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THE International Monetary Fund Thread (merged)

Discussions about the economic and financial ramifications of PEAK OIL

Re: IMF oil price shock warning! >130$/b

Unread postby vision-master » Sat 09 Apr 2011, 15:48:00

Gas up to $3.89 gal as of today, must be over $4 in places like Cali?
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Re: IMF oil price shock warning! >130$/b

Unread postby timmac » Sat 09 Apr 2011, 15:55:21

vision-master wrote:Gas up to $3.89 gal as of today, must be over $4 in places like Cali?


Its been over $4 a gal in Cali for over a month or 2, its now edging towards $4.50 per gal there is many areas..
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Re: IMF oil price shock warning! >130$/b

Unread postby kmann » Sat 09 Apr 2011, 15:57:03

20,320 total product supplied week of 7/4/2008 compared to 18,494 for the week of 7/3/2009 (EIA data). About a 9% drop in demand for that week. I don't know that I'd call that highly inelastic. Of course there was alot more going on than oil prices during that period. Maybe somewhat inelastic, I'm not familiar with how other products behave with a 350% price swing. Nevertheless, I believe speculation to be responsible for a substantial part of the price swings.
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Re: IMF oil price shock warning! >130$/b

Unread postby Puchica » Sat 09 Apr 2011, 16:22:06

this pattern fits the Law of the Queue
From the secure heights
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Re: IMF oil price shock warning! >130$/b

Unread postby yeahbut » Sun 10 Apr 2011, 04:44:26

GASMON wrote:North West England - Diesel £1.42 / litre, Petrol £1.29 - £1.36 litre. No shocks for us anymore, we know & expect £1.50 - £1.60 soon.

Sunny day, park up & get the bikes out.

Gas


Zachary. Gas is over $6US/gallon in NZ. People are getting back on the trains and buses, public transport usage is up every month. Bring it on.
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Re: IMF oil price shock warning! >130$/b

Unread postby pedalling_faster » Sun 10 Apr 2011, 07:34:35

diemos wrote:
kmann wrote:$142 to $38 range within a six month period cannot be justified by supply and demand alone.


Yes it can. Oil has a highly inelastic demand curve since it underlies all economic activity and there are no short-term substitutes. The minute that demand is one barrel per day over supply the bidding begins. Once the demand falls below supply the price collapses to the marginal cost of production.


it's very true that Western Civilization is wired into using fossil fuels.

but there are substitutes - the amount of substitution varying with the seasons.

for large trucks, biodiesel is a direct substitute. states like North Dakota are America's primary biodiesel source crop producers, e.g. sunflower oil.

of course there is the issue with some biomass-derived liquid fuels of competing with food. and there are ways to appease that,
e.g. giving tax breaks that are currently given to timberland owners (who pay basically zero property taxes as long as they meet the BLM standard of 110 trees per acre), if they also grow biodiesel source crops on their land.


getting back to substitution, only some diesel cars & trucks, and most large trucks, can run biodiesel directly. B99 is sold mid-winter, somehow they have circumvented the characteristic of SVO (straight vegetable oil) that causes it to gel up in winter. making the appropriate technological conversions (when i went to a biodiesel conference in 2006, the primary shop-talk among exhibitors was finding ways to heat the fuel lines ... they had already mastered heating the fuel tank & the dual-tank configuration) expands the fleet/ percentage of cars that can use non-fossil-fuel liquid fuels.

for Automobiles, the initial substitution that was made was 15% ethanol/alcohol. again, this relates to the subject of rising food prices ...

"A report by Dr. Indur Goklany, writing in the Journal of American Physicians and Surgeons (Volume 16 Number 1, Spring 2011), estimates that at least 192,000 excess deaths and 6.7 million additional Disability-Adjusted Life Years lost to disease have been caused by using food crops to make ethanol for fuel." (from PO.com home page.)

perhaps governments will wise up and support their citizens in growing corn and other foods that compete with biofuels. one example is the iGrow program in Sonoma County. basically they use government money to tell citizens to grow their own food, but some good may come of it. the primary difficulty for urban dwellers is access to secure garden space (so they can grow corn without it being stolen.)

this raises the question - how much alcohol can be substituted ? well, in Brazil, the answer is 100% - they got a clue after the oil shocks in the 1970's & switched entirely, leveraging their natural advantage (tropical location) and sugarcane production. (load up on sugar now, it will only be getting more expensive.) the engineering changes required are similar to marine engineering - the use of alcohol adds more water to the fuel cycle, which is corrosive for automobile engines.

http://green.autoblog.com/2010/01/04/re ... ion-in-20/

"there were 250 million cars here in 2008, and only 246 million at the end of 2009."

http://en.wikipedia.org/wiki/Passenger_ ... _operation

"The study found that of vehicles in operation in the US, 38.3% were older than ten years, 22.3% were between seven and ten years old, 25.8% were between three and six years old and 13.5% were less than two years old."

one of the paradoxes with automobiles is that the modern electronics makes them less tolerant of fuel changes, this is certainly true with diesels. i have a '98 Ford truck, which seems new to me (i bought it new), but i guess it qualifies as "older than ten years".

http://en.wikipedia.org/wiki/Ethanol_fuel

"Ethanol fuel is widely used in Brazil and in the United States, and together both countries were responsible for 86 percent of the world's ethanol fuel production in 2009.[2] Most cars on the road today in the U.S. can run on blends of up to 10% ethanol,[3] and the use of 10% ethanol gasoline is mandated in some U.S. states and cities. Since 1976 the Brazilian government has made it mandatory to blend ethanol with gasoline, and since 2007 the legal blend is around 25% ethanol and 75% gasoline (E25).[4] In addition, by December 2010 Brazil had a fleet of 12 million flex-fuel automobiles and light trucks and over 500 thousand flex-fuel motorcycles regularly using neat ethanol fuel (known as E100)."

I would say this is one of the primary policy goals to focus on in the US. Just as the US gov. gives tax breaks for solar installations, they could also give tax breaks for fuel conversions. Of course, this would require Ford & GM to get on-the-ball and offer conversion services at the repair facilities at their dealerships, similar to buying a re-manufactured engine. I paid about $3800 for one in 2006. I would estimate that the conversion task can be accomplished for $5000 on a modern 6 cylinder gas-guzzling engine. Obviously if the government offered a program similar to "Cash for Clunkers", that would be helpful (side-stepping the issue of where the money comes from. Recently, most of it has been printed/ created out of thin air.)
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Re: IMF oil price shock warning! >130$/b

Unread postby misterno » Sun 10 Apr 2011, 12:53:14

In Turkey, gasoline costs over $11/gal but car sales are breaking records approaching 1MM/year.

Same car sales boom is seen in the US as well but this time consumers are trading down and choose Toyota Pirius, Honad civic and other fuel efficient cars

http://online.wsj.com/mdc/public/page/2 ... c_h_econhl
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Re: IMF oil price shock warning! >130$/b

Unread postby AgentR11 » Sun 10 Apr 2011, 15:44:09

kmann wrote:However the effect is significantly amplified by speculation. $142 to $38 range within a six month period cannot be justified by supply and demand alone.


Umm. If I produce a raw material at a production cost of $5/ea and it is an essential and primary ingredient of a process that produces an economic value of $1000 / ea; how do you think the market will price my stuff when I'm producing slightly more than the market wants to use, and its cost of storage is high? Corollary, how do you think the market will price my stuff if I'm making slightly less than what the market wants to use?

My assertion, when there's too much, the price will absolutely collapse to the point that I could go out of business! If there's too little, my customers are going to bid, and they could end up bidding very, very high. Nothing speculative about it either. They want it, they have the funds, and are very interested in the principle that they should get it instead of their competitor.

Thats a simplified model of oil; though with oil, there are plenty of low-value uses occurring at $4/gal. As the price rises, these low value uses cease causing some economic depression effects as well as lowering demand and eventually price of fuel. Once the price drops again, that abandoned low value use may, or MAY NOT be resumed.
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Re: IMF oil price shock warning! >130$/b

Unread postby Outcast_Searcher » Sun 10 Apr 2011, 16:28:13

All I know is I really really am hoping that Toyota's planned 2012 Prius plug-in hybrid actually provides a 13ish mile range on batteries AND can be priced somewhat below $30K for the base model.

I'd like to buy one and rarely have to burn any gasoline -- just as a matter of principle. (Yes, if I had good joints, I could bike, etc. I do walk on good days, but carrying much is a problem for me. I'm trying to find a solution that will work in the real world for middle age folks and up with less than perfect health (and genetic issues or issues medical science can't figure out aren't one's own fault)).

I'm hoping the lithium ion battery and Toyota's commitment to recycling will help with the battery materials issue.
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: IMF oil price shock warning! >130$/b

Unread postby americandream » Sun 10 Apr 2011, 16:51:01

kmann wrote:$142 was unjustified in '08 (as the subsequent crash to $38 showed) and $130 now is also unjustified, as the coming crash will also show.


Absurd nonsense. The price is as justified as the supply and demand situation dictates. Neither is the market stupid enough to gamble oil prices into another crash. A few numbskulls could possibly risk depression like consequences as we saw with mortgages. However there is always a component of the market smart enough to know the true nature of a market's moves and to hedge accordingly.
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Re: IMF oil price shock warning! >130$/b

Unread postby americandream » Sun 10 Apr 2011, 16:52:41

yeahbut wrote:
GASMON wrote:North West England - Diesel £1.42 / litre, Petrol £1.29 - £1.36 litre. No shocks for us anymore, we know & expect £1.50 - £1.60 soon.

Sunny day, park up & get the bikes out.

Gas


Zachary. Gas is over $6US/gallon in NZ. People are getting back on the trains and buses, public transport usage is up every month. Bring it on.


Very little public transport out here in the sticks (most of the South Island ie)

edit: What's with the Americanism, "gas", mate?
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Re: IMF oil price shock warning! >130$/b

Unread postby Rod_Cloutier » Sun 10 Apr 2011, 18:56:46

The IMF's research comes as a new Reuters poll of 32 major oil traders predicted on Wednesday that oil prices will soar above $130 a barrel by late 2011.


Any bookies out there willing to bet it will be above $130 before the end of April to say nothing of the end of 2011.
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Re: IMF oil price shock warning! >130$/b

Unread postby americandream » Sun 10 Apr 2011, 19:25:07

Repent wrote:
The IMF's research comes as a new Reuters poll of 32 major oil traders predicted on Wednesday that oil prices will soar above $130 a barrel by late 2011.


Any bookies out there willing to bet it will be above $130 before the end of April to say nothing of the end of 2011.


West Texas daily chart is strongly buying. Nothing to suggest any slowing in momentum.
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Re: IMF oil price shock warning! >130$/b

Unread postby Skinner » Sun 10 Apr 2011, 20:25:36

yeahbut wrote:
GASMON wrote:North West England - Diesel £1.42 / litre, Petrol £1.29 - £1.36 litre. No shocks for us anymore, we know & expect £1.50 - £1.60 soon.

Sunny day, park up & get the bikes out.

Gas


Zachary. Gas is over $6US/gallon in NZ. People are getting back on the trains and buses, public transport usage is up every month. Bring it on.


I like your style Butt. Way too much whining about fuel prices, if Americans want their SUV's, let them pay for it.
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Re: IMF oil price shock warning! >130$/b

Unread postby yeahbut » Mon 11 Apr 2011, 04:23:50

americandream wrote:Very little public transport out here in the sticks (most of the South Island ie)


True. No doubt all kinds of changes will be forced on us, and they will be different from region to region. Lots of them wont be much fun, I'm sure. I have to drive a lot for my job, and it starts to hurt about now, price-wise. Nevertheless, I still say bring it on. I see no factor other than money that the majority of the public respond to- hence the Nats can buy an election with tax cuts, or Labour with interest-free student loans, etc. If that's what it takes to get changes in mindless consumerism, then that's what it takes.

What's with the Americanism, "gas", mate?


1)who cares?
2)ever 'stopped for gas'? ever 'gassed up' the car? I have..
3)nothing like being called on your koiwoi-ness by a non-native :lol:
4)ok "american dream" :razz:
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Re: IMF oil price shock warning! >130$/b

Unread postby Pops » Mon 11 Apr 2011, 07:38:18

Repent wrote:Any bookies out there willing to bet it will be above $130 before the end of April to say nothing of the end of 2011.

I think I said $138.99 by the fourth of july in the price challenge thread...
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Re: IMF oil price shock warning! >130$/b

Unread postby kublikhan » Mon 11 Apr 2011, 12:28:52

pedalling_faster wrote:this raises the question - how much alcohol can be substituted ? well, in Brazil, the answer is 100% - they got a clue after the oil shocks in the 1970's & switched entirely, leveraging their natural advantage (tropical location) and sugarcane production.
That is not true. Sugarcane ethanol represents less than 18% of Brazil's energy consumption in the transportation sector. Even in Brazil, where the EROEI of ethanol production is seven times better than the US, oil provides over 70% of the energy in the transportation sector. And oil use in Brazil is growing, not diminishing. Meanwhile high sugar prices are pushing ethanol production down.

sugarcane ethanol represented 17.6% of the country's total energy consumption by the transport sector in 2008, while gasoline represented 23.3% and diesel 49.2%

Ethanol fuel in Brazil

The International Monetary Fund warned Thursday that nations should brace for dwindling oil supplies that could drive prices skyward as demand increases, especially in emerging economies.

In the six months to July 2008, crude oil prices more than doubled to record highs over $147 a barrel in New York and London. The market crashed amid the global financial crisis but has since recovered on the back of powerful emerging-market economies such as China, India and Brazil -- where oil consumption is growing fast.
IMF warns oil growing scarce, more costly

Ethanol consumption in Brazil should fall in the 2011/12 season as high sugar prices buoy prices of the fuel, making it less competitive than gasoline at filling stations, Datagro analysts said on Monday. The high price of sugar led most of the country's cane mills to favor production of the sweetener over ethanol in 2010/11, keeping supplies tight and prices firm. This trend should increase further in 2011.
Brazil ethanol consumption to fall in 2011
The oil barrel is half-full.
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Re: IMF oil price shock warning! >130$/b

Unread postby NWMossBack » Mon 11 Apr 2011, 21:56:08

Two pages, and nobody mentioned central bank shenanigans as a contributing factor?

If QE is really stopped in June stand by for wholesale deflation and cratering equities & commodities.
To a man with a bunker, every problem looks like Armageddon.
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Re: IMF oil price shock warning! >130$/b

Unread postby sehreneL » Wed 13 Apr 2011, 01:47:23

That does not sound good and even in America Oil prices are soaring, and gas prices are approaching levels not seen since the summer of 2008. Bad memories of summer 2008 are surfacing as oil and gas prices inexorably climb. In spite of a large volume of gas and oil reserves in the U.S., speculators have managed to drive up the price of oil 21 percent this year. Some analysts think the oil rally is about to end, however, as increasing gas and oil costs reduce customer demand. Here is the proof: Oil and gas destined to fall as prices pinch consumer demand.
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