THE Price of Crude pt 4 (merged) Archived

[nth]

I don't see it as blaming PO, but on a set of conditions that included speculators and investors.

They mention industries failure to invest in people, infrastructure, etc.
They also mention industries change of heart. They are no more keen on the bottomline than one satisfying energy demand.

They also talk about OPEC's wrong decision based on faulty data, so late to invest in new production.

I think this is a very good article on why oil prices rose these past 2 years. PO has very little to do with these price increases. PO will only come into play when oil production falters, which has not happen yet.

[Seadragon]

Yeah, but demand and supply are now neck and neck; what about growth in energy consumption next year? In five years? Ten? Where's that oil gonna come from?

[mpg]

WSJ is one of the best places to read about peak oil. But did they really need to come up with personalities to write the piece? At least Simmons wrote a book. One of the other five people who have caused the spike in the oil market is a young chinese accountant who bought his first car.

[DantesPeak]

WSJ is one of the best places to read about peak oil. But did they really need to come up with personalities to write the piece? At least Simmons wrote a book. One of the other five people who have caused the spike in the oil market is a young chinese accountant who bought his first car.

Kind of strange, to be sure, to identify that specific person instead of a typical Chinese or maybe a Chinese transportation planner.

A discussion of China's demand for oil should include the rising middle class plus the development of a vast highway system that dwarfs the US interstate system.

[grabby]

It's these reckless peak oilers who are causing high oil prices by talking about it. If they'd just shut up, oil prices would go back down.

EXACTLY! If we would just stop worrying about it, and stop talking about it, we would then have more oil at cheaper prices. I'll bet Elvis had something to do with this mess. Peak oilers must be trouble makers.

[nth]

Yeah, but demand and supply are now neck and neck; what about growth in energy consumption next year? In five years? Ten? Where's that oil gonna come from?

First, I believe demand is a lot greater than supply because we have supply restraint, prices are rising, especially refined petro products. Remember in a free market, rising prices are equivalent to demand exceeding supply.

Second, PO and supply restraint are two separate issues. Almost all energy experts believed we are in a supply restraint situation- mostly refined petro supply restraint and not Crude Oil. PO is mainly about oil production not being able to increase no matter how much oil industry invests in new production. We are not seeing that yet.

As for your question, there are many possible new oil fields to be drilled for the next 20 years or more. Just look at the number of blocks being auction off by governments. Also, anti-PO people believed that technology can increase recoverable, so proven reserves will grow a lot as oil prices rise. If you look at most oil fields outside of developed nations like US, you see significant under investment in oil infrastructure. They definitely can use new advance oil recovery systems to boost their oil production.

Now, even with all this, I still believe we will hit PO in the coming years. My reason is simple. The oil industry can only bring online a limited amount of new production a year. It is restraint by people, equipment, political process, and definitely not by money. Old oil fields going into decline will increase over time as most major oil fields are already or about to go into decline.

One thing is for sure. Without speculators and investors, oil price will not be so high. But, the job of speculators and investors is to forecast the market and they are correct when they forecast increasing demand and that demand will not abate when prices rise, which is why we are stuck with high prices and not see a drop that anti-PO people been predicting for the past two years.

If high prices are caused only by speculators and investors, we will see a rise in prices and a huge drop as their contracts for delivery comes due. We are not seeing that. We are seeing stable prices, which means supplies are tight.

[jimmyz]

man how about this from bloomberg

http://www.bloomberg.com/apps/news?pid= ... world_news

[HonestPessimist]

Expect $95 to $100 per barrel of oil to come around within this month and next month. Goldman Sachs predicted it last summer (suggesting $105 per barrel by end of 2005 or start of 2006), just less than a month before the Katrina/New Orleans disaster. The sky-high gas prices we saw and paid for in the first two weeks of September was just a conditioning preview for all of us and see how we reacts to that by various degrees.

I could be wrong and I hope I'm wrong but this sign of a triple-digit price per barrel of oil is just right around the corner soon.

Be prepared for the shock.

[jupiter422]

Are you suggesting this only because goldman sachs predicted it.Do you have anyother evididence or data that supports this?

[DantesPeak]

Could you be more specific as to why oil will go up now?

BTW - The first GS 'oil spike' report was less of a prediction and more of a good possibility that oil would spike sometime in the next few years or so - mostly due to political events. I agree with that. Again, the orginal report did not refer to a spike early in 2006. However I understand the report has undergone at least two revisions, and I haven't reviewed the latest version which references PO.

[Tyler_JC]

Expect $95 to $100 per barrel of oil to come around within this month and next month. Goldman Sachs predicted it last summer (suggesting $105 per barrel by end of 2005 or start of 2006), just less than a month before the Katrina/New Orleans disaster. The sky-high gas prices we saw and paid for in the first two weeks of September was just a conditioning preview for all of us and see how we reacts to that by various degrees.

I could be wrong and I hope I'm wrong but this sign of a triple-digit price per barrel of oil is just right around the corner soon.

Be prepared for the shock.

More illogical doom and gloom.

Oil may move up 10% or even 20% in January. But a 60% price hike in one month without a massive disruption in supply? Give me a break.

Either provide some evidence of a soon-to-be revolution in Saudi Arabia or moderate your prediction.

...Or do whatever the heck you want, it's a free internet.

[MicroHydro]

Nothing less than war could do this.

[sameu]

ongoing rumors about an airstrike/war in Iran could send the price way up

[peaker_2005]

Is it just me, or does it feel like one major political blunder would send this world into WWIII?

[MD]

Is it just me, or does it feel like one major political blunder would send this world into WWIII?

It's just you....

[Doly]

Is it just me, or does it feel like one major political blunder would send this world into WWIII?

You could call it WWIII, but the battles aren't going to happen in the territory of the countries that start them. The battles will happen in the countries with oil.

[linlithgowoil]

no chance. that price of oil would only happen if we had a shortfall in supply of a couple million barrels or more. and even then, the price would not simplty sit that high or keep rising, because people expect disruptions to be temporary - mainly because they usually are.

the world economy could not sustain $100 oil for very long, and thats why i think people saying oil will keep going higher and higher for ever more are wrong.

[Madpaddy]

Unless you are talking about the Jordanian dollar, I think $100 oil this month is impossible bar a war or a major terrorist attack. In fact, I think governments would intervene and introduce rationing before they would allow an increase like this to take place in such a short time frame.

However, the one thing I do know after watching events unfold in the last 4 years is that we cannot predict with any real accuracy what will happen.

[deconstructionist]

Is it just me, or does it feel like one major political blunder would send this world into WWIII?

You could call it WWIII, but the battles aren't going to happen in the territory of the countries that start them. The battles will happen in the countries with oil.

not that we're all Americans here, but for the record, America is still one of the top oil producing nations in the world... which puts the war on our soil in Doly's scenario.

I think it's safe to call it world war III. and i think that PNAC is marching us straight into it. the only thing that might stop it is civil war in the US.

[khebab]

Expect $95 to $100 per barrel of oil to come around within this month and next month. Goldman Sachs predicted it last summer (suggesting $105 per barrel by end of 2005 or start of 2006), just less than a month before the Katrina/New Orleans disaster. The sky-high gas prices we saw and paid for in the first two weeks of September was just a conditioning preview for all of us and see how we reacts to that by various degrees.

I could be wrong and I hope I'm wrong but this sign of a triple-digit price per barrel of oil is just right around the corner soon.

Be prepared for the shock.

Why is that? We don't have any problems on the supply side (yet), just tight spare capacity and strong demand. Many new projects are coming online this year and are on schedule.

Prices should stay around $60 +/- $10 for a while unless major geopolitical event!