Peak Oil is You
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Page added on December 29, 2010
OPEC Caught Lying: $200 Oil is Imminent
Now that the Peak has passed, all sorts of interesting tidbits are emerging.
Take the December 13th BusinessWeek article that declared OPEC is cheating the most since 2004…
Apparently, the oil cartel pumped 26.78 million barrels per day (mmbd) this year. Yet they have a production limit of only 24.845 mmbd, set at the end of 2008 in response to the recession.
So your friendly neighborhood fuel gang has been breaking its output limit by 1.934 million barrels — everyday, all year long.
With crude at its highest price in two years, overproduction allows OPEC members to boost profits without formally changing output targets.
An extra 1.934 mmbd at $80 works out to a nice “informal” $56.47 billion boost.
OPEC’s been lying… That’s nothing new.
What’s important here is to note the willingness to extract as much as they can as prices rise.
Analysts, start your engines
If the price of oil creeps high enough, OPEC will officially raise its target to cash in.
$100 seems to be the obvious trigger to make that happen, and the consensus is that it will happen this year.
Oil’s at $91.43 as I write this — up 30% from the year’s low.
Goldman says it’ll “average $100 in 2010 and $110 in 2012.” JPMorgan says we’ll see $120 by the end of 2012.
Adding to the pricing fire, U.S. stockpiles declined by 19 million barrels this month thanks to intense cold and holiday travel. That’s the biggest monthly decrease since December 2006.
I’m sure you’ve noticed gas station marquee numbers are back on the march.
A $3.00 appetizer
Prices at the pump have officially broken $3.00 for the first time since October 2008. And they aren’t expected to ease anytime soon.
John Hofmeister (former President of Shell, current Head of Citizens for Affordable Energy) is touring TV land this week with a new prediction:
We’ll be paying $5.00 per gallon in less than two years, and sometime between 2018 and 2020 there will be another 1970s-style energy shortage requiring rationing.
And this guy didn’t just jump on the bandwagon; he’s been saying for years that “the last days of affordable gas are behind us.”
He’s been attacking our national energy policy since the turn of the century, saying business as usual would lead us to an “energy abyss”.
And like an ever-increasing cadre of oil execs, he admits conventional oil production is in decline, and is convinced we must turn to unconventional sources to fill the gap — and avoid gas station rationing.
There’s still time to put this trend to work for your portfolio. Oil at $200 per barrel implies a 122% increase from today’s prices.
Buying an oil or gasoline fund like United States Gasoline (NYSE: UGA) or ProShares Ultra Crude Oil (NYSE: UCO) or top unconventional oil plays will ensure rising oil prices translate into personal profits…
Those stocks and funds are already marching in step:
5 Comments on "OPEC Caught Lying: $200 Oil is Imminent"
Mike1999 on Thu, 30th Dec 2010 1:38 am
Sir, $200 oil is Impossible. The US went into the Great Recession at the $140 dollar peak. With the US consumer Not Accepting Peak Oil theory, and therefore still being unprepared, I can see no reason why our Economy will not tank at the trigger price of $140 again. OK, Let’s say $150 for inflation.
Ryan on Thu, 30th Dec 2010 7:06 am
Mike1999, you sir, are wrong. $200 oil is definitely possible. It is rising, and will continue to rise. Will it rise as quickly as it did in 2008? I highly doubt it will be that quick right away. As the implications of a world with oil after its peak begin to show through the silver lining, there will be no barrier. No number will be too high, and it’ll happen much quicker than it did in 2008. The question is, how long will it take for us to feel the pinch? If OPEC keeps lying, it will assuredly be much quicker than people anticipate. We HAVE hit peak oil some time ago, and we just don’t know how much there is left to extract when OPEC lies.
sheila on Thu, 30th Dec 2010 12:49 pm
The Europeans are already paying far more for fuel than we do in the US so $200 a barrel oil will not crash the economy, it may decline again but people will adjust to the higher prices – for a while.
As prices continue to rise, I think that shipping goods from China, especially cheap goods, will be too expensive and with rising unemployment,more companies will fail.
Quality goods made here may become a growing business but only for wealthy customers. More people will be forced into making goods at home to sell on the street, street lights will be turned off to save money, big trucks will be cheap to buy but only a fool would buy one, many will be abandoned.
I think eventually oil will pass $200 a barrel because with 7 billion humans to feed we will have to use more oil no matter what the cost and when the cost becomes too much, billions will starve but we will still be using oil but not to plow the earth anymore.
The military will be the last big user of oil as the US fights to maintain it’s “empire” and world dominance.
It will of course lose in the end.
Simon in BC on Thu, 30th Dec 2010 2:23 pm
It isn’t the real price of oil that is going up, it is the US currency that is depreciating. And that is going to continue, that is government policy. That is how the US is going to avoid servicing its debt – by devaluing it. The obvious result of that is that world commodities – e.g. oil – will cost more in US dollars.
Yup. US is doomed. There is no way out of this trap. You either go bankrupt servicing your debt or the economy collapses because you can no longer afford to fuel it.
Kenz300 on Sat, 1st Jan 2011 10:24 pm
Diversify..diversify…diversify
The time to transition to wind, solar, geothermal and second generation biofuels is now.
Bring on the electric, flex-fuel and hybrid vehicles. Dust off the bicycles too.