans of interreligious dialogue is their refusal to recognize that Islam is confronted with a real and gigantic problem.  Without a radical reform of Islam, we are headed toward a confrontation, not to say an explosion.  I even think that it is imminent and that the West is on the edge of a civil war.  One cannot indefinitely — or with impunity — play tricks with truth.  Morever, the papal encyclical Nostra Ætate never asked to dialogue “with Islam,” but to create relations with Mohammedans.  It is not possible to have a convergence of doctrines, but only constructive, desirable relationships between individuals.  […]

    Q:  Why do responsible Mohammedans have such trouble speaking freely about all this and about the trends of certain of their co-religionists?

    Fr. B.:  Precisely because, for the past six centuries, Islam has chosen a hard line.  Because it is very difficult — not to say impossible — for Mohammedans to reverse course, whatever good will may be animating them.  The points of blockage are numerous.  For example, renouncing the plan of a global caliphate which is pushed not just by the Islamisists, notably the Muslim Brotherhood (UOIF in France), but also by Islam, period.  Another block:  opening Islam to critical thought.  That is impossible for Mohammedans;  for ten centuries that has been forbidden them by the decision to “close the door on ijtihad” (“reformation,” “intellectual effort” aiming at modernizing the reading of the Quran).  […]

    Q:  Do you think Islam is compatible with democracy, with secularism?

    Fr. B.:  No.  Mohammedans use democracy to kill it.  For them, the laws of Allah (Sharia) are superior to those of humans.  For the majority of Mohammedans, the Quran is not discussable.  It emanates from Allah and is in heaven next to the Throne, having been placed there on the Guarded Table since the beginning of creation.  Segregation of infidels and women is inscribed in the Quranic verses and in the hadiths, which allows us to say that it will not be tomorrow that democracy, freedom of conscience and of religion will be realized in the Arabo-Islamic world, nor even in France.  Islam governs every aspect of the life of the individual from the cradle to the grave.  One is not free to think or to decide for oneself outside of Sharia, and if one does so, one places oneself outside of the Ummah (the Islamic community-nation).  One also knows what awaits one:  hell on earth and in the Beyond.  One is far from human rights, from Augustinian free choice, from secularism and from democracy.

  6. geopressure on Fri, 29th Jan 2016 5:07 am 

    There never was a “Crude Oil War”

    That is just a narrative created by the US Government so they could demolish the price of crude oil & blame it on Saudi Arabia…

  7. Dredd on Fri, 29th Jan 2016 6:06 am 

    Is Saudi Arabia finally winning the global oil war?

    There are no winners in a fight to supply the most poison (The Ghost-Water Constant – 2).

  8. yoananda on Fri, 29th Jan 2016 6:52 am 

    Shale production is flat for month according to :
    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

    WHO TO BELIEVE ???

  9. shortonoil on Fri, 29th Jan 2016 8:31 am 

    theedrich, thanks for the translation.

    I would have to pretty much agree with the conclusions drawn by Father Pons. Islam has never gone through he reformation that would have been needed to have brought it into the modern world. Its most radical, and dogmatic versions appears to emanate out of the Middle East. There it appears to have remained a 7th century ideology in a 21th century world. The Middle East exists in its present form because of its association with petroleum. Without oil it would revert back to what it is; a sand dune. When the oil is gone the Mohammedans there will be left with a few million ijtihad-ists, and no ijtihad. With no one to confront with their bronze age ideologies they will prey on each other. Why Western society believes that it can inject itself with a few million Neanderthals without generating major disruptions is the real question?

  10. PracticalMaina on Fri, 29th Jan 2016 8:40 am 

    Or perhaps without the world meddling in the middle east for their oil they would have developed further, in a technological and societal point of view. When the economic hit-men get done with the birthplace of civilization it can be a real shithole. It is our support and funding that keeps the believers of the Wahhabi sect funded and armed. It is also the climate change that was under their own feet that will ultimately force the population out of their native lands.

  11. PracticalMaina on Fri, 29th Jan 2016 8:41 am 

    *The climate change from the oil under their own feet
    I should probably proof read

  12. shortonoil on Fri, 29th Jan 2016 8:53 am 

    “It is also the climate change that was under their own feet that will ultimately force the population out of their native lands.”

    Maybe climate change will bring them some rain, and they won’t have to sell black goo to the godless infidels?

  13. PracticalMaina on Fri, 29th Jan 2016 9:08 am 

    Isn’t that what ultimately started the Arab Spring, the economy-food situation caused by a drought? Bread vendor in Egypt self-immolated because he was being extorted by a cop? Rain also doesn’t do much for crops when its 120F, except maybe make a little magnifying glass effect to burn the plant before it evaporates.

  14. makati1 on Fri, 29th Jan 2016 9:11 am 

    Short, now wouldn’t that be a kicker?

    After all, the Sahara was a tropical jungle not too long ago. After the last ice age, maybe about 5,000 years ago, if I remember my geography correctly. Maybe the tropics will return to the ME? Maybe the US will become the new Sahara. LOL

  15. geopressure on Fri, 29th Jan 2016 9:29 am 

    yoananda: “WHO TO BELIEVE ???”

    Not the EIA…

  16. geopressure on Fri, 29th Jan 2016 9:32 am 

    The EIA would have us believe that the physics that causes shale oil wells to decline at rapid rates (about 50% drop-off in the first 6 months of production), have ceased to exist…

    & why do they make this claim? because that is the ONLY way that they can continue to blame the price decline on Saudi Arabia…

  17. Apneaman on Fri, 29th Jan 2016 10:39 am 

    short, there is no modern world without the muslims – they invented most of the maths you use. Their current mentality started in the 13th century NOT the 7th. Believe retards like the douche if you like. Do you do your own math or do you just repeat math you hear on the internet?

    ISLAMIC MATHEMATICS

    http://www.storyofmathematics.com/islamic.html

    ISLAMIC MATHEMATICS – AL-KHWARIZMI

    “His book is considered the foundational text of modern algebra, although he did not employ the kind of algebraic notation used today (he used words to explain the problem, and diagrams to solve it). But the book provided an exhaustive account of solving polynomial equations up to the second degree, and introduced for the first time the fundamental algebraic methods of “reduction” (rewriting an expression in a simpler form), “completion” (moving a negative quantity from one side of the equation to the other side and changing its sign) and “balancing” (subtraction of the same quantity from both sides of an equation, and the cancellation of like terms on opposite sides).

    In particular, Al-Khwarizmi developed a formula for systematically solving quadratic equations (equations involving unknown numbers to the power of 2, or x2) by using the methods of completion and balancing to reduce any equation to one of six standard forms, which were then solvable. He described the standard forms in terms of “squares” (what would today be “x2”), “roots” (what would today be “x”) and “numbers” (regular constants, like 42), and identified the six types as: squares equal roots (ax2 = bx), squares equal number (ax2 = c), roots equal number (bx = c), squares and roots equal number (ax2 + bx = c), squares and number equal roots (ax2 + c = bx), and roots and number equal squares (bx + c = ax2).”

    http://www.storyofmathematics.com/islamic_alkhwarizmi.html

    No muslim golden age = no renaissance = no scientific revolution = no modern world.

    See it’s all there fault.

    What happened to them?

    Corruption + anti intellectualism + religious fundamentalism were among the main factors.

    Sound familiar?

  18. rockman on Fri, 29th Jan 2016 3:24 pm 

    And again the same response to such follish claims. The KSA is “winning” because it’s giving up $200 BILLION PER YEAR in oil revenue due to low prices. And when/if prices get back to $90+/bbl the shales won’ come back into play??? A reminder: the shale boom came out of a
    $35/bbl oil world where there were essentially ZERO companies play the shales despite the tech being available and the oil was known. High prices will create new US shale players and financiers just as it did before. And it will have the same profit motive. The KSA gains nothing with revenue loses that could reach into the $TRILLIONS

  19. shortonoil on Fri, 29th Jan 2016 3:30 pm 

    “short, there is no modern world without the muslims – they invented most of the maths you use.”

    To understand what has happened to Islam read the book “God Against The Gods” by Jonathan Kirsch. The same thing happened to all the monotheistic religions. The Muslims continued the work of the Greeks after the fall of Rome. They saved the writings of the ancients while the Christians were burning them. The Christians thought they were the work of demons (which was a Persian concept) because they were written by pagans (which was a word that was first used by the Romans to describe Christians). The Christians sort of settled down after killing each other off for a couple of centuries over the intrinsic nature of God (the Arius heresy). Then in 1097 pope Urban II sent the first Western armies to free the Holy Land. They chopped up a few Muslims and rediscovered Aristotle, Plato and the ancient Greek writings that the Muslims had salvaged from the Christian fires 500 years before.

    The Jews, Muslims and Christians lived pretty much at peace with one another (after they chased out the Crusaders) in the Levant for about 700 years. Sometime around the the start of the last century radical elements of Islam began to emerge. It is hard not to comprehend that anyone who would strap a bomb to them selves, and pull the trigger is not a little bit bent. The insanity that is now striking Islam has run a common thread through all the traditions of Abraham. It has just started much later with them than it did the others.

  20. Apneaman on Fri, 29th Jan 2016 5:49 pm 

    Yes, I acknowledge they saved a bunch of the the Greeks work (and others) and expanded on it. I wonder how much more there would have been to work with if those heathen christians had not burned the library of Alexandria? Savages! The suicide cults are a by product of empires. In the first century there were the Sicarii. More to come. Those Bundy tards have the early makings of yet another suicide cult. Some folks are just not going to lay down for empire. SAIEW.

  21. makati1 on Fri, 29th Jan 2016 8:29 pm 

    Rockman, high oil prices will end the globalization of everything, including oil. There is no way that any economy on earth can sustain $90 oil for more than a few days/weeks. And, I do not ever see fraking come back. There will be no way it can when the US is a 3rd world banana republic in the open and not just behind the curtain.

    Few here see or believe that TPTB are out to take down the US and level it in all ways with the rest of the world. If I remember my stats, that means an annual per capita income of less then $10,000, not the published US ~$40,000 of today. Wait and see if I am not correct.

  22. Nony on Fri, 29th Jan 2016 9:40 pm 

    It’s annoying but I find myself agreeing with Rock.

    SA has a long history of collusion. They would LOVE to have $100 oil (for all their barrels). They could care less about the dick size of market share. The problem is that the market has become competitive. This is 1986 redux. They are just doing what they have to do.

  23. GregT on Fri, 29th Jan 2016 10:26 pm 

    “They are just doing what they have to do.”

    They don’t have to commit suicide Nony. All they would need to do to over double, or even triple their profits, is to reduce production by ~500,000 bbl/d.

  24. antaris on Fri, 29th Jan 2016 10:34 pm 

    Sounds like a bunch of guys in a pissing match. Let some women steer the ship and change might happen.

  25. GregT on Fri, 29th Jan 2016 10:38 pm 

    Not to upset the apple cart here antaris, but women are far more cutthroat and ruthless then men will ever be.

  26. antaris on Fri, 29th Jan 2016 10:42 pm 

    Yeh, but in the oil business I think a bunch of dicks have control at the moment.

  27. GregT on Fri, 29th Jan 2016 10:47 pm 

    And one of the biggest motivating factors for dicks, is pussy.

  28. antaris on Fri, 29th Jan 2016 10:55 pm 

    Stop pissing, let the price rise and get more pussy. These dicks don’t seem the longest in the locker room.

  29. GregT on Fri, 29th Jan 2016 11:14 pm 

    I would suggest that the boys in the locker room are being told what to do by Upper Management antaris.

    As always, follow the money, not the oil.

  30. Nony on Sat, 30th Jan 2016 1:22 am 

    If they thought the cut would stick, they would make it, Greg. They take US LTO serious. If they cut to keep oil at 100+, we would be at 15 MM bpd in a few years. And that’s not even contemplating more deepwater, more tarsands etc.

    The problem is all you peak oilers pissed and dismissed US LTO and it went and grew about half a Saudi Arabia in about 5 years! Rune was wrong, Hughes was wrong. TOD was wrong. Piccolo was wrong. US LTO had world price impact.

  31. GregT on Sat, 30th Jan 2016 1:32 am 

    “US LTO had world price impact.”

    ‘Had’ Nony, for a very brief period of time. We face reality again, and it isn’t going to go away anytime soon. Our economies cannot afford $100/bbl oil. They can’t even afford $30/bbl oil anymore. The damage has already been done.

  32. Apneaman on Sat, 30th Jan 2016 1:39 am 

    Nony, I could plant daisies on the moon and get rich doing it if I had enough sucker investors.

    April is accounting time – watch the rest implode.

    Oil Plunge Sparks Bankruptcy Concerns

    http://www.wsj.com/articles/oil-plunge-sparks-bankruptcy-concerns-1452560335

  33. theedrich on Sat, 30th Jan 2016 1:56 am 

    Just so everyone (except the obtuse man-ape or the Pee from the urinals of Uruguay) is clear on the evolution of modern knowledge:  science as we know it today would never have evolved without the invention of the number zero.  (Etymologically, the word comes from Arabic sifr [“empty”], whence also our “cipher.”)  It was not a creation of the Mohammedan ragheads, but of an Indian mathematician, Brahmagupta, in the middle of the seventh century.  The numerals which we use today, though called “Arabic,” are not some creation by the Sand Negroes, but by Indians writing in their sacred language of Sanskrit.  Al-Khwarizmi (“the man from the province of Chorasmia,” Persia, not Arabia — whence our “algorithm”) built his work on the Indian advances.  During the much-maligned crusades, Christian scholars discovered the Indian achievement (it had thitherto been quite difficult to multiply, say, LXXIV by CXLIX, but comparatively much easier to do 74 x 149, let alone to deal with negative numbers) and used it to advance scientia (“knowledge”), or “natural philosophy” as it was long known.  The works of Greek philosophers had been translated into Arabic, and Western Christians later (but before 1453) translated those translations into Latin, the language of the medieval Schoolmen in the universities.  Post-crusades, the ignorance-prone Sunni savages aborted all higher learning in favor of the Quran.  They remain largely in that mindset today.

    Furthermore, the burning of the library of Alexandria is recorded as the inadvertent result of Julius Caesar’s attack on that city in 48 B.C., centuries before Christianity’s dominance of the Empire he made possible.  The myths about Christians (Catholics) burning the library were invented by anti-papist Protestants following the Reformation.

  34. Nony on Sat, 30th Jan 2016 2:07 am 

    Greg: we can afford ~80 MM bpd @ $33.74. Oil demand is relatively inelastic.

  35. GregT on Sat, 30th Jan 2016 2:10 am 

    If you weren’t such a raciest de-evolved prick theedrich you might actually make some sense. Unfortunately for you, your sense of superiority cancels out any semblance of intelligence that you might have had. It’s idiots such as yourself that have caused untold violence and bloodshed throughout history. There is no place for dinosaurs such as yourself in the future. You are a prime example of why the human race is destined for the trash bin of history. You are a complete waste of space theedrich. We don’t need people like you any more than we need cockroaches.

  36. GregT on Sat, 30th Jan 2016 2:36 am 

    Nony,

    If we as a society could remove ourselves from the clutches of the central banks, and the need for infinite exponential growth, we could in all likelihood be able to create a steady state economy. If that were the case, we could probably be able to afford oil prices much higher than what we have now. That would do nothing to solve our bigger problems however, which stem from our continuation of burning fossil fuels. Your future Nony, is not looking very bright. All of the money in the world will not help you in the slightest bit within a few decades from now. To continue to cheerlead for fossil fuels, is to cheerlead for your own demise.

    Wake up Nony. You are a very big part of the problem, and are doing nothing at all towards coming up with a solution. You can’t have your planet, and destroy it too.

  37. Apneaman on Sat, 30th Jan 2016 2:56 am 

    No one attributed zero to the muslims fuck head and the islamic science doc I linked for you stated that they got zero from those very dark brown Indians. You also intentionally confusing Arabs with the medieval Islamic civilization. And I don’t believe shit that caesar the great self promoter wrote either – talk about an agenda myth maker. There are multiple explanations for the loss of the library. Like I said, without the muslims Europe may still be a bunch of agrarian peasants and you might be a goat farmer instead of working the night shift at 7/11 for your entire adult life. Douche, why would anyone believe your race agenda version of history anymore than a religious motivated one or a black african who claims all ancient egyptians were black africans? You are so highly biases towards your caucasian superman fantasies that only other insecure hard core racists would take you seriously. Great white cherry picker. You’re so desperate that you are now using the religious crusades to support your agenda. I guess those religious tards are ok since they are white? They brought back much knowledge from the muslims that advanced european civilization, so you are arguing against yourself.

    The crusades haven’t been maligned enough, but Terry Jones does a fine job getting it started in his great 4 part Doc. Not the Terry Jones tards like you listen to.

    “Of all the wars waged in the name of God, none has ever matched the arrogance and conceit of the Christian Crusades. For nearly two centuries (1095-1291), this medieval “holy war” variously raged, sometimes so spiritually misshapen by rapaciousness, murder, and political greed that to think it all had to do with Christian faith is absurd. And really, there is no one better to dramatize such a theater of holy war than Wales-born Terry Jones, host of The Discovery Channel’s Ancient Inventions and an accomplished medievalist. Best known for his absurdist contributions to all things Monty Python–he was a founding member of Monty Python’s Flying Circus and cowriter of Monty Python and the Holy Grail, Life of Brian, and Monty Python’s The Meaning of Life, among others–Jones wields an uncanny ability to explain the methodologies and madness of the Crusades while not failing us his sense of humor.”

    Crusades 1 – Pilgrims In Arms

    http://www.dailymotion.com/video/x2ikani

    Crusades 2 – Jerusalem

    http://www.dailymotion.com/video/x2insad

    Crusades – Episode 3 – Jihad

    http://www.veoh.com/watch/v18705661k758Zxkw

    Crusades – Episode 4 – Destruction

    http://www.veoh.com/watch/v18703089KzkfjxZ2

  38. Davy on Sat, 30th Jan 2016 7:08 am 

    “If we as a society could remove ourselves from the clutches of the central banks, and the need for infinite exponential growth, we could in all likelihood be able to create a steady state economy. If that were the case, we could probably be able to afford oil prices much higher than what we have now.” The Central Bankers are not the cause they are just a symptom of a way of life that is completely out of scale to the realities of a finite planet with limits.

    The use of oil is likewise a symptom of a way of life that is not a valid ecological system for an earth species. There is no such thing as a steady state economy nor will we ever see one. The idea of economies are just human exceptionalism in action. Economies are nothing more than a local human ecosystems and as an earth ecosystem modern man fails in all categories of a healthy connection to a stable earth ecosystem. The most important categories are population and consumption levels. These reflect on complexity and energy intensity. There is no way we could have what we have today without overshoot.

    Nothing is steady in an earth ecosystem. Flux and change both creative and destructive are part of the succession of ecosystems in the greater earth ecosystem. Modern man is an unsustainable way of life. Any of the so called higher human civilizations even the pre-modern ones were not sustainable. Modern man since the advent of agriculture and small cities has been out of balance. We only had the opportunity to reach the level of agriculture because of a benign climate. This benign environment lasted long enough for us to become what we are today. We now should be fully aware that what we are today is wrong at every level.

    Man belongs in small groups of semi-nomadic hunter gathers. We are likely heading back to our roots soon because modern civilization cannot degrowth and or have a steady state. Modern civilizations will always collapse into overshoot by their nature. They are a climax ecosystem that becomes unsteady and bifurcates. Simple and low impact green thoughts do not equate to sustainable at any level of modern man. Greens are deluded to think we can have a low impact modern way of life.

    Our future is here and now so we will have to make the best of living in a time of descent with decay and destructive change. Agriculture and a benign climate were the worst thing to happen to modern man not oil and or central bankers. Oil and central bankers are just the result of an unstable growth of a species in overshoot. The earth ecosystem is now in decay as is our human ecosystem. There is nothing we can do about this except adapt and do the best we can within this descent paradigm. None of us are to blame individually. Modern man as a species type is wrong in respect to a healthy earth ecosystem. Nature is rebalancing a species in overshoot with destructive change. We have no choice but to live and die in this macro natural event.

  39. shortonoil on Sat, 30th Jan 2016 7:39 am 

    “Greg: we can afford ~80 MM bpd @ $33.74. Oil demand is relatively inelastic.”

    The price of petroleum can not exceed it value to the general economy. Period. No one is stupid enough to use $2 of petroleum to produce a $1 worth of goods an services. That is a guaranteed route to bankruptcy. Elasticity has absolutely nothing to do with it. The price of oil is constrained by boundary conditions; its value to the economy at the top, and its production cost at the bottom. Unless those two points are identified any projection of price is an exercise in a make believe world.

    http://www.thehillsgroup.org/

  40. JuanP on Sat, 30th Jan 2016 8:20 am 

    TheeDouche, I am glad that you understand that I have nothing to learn from a trailer park neo Nazi skinhead piece of white trash like you. Go Sieg Heil and tell your revisionist racist myths to your racist schoolyard buddies, prick. I think your buddy, Davy, the delusional American exceptionalist is somewhere around or will, surely, be back soon. He obviously has nothing better to do with his life than play with his computer and his goats. Maybe you can visit him on his daddy’s farm and you can both release yourselves with the goats or the chickens.

  41. Davy on Sat, 30th Jan 2016 8:42 am 

    “Davy, the delusional American exceptionalist is somewhere around or will, surely, be back soon. He obviously has nothing better to do with his life than play with his computer and his goats.”

    Folks this is an example of a naked unprovoked personal attack. I said nothing to initiate this. It points to a personality disorder and an immaturity. His intent is to pull my chain to start the typical endless cycle of word conflict. Individuals like this need to be discredited as a legitimate forum contributor. I am not saying he does not post relevant and intelligent info. I am saying he is promoting hate and discontent in addition to these other posts. We have seen multiple times the general consensus on our board is against personal attacks, labelling, and obscene language. The board is for a basic code of conduct with respect and tolerance for comments with relevance. I ask you to reason with this individual who is demonstrating his personal narcissism over what is best for all of us.

  42. GregT on Sat, 30th Jan 2016 8:57 am 

    “…that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable… We shall once more value ends above means and prefer the good to the useful.”

    -John Maynard Keynes

    Center for the Advancement of a Steady State Economy

    CASSE was founded as a U.S.-based nonprofit organization by Brian Czech in 2004 to refute the dangerous rhetoric that “there is no conflict between growing the economy and protecting the environment.” Working with colleagues in several professional scientific societies, Brian crafted a scientifically sound position on economic growth that can be signed by individuals and endorsed by organizations. With our position statement, the work of our dedicated staff and volunteers around the world, and the development of numerous information resources, CASSE has become the leading organization promoting the transition from unsustainable growth to a steady state economy.

    http://steadystate.org

    “Perpetual economic growth is neither possible nor desirable. Growth, especially in wealthy nations, is already causing more problems than it solves.”

  43. JuanP on Sat, 30th Jan 2016 9:11 am 

    Davy, the board’s fool is back! 😉

    I have already explained, Davy, that I no longer need a reason to attack you other than the fun I derive from it. I will attack you whenever I feel like it, fool. Get used to it. It is too late for you to cry for mercy or play the victim now. You had years to change your behavior, now it is too late.

    You need to visit your goats, fool! You think you speak for the board? WHAT A DELUSIONAL FOOL YOU ARE! You only speak for your insanity, freak!

  44. JuanP on Sat, 30th Jan 2016 9:16 am 

    I will give you this, Davy. You do speak for the delusional American exceptionalist one percenter bullies on this board, because you are the only one and that is who you speak for and who you speak to: YOUR OWN DELUDED, FOOLISH SELF!

  45. shortonoil on Sat, 30th Jan 2016 11:26 am 

    “Like I said, without the muslims Europe may still be a bunch of agrarian peasants and you might be a goat farmer instead of working the night shift at 7/11 for your entire adult life.”

    The Muslims did preserve the knowledge of the ancients after the fall of Rome. That may have been because they were the only intact civilization close enough to the source to be able to do it. It may have also been because they were more Persian, than Muslims. The House of the Magi had existed for more than a 1000 years before Rome was more than a swamp in central Italy.

    Nevertheless, they have now fallen prey to the pit fall of all the monotheistic religions; Holy War. They did not invent it, the Jews did thousands of years before. The Jews also invented the tradition of martyrdom, the last recourse of the Soldier of God. The Muslim suicide bomber is only replaying the stories in the Book of The Maccabees. The flip side to the victorious legions of God; a vanquished and defeated follower. Both the victorious soldier, and the dead martyr will be used in God’s most Holy War.

    Let’s not deify the Mohammedans; it is a religion that sprung from the utterance of an illiterate Bedouin; a plea for unity to a fragmented tribe in a hostile, and brutal world. It was imposed on those around them with a copy of the Torah, and a sword. It has grown to dictate the lives of millions, for lack of anything better, if nothing else. It is now exhibiting its most brutish demeanor, death to all who fail to follow the One True God. It has now taken on the most egregious trappings of fanaticism; intolerance.

  46. Apneaman on Sat, 30th Jan 2016 2:03 pm 

    short, deify? Get fucking real. No one’s deifying, just pointing out the rise and fall of civilizations and the fact that most so called “advancements” are built on the work of others. Like the douche you are convoluting Persia, Arabs, the muslim religion with the whole of medieval “golden age” of islamic civilization. Cordoba to Samarkand to Arabian peninsula. It was huge and diverse and brutal at times and did great things – like many an empire. And now we follow with the USA trying to catch up with radical islams fanaticism, intolerance, anti intellectualism and blood lust. Doesn’t matter really, all the ape tribes are comprised of the same insecure, arrogant suicidal cancer monkeys in the end and the end is neigh.

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