[Cog]

Purse swinging be serious business yo.

[kublikhan]

Oil price soared, but demand did not plummet. Oil price crashed, but demand did not soar.

Oil prices change quickly in response to supply/demand balances(or perceived future balances).Demand does not respond quickly to price changes.

[kublikhan]

Then I will explain further. Demand does not respond quickly to price changes. During a price crash, people do not go out and start driving in circles just because gas is cheaper. They may decided to carpool less. Take an extra vacation that year, etc. But the majority of their driving needs/wants are unchanged. A bigger change can be seen when it's time for people to go out and buy a new car. During a price spike, hummers are swapped out for subcompacts. During a price plummet, those glitter SUVs on the showroom floor start looking alot more appealing:
Large SUV Sales Surge Faster Than Small Cars

But it takes awhile to significantly alter the fuel economy of the entire fleet. There are 260 million vehicles in the US fleet. But only around 17 million new vehicles sold every year. In other words, there is a great deal of momentum that doesn't change quickly.

The market is oversupplied, by a significant amount, and no amount of posturing will change that. However, basic economics may. Overlooked by many is the fact that OPEC’s problem is one that automatically diminishes over time even if OPEC does nothing. This is because the demand for oil is short-term inelastic, but long-term elastic. If demand is inelastic, then a price cut doesn’t change the quantity sold very much. Oil demand is, at least in the short-run, price inelastic. If gasoline prices rise $1 per gallon next week, you will still drive almost as much as before.

Oil Price: Not Just About Supply, Consider Demand Elasticity Too

Markets on the other hand respond quickly to new information. In November 2014 the Saudis announced they will not be implementing an output cut. Future perceptions of the supply/demand balance changed quickly. The price immediately dropped $6 and continued to fall for the next year. In November 2016 oil prices surged after OPEC announced an oil cut. Market perception of the future supply/demand balance changed and prices adjusted accordingly.

[AdamB]

I wonder if professional doomers, the ones who get paid to predict doom, ever sit back after their doomer predictions come to naught, think about what a waste their life has been.

I'm betting yes. And the one in particular I have in mind, after their stint at TOD began to be noticed at national professional conferences (much like Savinar when he ditched the dead albatross around his neck and revealed all about peak oil believers), they suddenly got quiet and began sidling away from the entire topic. Guilt by association...they know what that is.

And let's not forget that some of them, when coming to the conclusion you mention, couldn't stand the truth, and acted accordingly.

https://hatrickpenry.wordpress.com/cate ... stigation/

[kublikhan]

In the oil business, the opposite is true. Production does not simply ramp up. New production can take a decade for lease purchase, environmental impact, road and infrastructure development, collection and processing equipment, test wells, development wells, productions wells.

Both are true. Oil is short term inelastic on both the production and demand sides:

Both the demand and supply of oil are relatively inelastic in the short run: changes in price have little impact on either the quantity demanded or the quantity supplied. When oil prices rise we spend considerable time and energy complaining but, at least in the short run, spend almost no effort in trying to adjust our habits to consume less. Similarly changes in price do little to spur new supplies in the short run.

Demand and Supply Applied: Oil Prices

No. The market is not over-supplied, it it under-demanded. We see a demand dearth around the world and even in the United States.

That is old data. New data shows VMT and VMT per capita rising again:

The Federal Highway Administration announced this week that in calendar year 2016, the total number of miles traveled by vehicles on all U.S. roads reached another all-time high of 3.218 trillion, above 2015’s 3.130 trillion, which itself was the highest since 2007’s 3.031 trillion. In 2016, VMT was 10,065 miles per capita – the highest that it has been since 2007’s 10,049 m.p.c. This still is not quite up to the all-time high of 10,117 m.p.c. in 2004. Importantly, note that the rate of increase in VMT per capita over the last three years (an average of 1.7 percent per year) exceeds the average rate of increase over the 13-year 1992-2004 period (an average of 1.3 percent per year). So predictions of a perpetual decline in total VMT per capita appear unfounded.

VMT Hits Nominal High, Approaches All-Time Per Capita Mark

[AdamB]

How is this for recent: https://srsroccoreport.com/oil-price-co ... d-its-day/

Oil Price Collapse Is ‘Permanent’; Analyst Says Fossil Fuel Has Had Its Day
The highly regarded Oxford University economics professor is a long-time industry observer.

It seems Etp is going mainstream

So were bell shaped curves..until they became the punchline to a joke.

[Plantagenet]

How is this for recent: https://srsroccoreport.com/oil-price-co ... d-its-day/

Oil Price Collapse Is ‘Permanent’; Analyst Says Fossil Fuel Has Had Its Day
The highly regarded Oxford University economics professor is a long-time industry observer.

It seems Etp is going mainstream

Interesting. So lets think about this a bit----what is Prof. Helm saying the problem is? Here's a quote from that report

"So, what drove oil prices to the heady levels of $140 a barrel just less than 10 years ago?

“China,” says Helm, barely missing a beat. “If you look at both the rapid growth in emissions and the rapid growth of oil, fossil fuel and all commodity prices, it was while China was doubling its economy every seven years. This is a phenomenal rate.

“It’s all very well to say that with hindsight now, but no one anticipated that this enormous, energy intensive growth would happen,” he adds.

What Dr. Helm is forgetting is that INDIA is now doubling its economy every seven years---a truly phenomenal rate. And India has even more people then China.

Its bizarre for Dr. Helm to say that GDP growth in China drove oil prices to $140 bbl., and then ignore the fact that India is on the exact same path today. A more logical way to look at this is that rapid growth in oil demand in India is eventually going to help end the oil glut, and lead on to higher oil prices down he road a few years, just as China did a decade ago.

Cheers!

[onlooker]

You guys are something caught in your supply/demand tug of war, and present happy motoring fantasies even while the 800lb Gorilla of relentless depletion and Net energy decline are continuing to bring ever closer an economic reckoning. Gosh, it really is true, one of human kind greatest flaws is myopic vision and aversion to bad news

[ROCKMAN]

Looker - "...and present happy motoring fantasies even while the 800lb Gorilla of relentless depletion...".

Yep, and all a function of the time frame one chooses. Like falling off a 20 story building. If one choose the time frame from when you first step off till you reach the 10th floor. In fact it can be wonderfully exhilarating is you don't think about the future.

Likewise for an observer on the ground. Watching the body splat can be disturbing but OTOH one could be relieved it was that person. At least in the time frame when that body hit if they don't look up and notice a body heading straight down at them. Of course the guy sitting in the limo watching that entire scene is thankful he's safe inside his low mpg ride. Of course he hasn't noticed the runaway dump truck heading for him.

OTOH that Arab truck driver figures he may get a bit bruised but he'll survive.

[onlooker]

Yeah Rock, wonder how many in your business are seeing beyond that blue horizon. I don't know why your observation made me think of a riddle from a movie/book about Time "This thing all things devours:
Birds, beasts, trees, flowers;
Gnaws iron, bites steel;
Grinds hard stones to meal;
Slays king, ruins town,
And beats high mountain down. " = time

[ralfy]

Oil price soared, but demand did not plummet. Oil price crashed, but demand did not soar.

Oil prices change quickly in response to supply/demand balances(or perceived future balances).Demand does not respond quickly to price changes.

So much for Econ 101?

[ralfy]

Why VMT and car sales in the U.S.?

Why not look at global oil production and consumption?

[kublikhan]

Oil prices change quickly in response to supply/demand balances(or perceived future balances).Demand does not respond quickly to price changes.

So much for Econ 101?

Price elasticity is a basic concept of econ 101:
Econ 101: Principles of Microeconomics Chapter 6: Elasticity

Price elasticity is a concept known for measuring the responsiveness of demand and supply quantities to the changes in price.

Economics 101

Why VMT and car sales in the U.S.?

Why not look at global oil production and consumption?

Good point. And global oil production/consumption is still rising:
Total Petroleum Consumption - World

[asg70]

global oil production/consumption is still rising

Not to mention CO2 concentrations.

https://www.scientificamerican.com/arti ... d-for-co2/