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The ETP model was wrong - But is there a top for oil prices?

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The ETP model was wrong - But is there a top for oil prices?

Unread postby Observerbrb » Wed 09 May 2018, 16:59:12

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Finally, it seems that the ETP model was completely wrong. Right now, the world economy is able to withstand a 70-75$ oil barrel price. I don't know if shortonoil has discovered a new flaw or has explained the reasons of this failure, but we can all agree that after its 2nd correction his credibility is at stake. A 3rd correction will not be welcomed by forum users and other customers he might had.

However, I find interesting the concept of a top to oil prices. We already know that Oil Prices were only able to surpass the 140$ for a few weeks in the past, and no more than 110-120$ for a couple of years. My question is; Considering the higher debt levels, is the economy ready now to withstand an oil price of 90$ per barrel?
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Wed 09 May 2018, 18:04:26

Thus far, all the claims that "the economy can't withstand $X oil" have been shown to be nonsense.

The global economy did just fine with crude averaging between $90 and $100 very persistently for four years. When it went down starting in mid 2014, it had nothing to do with being unaffordable, but was due to a supply glut from oil fracking.

Even the claims that the economy couldn't withstand oil averaging close to $140 for a few weeks in July of 2008 lack any credibility. The global economy topped and crashed due to a financial rout from housing. Oil was causing some pressure, and people were adapting (as people will do when forced to) by buying smaller cars, but economists consider oil a very distant secondary effect compared to housing re the 2008-2009 major global recession.

There's no doubt that there is a price at which oil can tip over the global economy, but we certainly haven't seen anything like it. It's likely at least twice, if not three or four times your $90 figure.

Again, people can and will adapt. Now people have efficient HEV's, PHEV's and some BEV's to turn to, as well as traditional ideas like carpooling, driving less, and just using a plain old efficient small ICE car.

By the way, as experts on investing like Jack Bogle of Vanguard have shown, technical analysis (i.e. charting) gives investors NO advantage in making profitable trades, once the expenses of the extra trading are taken into account.
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: The ETP model was wrong - But is there a top for oil pri

Unread postby asg70 » Thu 10 May 2018, 00:40:53

"Oil Prices were only able to surpass the 140$ for a few weeks in the past"

That wasn't a definitive test because the credit crisis seizing up the financial system is what was responsible for oil prices tanking...plus there was a fair amount of oil speculation going on as well.
“If and when the oil price skewers for 6 months or more substantially above the MAP, then I will concede the Etp is inherently flawed"
--Onlooker, 1/1/2018
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Thu 10 May 2018, 01:29:48

The WTI crude oil price has been above the Etp model's MAC before, but just to then crash. The global economy isn't doing fine right now. Europe is slowing down and EM currencies are experiencing stress. Even China posted its first current account deficit. The stock markets are bouncing on their support lines. The debt levels are high and JP Morgan warns that the Fed's QT is unpredictable for the markets.

Something is about to break.

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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby marmico » Thu 10 May 2018, 02:02:27

Steve from Virginia goes through a lot of crayons reliving his grade school isosceles doom triangles, doesn't he?

Here's a golden oldie from 5+ years ago.

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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Thu 10 May 2018, 12:04:12

Yoshua wrote:
Something is about to break.

You're not keeping up. The ETP is pretty much broken.

Your chart is old.

WTI is now WELL above the MAP, persisting there, and rising as a trend, even as the ETP MAP falls. At the rate we're going, it will be mathematically impossible for the $41 ETP average MAP price for 2018 to hold up for the year within a few months. And since the MAP plunges from there, good luck being credible by claiming the ETP is valid.

Your ilk's frequent cries of economic alarm are persistently wrong. See zerohedge for a classic example of this. But thanks for playing.
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: The ETP model was wrong - But is there a top for oil pri

Unread postby coffeeguyzz » Thu 10 May 2018, 12:34:20

I never could quite understand why people would give Mr. Short any credibility.

The few times I engaged with him regarding matters of unconventional development, specifically in the Appalachian Basin, it was immediately crystal clear that he was woefully ignorant on the topic.

Still, he continued to present an image of being an expert.

Weird.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Revi » Thu 10 May 2018, 13:10:23

The big variable they weren't thinking of is the value of the US Dollar. It's gone from 103 to 93 over the past year. That's 10% at least, which explains some of oil's rise. A lot of people think it will break back down to around 88 again very soon. That will add another 5% or so to the oil price. We'll see...
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby onlooker » Thu 10 May 2018, 13:28:40

Certainly! Law of supply & demand. Until thermodynamics and EROEI make the entire Economy subject to a downward pull as Net energy becomes more scarce
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Thu 10 May 2018, 13:30:50

Revi wrote:The big variable they weren't thinking of is the value of the US Dollar. It's gone from 103 to 93 over the past year. That's 10% at least, which explains some of oil's rise. A lot of people think it will break back down to around 88 again very soon. That will add another 5% or so to the oil price. We'll see...

OTOH, looking at an up to date chart, the US dollar has been up several percent over the past few months. But for the last 11ish months, oil has been getting stronger, and quite persistently.

Also, the percentage change in oil's price from $43ish to $70+ish over that time (over 60%) has dwarfed the change in the USD . While the USD does influence the price of crude, it's clearly not dominating it over the past year.

https://www.marketwatch.com/investing/index/dxy/charts

http://www.macrotrends.net/2516/wti-cru ... aily-chart

Also, the two and three year trends for the USD have been roughly flat, but the overall trend for oil since early 2016 has been STRONGLY positive. Like to the tune of nearly tripling from the early 2016 lows.

Cherry picking the dollar while it's down 10% isn't telling us anything meaningful about oil's fundamentals over the past 5 years or so, IMO.
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: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Thu 10 May 2018, 13:40:31

onlooker wrote:Certainly! Law of supply & demand. Until thermodynamics and EROEI make the entire Economy subject to a downward pull as Net energy becomes more scarce

Anther day, another nonsensical post from you re economics. How many times must people in the business like the Rocks explain how in the real world, EROEI isn't even an economic factor before you stop repeating such nonsense?

And even if net energy from oil DID become much lower over time (decades) -- what part of other energy sources like wind and solar which are growing at very fast rates, and what that means in coming decades don't you understand? (Apparently, all of it).

Numbers matter. Trends matter. Data matters.
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: The ETP model was wrong - But is there a top for oil pri

Unread postby onlooker » Thu 10 May 2018, 14:23:47

Just because economics is the readily apparent measure does NOT mean that the inherent geophysical factors are inconsequential. You are forgetting that economics is the way by which we measure and tabulate available resources. What the ETP tried to contribute was a direct measurement of a resource, in this case oil. The law of supply and demand at its essence is the adaptation of society to geophysical realities. They do NOT override them. They are subject to them.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Thu 10 May 2018, 16:32:17

onlooker wrote:Just because economics is the readily apparent measure does NOT mean that the inherent geophysical factors are inconsequential. You are forgetting that economics is the way by which we measure and tabulate available resources. What the ETP tried to contribute was a direct measurement of a resource, in this case oil. The law of supply and demand at its essence is the adaptation of society to geophysical realities. They do NOT override them. They are subject to them.

Fine. But you continue to ignore that in today's real world economy, profit margins and estimates about the likely future profit margins are used to make decisions about what to produce and what not to produce (or to shut in until prices are more favorable).

Ignoring that real world economics to make apparently (re how horrible results for the ETP and all the claims of EROEI based predictions of fast crash doom) flawed or irrelevant claims of what might happen SOME day re physical constraints might make you feel better, but it says nothing meaningful about short to moderate term oil supplies and affordability.

You are persistently wrong about the economics of doom and persistently keep trying to spin your theories so you can sound right. I suppose that might be a great hobby, but meanwhile, in the real world, roughly 100 MBPD of oil is produced and consumed over time, with nary a concern for ETP or EROEI. And with the oil majors profiting to the tune of many $billions a year.

That's economic reality.
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: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Fri 11 May 2018, 02:27:18

The oil price started to rise last summer, at the same time the dollar started to fall. The rising cost in oil prices was to some degree covered by the falling cost of the dollar for Europe and other nations that import oil.

Lately the dollar has been rising, while the oil price continues to rise. The cost of oil and the dollar are now both rising for Europe.

The global economy is slowing down right now. The slowdown in Europe is more profound than in other advanced economies.

The WTI and the MAC are now moving in opposite directions. We will just have to wait and see what happens.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby asg70 » Fri 11 May 2018, 07:46:31

onlooker wrote:Certainly! Law of supply & demand. Until thermodynamics and EROEI make the entire Economy subject to a downward pull as Net energy becomes more scarce


It doesn't worth this way, onlooker. You can't waffle back and forth between supporting traditional supply & demand one moment and net-energy (aka ETP) the next. Remember that ETP was mocking traditional supply & demand theory when Short was here before.

Seriously, I think these talking points just move like a weather-vane depending on oil being high or low and either way BAU continues apace.
“If and when the oil price skewers for 6 months or more substantially above the MAP, then I will concede the Etp is inherently flawed"
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby marmico » Fri 11 May 2018, 08:51:18

The EROIers (and ETPers*) are clueless. I challenge Charlie Hall to prove that since 1981 (his first peer-reviewed paper) the EROI from the US oil well to the gasoline tank has declined.

The EROI decline from the 1981 lower hanging fruit at the well has been more than offset by the 2018 rise in EROI from transportation from the well to refinery, the rise in refinery EROI, and the rise in distribution EROI from the refinery to the gasoline tank.

*The ETP Bozo maintained that EROI in 2012 crossed the 2:1 mark.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby pstarr » Fri 11 May 2018, 11:04:12

This is really just another in an endless (moronic) attacks on ETP. Has nothing to do with basic economics. Obvious basic economics. What a waste of bandwidth, server time/space and CO2.

Of course there is a top for prices. It has been demonstrated more than a dozen times in post WWII war global economy. Every recession (save one) has been preceded by a sudden and debilitating rise in the price of oil. No other commodity price change has ever had the same effect. Cause not correlation.

We saw it here, in the US. When crude oil jumped from $30 to over a $100/barrel (for 6 years) the American consumer and American industry sent/lost $100 billion PER YEAR overseas to our oil suppliers. Our money went to Saudia Arabia. It went to Nigeria. The money was not available at home. Got it yet?

Likewise that crude-oil price explosion translated to over $4.00 (to $5.00 in some places) gasoline. The average American spent/lost $2,000/yearly for over 6 years. $12,000 they otherwise could have spent on mortgages, fast food and entertainment. LOST. PERIOD.

Don't tell me that there is not a top for oil prices. I laugh until I turn blue and puke
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Fri 11 May 2018, 13:28:11

pstarr wrote:This is really just another in an endless (moronic) attacks on ETP.

...

Of course there is a top for prices. It has been demonstrated more than a dozen times in post WWII war global economy. Every recession (save one) has been preceded by a sudden and debilitating rise in the price of oil. No other commodity price change has ever had the same effect. Cause not correlation.

If high oil prices cause recessions, what about the HUGE exception of mid 2010 to mid 2014, with oil prices near $100 persistently, and no global recession, no US recession for FOUR years? Or is $100 not debilitating enough for you when you've been constantly claiming for years in defense of the ETP that people can't afford oil at half or less of that price?

At least the way economists define recession, since you tend to falsely claim we've never left a recession since 2009. :roll:

You know, saying the same clearly incorrect things in defense of ETP over and over, even as ETP dies the ugly death it deserves (re the obvious failure of the MAP) isn't exactly a convincing argument, right?
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: The ETP model was wrong - But is there a top for oil pri

Unread postby onlooker » Fri 11 May 2018, 14:51:20

[quoteYou can't waffle back and forth between supporting traditional supply & demand one moment and net-energy (aka ETP) the next.][/quote]
Who or what says I can't . Again, energy especially Oil is unlike any other commodity or resource. It is the lynch pin of the Economy. Just because the oil price is not following the MAP at this particular time does NOT invalidate the general premise that a falloff in Net energy will kickstart a reinforcing negative feedback in which the OIL Industry and General Economy will reciprocally drag each other down as key industries like transportation, agricultural and manufacturing that still require plenty of energy via oil seize up for lack of sufficient energy/oil.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Fri 11 May 2018, 15:45:03

onlooker wrote:
You can't waffle back and forth between supporting traditional supply & demand one moment and net-energy (aka ETP) the next.]

Who or what says I can't .

You can. This is America with free speech and all. Just don't expect to be taken seriously by rational adults who have a decent knowledge of economics.
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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