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$56 a Barrel

Discussions about the economic and financial ramifications of PEAK OIL

Re: $56 a Barel

Unread postby Tanada » Wed 10 Jan 2018, 15:08:04

RonMN wrote:I've been watching the oil price fearing that $56 might be some sort of psychological barrier that when broken...could spell the beginning of much further price climbs.

Does anybody else think this or am i over reacting?


I took a deep dive today to see how we were all reacting on the 2005-2008 upswing. Thought some of you might find it interesting yourselves. So many were so confident the End Was Nigh that looking back a decade later I wonder how those of us with that belief structure were able to function in our world culture as a whole...
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: $56 a Barel

Unread postby GHung » Wed 10 Jan 2018, 15:22:33

I'm still trying to figure out what a barel is 8O
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Re: $56 a Barel

Unread postby yellowcanoe » Wed 10 Jan 2018, 15:51:00

GHung wrote:I'm still trying to figure out what a barel is 8O


Haven't you heard that we have reached peak "r" and we are going to have to be more frugal in using up the ones we have left!
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Re:

Unread postby GoghGoner » Wed 10 Jan 2018, 16:18:51

Wildwell wrote:$50-70 Price is a bit high isn’t it?
$80 We have a problem. Get the SUV on Ebay.
$100 Airlines, what airlines? Oil price is the No1 subject for the man in the street Major shift to efficiency, demand destruction begins to set in.
$150 Panic sets it, food prices high, rationing, financial collapse?
$200 Grab your horse and run to the hills!
$300 Might as well not bother getting out of bed and keep a big wool straight jacket on.


Like most of us, this poster assumed a linear rise in prices but almost nailed the price that the financial system collapsed. It was bad, folks already don't remember the mass panic from Lehman Bros and the ensuing liquidity squeeze. European central bank is stopping some of its bond purchases this year and US Fed is still scratching its head about continued low inflation. We aren't even out of the woods from what happened 10 years ago.
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Re: Re:

Unread postby Outcast_Searcher » Wed 10 Jan 2018, 16:54:04

GoghGoner wrote:
Wildwell wrote:$50-70 Price is a bit high isn’t it?
$80 We have a problem. Get the SUV on Ebay.
$100 Airlines, what airlines? Oil price is the No1 subject for the man in the street Major shift to efficiency, demand destruction begins to set in.
$150 Panic sets it, food prices high, rationing, financial collapse?
$200 Grab your horse and run to the hills!
$300 Might as well not bother getting out of bed and keep a big wool straight jacket on.


Like most of us, this poster assumed a linear rise in prices but almost nailed the price that the financial system collapsed.

And you and pstarr are still claiming that the collapse was primarily due to the oil price instead of real estate problems (CDO's, etc). So you imply you are smarter about economics than the collective minds, education, etc. of the world's economists.

If you can't wake up beyond that, what's the point in commenting?
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: $56 a Barel

Unread postby AdamB » Wed 10 Jan 2018, 20:19:08

Tanada wrote:
RonMN wrote:I've been watching the oil price fearing that $56 might be some sort of psychological barrier that when broken...could spell the beginning of much further price climbs.

Does anybody else think this or am i over reacting?


I took a deep dive today to see how we were all reacting on the 2005-2008 upswing. Thought some of you might find it interesting yourselves. So many were so confident the End Was Nigh that looking back a decade later I wonder how those of us with that belief structure were able to function in our world culture as a whole...


Outstanding!!!

I seem to recall some of the peak oil classic folks (Kunstler, Ruppert, Deffeyes) going mental back at the $40 marker, but this one seems spot on for the current market.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Re:

Unread postby AdamB » Wed 10 Jan 2018, 20:27:37

GoghGoner wrote:
Wildwell wrote:$50-70 Price is a bit high isn’t it?
$80 We have a problem. Get the SUV on Ebay.
$100 Airlines, what airlines? Oil price is the No1 subject for the man in the street Major shift to efficiency, demand destruction begins to set in.
$150 Panic sets it, food prices high, rationing, financial collapse?
$200 Grab your horse and run to the hills!
$300 Might as well not bother getting out of bed and keep a big wool straight jacket on.


Like most of us, this poster assumed a linear rise in prices but almost nailed the price that the financial system collapsed. It was bad, folks already don't remember the mass panic from Lehman Bros and the ensuing liquidity squeeze. European central bank is stopping some of its bond purchases this year and US Fed is still scratching its head about continued low inflation. We aren't even out of the woods from what happened 10 years ago.


Speak for yourself. 2009 was the equity buying opportunity of a generation, too bad you missed it. Owning some real estate sure didn't hurt either, depending on where. Few object to a doubling of home values. $110/bbl or so was all it took to kick off the shale revolution, ensuring the US position as an energy producing superpower for at least a decade, and based on the ease with which the wife and kid have been switching or collecting jobs as of late, the full employment economy that has resulted isn't all that bad either.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: $56 a Barel

Unread postby GoghGoner » Thu 11 Jan 2018, 05:33:19

By us, I meant the peak oil theorists during that timeframe on this and other peak oil websites, not the population in general. I spent a couple of years at lurking at TOD before I registered for this site.

This is a nugget from TOD around 2006:

US oil consumption will be reduced by an awful lot more than 10% in 12 years. After all, we cannot possibly consume oil that doesn't exist. That is, world oil supply will drop by a lot more than 10% during the next 12 years.
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Re: $56 a Barel

Unread postby Tanada » Thu 11 Jan 2018, 11:25:31

GoghGoner wrote:By us, I meant the peak oil theorists during that timeframe on this and other peak oil websites, not the population in general. I spent a couple of years at lurking at TOD before I registered for this site.

This is a nugget from TOD around 2006:

US oil consumption will be reduced by an awful lot more than 10% in 12 years. After all, we cannot possibly consume oil that doesn't exist. That is, world oil supply will drop by a lot more than 10% during the next 12 years.


Yes, that belief was a near majority stance around this website when I arrived in April 2005. On the other hand Aaron, one of the founders, split the population of members in three shortly after that with the Doomers, Conucopians and Moderates as those three self selected groups. I have always considered myself as mostly a Moderate though when my personal times are tough I tend to be more Doomer oriented. Point being, in 2005 I was somewhat concerned because I thought the post peak period would be very tough, but I believed then and still believe now we will muddle on through as we tend to do. Post peak will not be like pre-2005 in some aspects, but it will still be a way of life that gets most of society through year after year.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: $56 a Barel

Unread postby Hawkcreek » Thu 11 Jan 2018, 12:42:57

Yeah, I started as a doomer in 2004, gradually switched to a moderate, and finally ended up not giving much of a crap.
Whatever happened to Aaron, anyway? I liked his style, and felt bad that he seemed to be going through a bad divorce.
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Re: $56 a Barrel

Unread postby Tanada » Thu 11 Jan 2018, 13:55:28

At the rate prices are rising now I see one of two things happening over the next few weeks. Either we will bounce off a ceiling like we did last year when the trading software thinks the current upswing has reached its end, say $72/bbl, and bounce around but below that for a few months. Or a lot of 'investors' will decide oil is back in vogue as an investment like they did in 2009 and prices will climb back into the $80+/bbl range they held from 2010-2014. If the latter happens you will see a lot of wailing and knashing of teeth, and a rush for the door as all those with a lot of crude in storage try and sell it ASAP to get the profits from the run up.

In my heart of hearts I must admit I think of the $80+/bbl range as 'normal' and the situation of 2015-2017 as the aberration. World oil demand is still growing each and every year and legacy producers are not keeping up in many cases. For example Egypt or the UK had developed so much oil capacity after 1980 that they actually became exporting countries for a decade or longer but they are now back in the import category. Standard of living, include ICE powered private vehicles, continues to increase world wide especially among the half of the population that were born when only the wealthiest strata of their country could afford a private vehicle, even a moped.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: $56 a Barrel

Unread postby Outcast_Searcher » Thu 11 Jan 2018, 14:18:05

Tanada wrote:In my heart of hearts I must admit I think of the $80+/bbl range as 'normal' and the situation of 2015-2017 as the aberration. World oil demand is still growing each and every year and legacy producers are not keeping up in many cases.

Tanada, I agree with your whole post. And this is a perfect example of why it's so hard to predict oil prices in a month or a few years or even a decade.

If prices return to the $100ish new normal, will that accelerate and expand the US oil fracking boom enough to create a glut again in time? Will that make some international oil fracking seen as likely economical to expand that? (In my heart of hearts, I don't buy that the US is the only place oil fracking can be economical to scale. I think it's just a matter of the necessary price of oil to entice producers to take the risk.)

Or prices could get smashed back to $50ish, at least for a while, if sellers smell a short term peak price and dump oil in storage in earnest.

Longer term, barring a big global financial hit that lasts, the rising global demand for oil seems the most likely big trend -- at least for the next decade or so. If prices stay high (say near $100 a barrel) it will be very interesting to see how big the BEV, PHEV, and HEV production numbers can get cranked up in a decade in response.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: $56 a Barrel

Unread postby ROCKMAN » Thu 11 Jan 2018, 16:25:52

T - "...the Doomers, Conucopians and Moderates...". Or if one puts it into a time domain a person might mutate from one category to another...and then back again. Especially if one doesn't have a good perspective. Having been "in the shit" for more then 4 decades the Rockman has seen hundreds of personal examples. We all know the frog and heating pot of water example. But it goes way beyond to where the frog is removed from the near boiling pot and set on a dish full of dead flies. And then dumped back into the pot of water. And then once again returned to frog heaven.

The oil patch boom/bust cycle obviously has its reciprocal on the consumer side of the fence. Consider the young farts here that tapped into our website in 2009. But compare their current expectations compared to the "babies" that first arrived here just last year. And then there's the dinosaurs that have lived and breathed the oil market (both producers and consumers) since the 1970's. The entire history can be had if one digs into the history. But how many folks that have never used a rotary telephone will do that? Funny movie scene for real: young blond valley girl picks up a rotary and starts poking the holes. LOL.

So we have a dedicated group of doomers here that have actually modeled the "end of life" for the oil patch. Obviously the oil price crash of a couple of years ago has confirmed their prediction. Confirmed it to the degree they cannot find it in themselves to honestly address the increasing trend in oil prices we've been seeing for many months. But as mid 2018 approaches and IF oil prices stay elevated they will be stuck with a mathematical impossibility of their prediction NOT BEING PROVEN severely flawed.

IOW if oil is in the $60+/bbl range oil producers will have to actually pay consumers to buy their oil for the predicted average oil price of 2018 to come even close to being seen. We don't have to wait until the end of 2020 to see the model crumble. It might happen within the next 6 months. Or it may not. But we don't have to wait long to find out.
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Re: $56 a Barrel

Unread postby Subjectivist » Thu 11 Jan 2018, 17:16:26

Hey f they want to pay me to take their products I am sure I can find a use for them!
II Chronicles 7:14 if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven, and I will forgive their sin and will heal their land.
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Re: $56 a Barrel

Unread postby tita » Fri 12 Jan 2018, 11:00:02

Tanada wrote:In my heart of hearts I must admit I think of the $80+/bbl range as 'normal' and the situation of 2015-2017 as the aberration.

Anyway, we are far away from the pre-1970 situation, which would require a price in the 25-35$ range.

The 2015-2017 price is similar to the 1986-2000 price... Except on the length. Consumption increases everywhere. The 70-80$ range is about the average price (inflation adjusted) for the period between 1970 and today. I would say that over 80$, consumption from developed countries doesn't grow and alternative or energy savings increase, and only growth from emerging countries (China and India) increase. Of course, the price range move with global GDB growth and global oil consumption.

This is quite impressive how we got out of the glut so quickly... IMHO this proves that production improvement is smaller than what we had in 1986. We won't hit 100$+ soon, but we are well on the way for a price rally similar to the 2000-2008 period, but on a shorter time.

Which may well end up with another crash of the economy. There is too much exuberance right now, stock markets flying too high. A lack of confidence brought by a decreasing consumption in the aftermath of an oil price spike could be the trigger.
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Re: $56 a Barrel

Unread postby Tanada » Fri 12 Jan 2018, 12:09:18

About the only thing politicians are ultimately good for is instilling confidence in their people. In an economic downturn I have abundantly more confidence in a businessman turned politician than I do in a leader who believes the government is the answer to every problem and you should "never let a crisis go to waste" when building your political power base.

Coasters ignorantly believe there lack of confidence in President Trump is what calls the tune, but for the bulk of the population of the country things are better now than they have been since 2007 in economic terms. There was no magic involved in this, it was mostly the effect of the average people of the country trusting the President to make good economic decisions which gave them the confidence to go out and spend money they had been not spending for close to a decade. Spent money stimulated the economy and shocked all the doomsayers who were sure and certain 2017 would be a massive down year. I suspect if Hildebeast had been able to steal the election it would have indeed been a down year because I for certain wouldn't have risked spending any money I could avoid spending.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: $56 a Barrel

Unread postby tita » Fri 12 Jan 2018, 13:12:05

@Tanada
True! But it works only if the economic conditions are ready. An election of Donald Trump, right after the economic crisis of 2008, would have had a very different outcome than what we saw. Remember that the economic upturn started before the election of Trump. He just amplify the confidence.

But anyway, he couldn't be elected at that time, as he represented the finance that led the world in crisis. Also, confidence doesn't change fundamentals. If growth can't be sustained, then it's game over for him. Still three years to go!
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