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Re: THE Price of Crude pt 14

Unread postPosted: Sat 12 May 2018, 13:21:38
by Outcast_Searcher
TrueBeliever wrote:As for me, I hope to keep driving my Diesel pickup, my 200HP outboard equipped fishing boat, other cars, motorcycle, for the foreseeable future ... and be thankful I live in a part of the world that's only 5% of the World's population across 3.7 million plus square miles, borders two seas, and has enough Oil Sands to help us limp along while the rest of the world whimpers! (This scenario requires we assimilate Canada)

Or we just trade and process oil as normal (no assimilation necessary), and folks of modest means simply drive a relatively fuel efficient car, or take a bus, etc.

With the median US household income near $60,000, even if gasoline returns to $4, or even $5 a gallon, it's hardly a Greek tragedy, though the chorus of whining might make you wonder.

Gas at $5 a gallon on on average on a sustained basis would imply oil at something like $160 or so. Is it realistic to think that oil WELL above $100 on a sustained basis won't spur MANY big producers to up both production and exploration by a considerable amount? I vote no.

Re: THE Price of Crude pt 14

Unread postPosted: Sat 12 May 2018, 15:48:48
by onlooker
So nobody is anticipating a possible crash in the oil price?

Re: THE Price of Crude pt 14

Unread postPosted: Sat 12 May 2018, 18:54:25
by vtsnowedin
onlooker wrote:So nobody is anticipating a possible crash in the oil price?

It has crashed before for no good or fundamental reason so you should never say never but at present I see no looming possibility that would make it decline much less crash. Even if some new huge mega field was discovered it would take years to bring it on line and all the mega fields currently producing are controlled by people with no interest in seeing prices fall.
On the other hand I see numerous places in the oil producing regions where political instability could shut off supplies from those regions creating a shortage and the corresponding price spikes.
So on balance I see little down pressure and more then enough up pressure.
The above analysis and advise is worth about two cents. 8)

Re: THE Price of Crude pt 14

Unread postPosted: Sat 12 May 2018, 23:12:55
by Outcast_Searcher
onlooker wrote:So nobody is anticipating a possible crash in the oil price?

I've seen predictions all over the place, but the downside predictions look like minor to moderate declines, not crashes.

1). Global demand is expected to continue to increase meaningfully, which on balance, should squeeze supply and prices. This has been the trend for about the past two years.

2). A valid concern peak oil advocates have pointed out is how with low prices in recent years, new oil found isn't replacing what we're using. The best way to fix that is with higher prices to incent the profit motive for more exploration. (e.g. supply, demand, and the pricing function, taking care of business over time, as they have, although erratically, since oil became highly volatile in the 70's).

As vts said, it's not that a crash couldn't happen -- but the factors known, on balance, including geopolitical risks, seem to make increasing prices more likely.