Starvid,

Thanks for the perspective.

Oil supply is the elephant in the room.

Aye, and at such a time as year-over-year demand has fallen more rapidly than anyone but bird-flu-doomers were predicting.

I don't think we'll see over a hundred by the end of the year, but we may see over $150 next year if the recession isn't too bad. All those people getting Tatas will need to fill them.

Crude fell off a cliff... Down to $78...

I have this very rough model describing how I see the future price of oil, which I didn't invent. It's called the crocodile jaw graph.



You have two straight lines, both starting at x=0, y=something in the middle of the graph (representing 85-86 mbpd).

One, the demand line, slope upwards and the other, the supply line, slope downwards. Go a decade or two along the x-axis and the jaw is big enough to swallow half a dozen Saudi Arabias.

This is the worst, or best, case, depending on your perspective.

Now, demand might flatten because of a recession. This is what is happening. The upper part of the jaw becomes horizontal. The upward push on the price of oil is weakened, but it sure as Hell is still there.

Then, we might get lucky with supply. We might not peak for another 10 years and we might even increase production by 5 mbpd, or by almost 10 mbpd. Then the lower jaw closes, but the upper jaw is still open and the pressure remains.

The one thing that could ease the pressure on oil, maybe even drive it down a lot, is if both jaws close at the same time, for a prolonged time.

But given the Asian growth story and the oil supply issues we're facing, I really don't see this as a probable, though a possible, outcome.

This is a very rough prediction, but as Nicholas Nasim Taleb tells us, it's really freaking hard to predict the future with any kind of certainty. And when we look back at those who have tried previously, even the smartest have failed horribly and repeatedly, Hubbert excluded. Maybe because he didn't try to predict dynamic social processes (the economy) but something *relatively* straightforward, the strictly physical behaviour of oil in the ground (something which ROCKMAN reminds us is in itself an extremely hard and unpredictable business).

$75.16

Yep, that's really falling off a cliff alright.

$75.03
Let's hit $70, $60, $50, and get it over with

We're now at half of what it was at the peak of prices.

Sorry Gebari, your prediction just got toasted.

This $75 price is as nutty as the $147 price was.

Most of the same people that three months ago who were working, driving, etc. , presumably still are. Or are they?

So in theory, a oil producer will be making half as much as they did just a few months ago! OUCH

If we get a couple of good drops on the DOW, be ready for sub $70 readings.

$74.57

With the recession, credit crisis and all, and looking at the oil prices dropping by 50% from the highs, I'd suppose that oil demand has dropped by half, from 86 million barrels per day down to 43 million barrels per day.

Um, hold on, wait a minute ...

It's at $75.61 at the moment.

I'm with Richard Heinberg's prediction that once the oil price gets down below a certain level (which people on here have said would be $60-70 per barrel) supply will reduce since unconventional sources of oil and old wells are no longer financially viable. If global demand at that point is steady, or increasing, the price per barrel will go up.

Even worse as the fixed costs are still there.

On the other hand, the equity markets did not believe the really high oil prices were there to stay, as oil company shares didn't follow them up (even though they bloody well seem to be following the down).

And then the unconventional fields will be turned on again. Basic economics: people don't want to sell stuff at a loss for any extended time.