Where is that 100 dollar a barrel floor? Thought opec was going to restrict production after the fall below 100. Hum....

It's all part of the master plan to disguise the post-peak decline as OPEC quota cuts and keep us all blaming those damned ay-rabs.

On behalf of myself and the rest of the oil patch I would like to express my relief over the recent drop in oil prices. Hopefully now all this chatter about renewable resources and alternative energy sources will quiet down. When oil hit $147 we really began to sweat. Sure, the bump in cash flow was nice but oil is still more than 10% above prices 12 months ago. And no one producing wells drilled in the last few years had ever expected prices to hit $80 a year ago so we're still way above economic expectations.

With a little luck drilling activity will slow up some to a manageable rate. (these 12 hour days were starting to wear me down). Hopefully this will also reduce those horrible inflationary drilling costs that started to seriously impact the bottom line. We're also confident (based upon much historical precedence) that the Federal and state govt's will encourage the populace to utilize the reduced energy costs to jump start the economy with renewed consumption across the board. Personally, with only 10 years to retirement, I was hoping the boom would last till then. Given the acceleration towards PO that this price decrease will generate I'm now feeling more confident then ever in my financial future.

Is your tongue in cheek or do you have to always see the future in stark (often completely opposite) extremes?

It's rebounded back to $90.
Which makes $87.56 the new low for this round.

Keep going! (whichever direction it is)

I still think, through all of this, that oil has really held its ground. Gold has been like a rock, silver has done OK...

I suppose it depends on how you play the game Frank. For future traders I'm sure 100's of millions of $'s were lost. But for the oil patch life is still great. During much of 2008 we had a huge jump in cash flow. No one developing their drilling budgets in 2006 or 2007 probably used price projections over $50 or $60 a barrel. Even this year I know of no one using anything higher than $80/bbl on their economic evaluation of future drilling projects. At $90/bbl we're still over 10% higher than a year ago.

What's most amazing is how Wall Street has thrown NG heavy independents under the bus with the rest of the market. My favorite NG independent was bid down to $68 yesterday. About 6 months ago it hit $127 and all the analysts loved it at that price. NG is down from the spring price spike but still slightly above the "high season" price last Jan. Lots of NG still shutin in the GOM during the time NG should be going to storage for the winter peak demand season. DOE is already predicting residential NG prices to be 30% to 50% higher than last winter.

I have self imposed limits on how much stock I hold in any one company. It's been very tough to not break the rule and pick up more of this company. I wouldn't at all be surprised it jumps 50%+ with the first MSM report of high winter NG prices: the herd will run just as fast in the opposite direction IMO.

Just looking from my perspective... If a depression is where we are headed (huge job cuts, no money), then oil should have dropped even more (in my book). Not much need for oil products when you have no job or money. If the economy does come through, and consumption picks up or remains the same, oil should still go up, especially with declining output.

To add something, i don't think anyone should have thought that the price wouldn't come down.

Frank -- the DD you describe has always been the big question for me. Up till the econ meltdown I had been surprised how little DD we had seen. Cutting driving 2% or so is not DD IMO. Back in the 80's a 15% drop in global oil consumption got us to $10 oil. But I also know it takes a good 18+ months for DD to be fully felt...we still had a ways to go.

But now we're looking at potential significant DD from the meltdown. The next biggest question will be the response from OPEC. The KSA flooded the world with oil in 1986 so they could regain market share lost to other price cutting OPEC members. But it's not 1986 either. Most of the exporters admit being at or near their own PO. Take Mexico for example. I would think they would lobby hard for production cut backs: they're depleting very quickly and any prolonged price war will truly cripple them. As always, the key will be the KSA. If they cut production AND the other OPEC members don't try to take market share from them we still might see relatively high oil prices in spite of significant DD. Granted the political/military reactions to such a move by OPEC could be drastic. Very interesting times ahead.

Heard on Jim Puplava's show that China's car sales were up 40% this year. They aren't joining this demand destruction party, or are they. Also, the folks in those countries which still subsidize oil prices haven't felt much pain at all and I presume they are continuing with their happy motoring days.

But (and why is there always a 'but?') the military will still need the oil, and as it grows scarce, will find a way to procure all they can.

What a conundrum eh? Increased militarization for the purpose of securing ever more scarce resources, creating yet more demand for said resources...

Well William, Hitler built a successful political career (for a while anyway) using that same pitch in the 1930's. Had he taken his time to develop and utilize the resources he did obtain militarially instead of pushing towards England so quickly we might all be speaking german today IMO.

I had been hoping, somewhat innocently, that we would manage this thing better. If we had just gotten honest with folks a decade ago and subsidized alternatives we could have kept most of this volatility at bay. But now it appears greed and a queer lust to see what would happen have left us in the coils of the anaconda. You know how those snakes work. Eeverytime you exhale they tighten their coils. Demand may drop strongly here in the US because of this, but then (if) when we strart to get our breath and the economy tries to recover we will find that oil depletion has inexplicably marched along as well and that we can never again see 87 mbpd no matter what we do. Then comes the next great financial shock and the start of a truly great war in the Middle East. This crisis will play it self out in hyperinflationary terms in the end. 'A loaf od bread for a days wages.'

Oil might fall to $65 per barrel, but it is only because we think the US is toast. If the US seems to be getting on track oil will quickly move back up, then a new price spike will emerge when we realize supply is constrained. That price will shoot up until it yanks demand back down, and so it will likely go all the way down the other side. Most of what we are seeing here is exactly what this site has at least considered for many years, now we are seeing it happen.

Someone brought up a good point about the cost sensitivity of alternatives and the profitibility levels for non-conventional oil. If we fall in price below $70 tar sands become a net loser, that could quickly close in another million barrels a day, and I would imagine it would cause some to stop up one-off wells as well. What really needs to happen is the largest and most diverse subsidy toward energy ever considered, and it has to last for at least a decade. All available sources all available and conceivable financing. Without a Manhattan Project/Marshall Plan for Energy the US is nothing but roast beast.

I couldn't agree with you more Voice but I have absolutely no confidence in our political system to manefest such policies. IMO we'll conitnue to see the two halves of our two-party system work to use the problems to divide us ever more. Just at a time when unified action is our only hope.