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Oil Prices Will Never Recover Pt. 3

General discussions of the systemic, societal and civilisational effects of depletion.

Oil Prices Will Never Recover Pt. 3

Unread postby BahamasEd » Sun 04 Sep 2016, 20:51:49

Yes, and by the EIA we are still producing more then we are using so we can't start working off the glut until then balance.

So by their forecast it should balance sometime next year and I would think it would take another year to work down the glut so prices can start to rise again, maybe sometime in 2018.

But the EIA predicts the future about as well as I do.

So I stand by my statement, Oil is not cheap yet, it needs do drop back down into the $20s to clear the market. I think that if the price stays between $45 to $60 then production will continue to out pace consumption

https://www.eia.gov/forecasts/steo/repo ... al_oil.cfm
The total energy cost of producing and delivering a gallon of gasoline to the end consumer must be less than the energy in a gallon of gasoline for it to be commercially viable.
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Re: Oil prices will never recover (II)

Unread postby Tanada » Sun 04 Sep 2016, 22:46:00

BahamasEd wrote:Yes, and by the EIA we are still producing more then we are using so we can't start working off the glut until then balance.

So by their forecast it should balance sometime next year and I would think it would take another year to work down the glut so prices can start to rise again, maybe sometime in 2018.

But the EIA predicts the future about as well as I do.

So I stand by my statement, Oil is not cheap yet, it needs do drop back down into the $20s to clear the market. I think that if the price stays between $45 to $60 then production will continue to out pace consumption

https://www.eia.gov/forecasts/steo/repo ... al_oil.cfm


The USA has somewhere between 500 MM/bbl and 750 MM/bbl in storage today over the working storage level we had in June 2014. We are by far the largest holder of stored oil on the planet from everything I have read, but just to be conservative say the world has 3000 MM/bbl in storage counting all the tanks in the USA, at sea and in foreign countries.

Say the EIA has the timing exactly right and the supply-demand balance hits perfection February 15, 2017 smack in the middle of the first quarter. That means starting February 16, 2017 there is a tiny shortfall between production and consumption.

No sweat you say, we just take it out of storage.

Great, but how long does 3 Billion barrels of crude oil last when the shortfall is on an increasing slope over time? Well in 2011 at around $90/bbl the world was consuming just over 88 MM/bbl/d. By 2015 that number was 92.6 MM/bbl/d despite recessions, very high oil prices for the 2011-2014 period and whatever other factors you want to throw into the mix.

Image

Just to play conservative lets just use 2011-2014 when prices were steady in the upper double digits mostly between $80/bbl and $95/bbl. Over that three year period world oil consumption grew at just over 1 MM/bbl/d per year. So being very conservative we will estimate demand will grow 1 MM/bbl/d next year despite the behavior over the last two years being somewhat higher.

But that is only one side of the equation isn't it? From the other side investment in future production has collapsed from early 2015, crushed by low prices. Nobody wants to spend money looking for oil when they are taking a loss or barely breaking even on the oil they are already producing.

As of March 2016 the USA had already lost half 500 M/bbl/d of production. More has been lost since then but this was the handy graph I found.
Image

Meanwhile starting in late 2014 OPEC declared they were defending market share, not price and in January 2016 Iran sanctions were lifted. Six months later they were ready to start negotiating because they have just about everything back online for export. What did this mean for world oil supply? See for yourself, OPEC added just 1 MM/bbl/d to the world market in the last 24 months, with everyone pumping pretty hard to capture and hold market share. Countries like Venezuela and Mexico that badly mismanaged their oil resources have been badly hurt by prices, but they are doing their darnedest to pump every barrel they can to make any money they can at these prices. With all that OPEC world supply is a measly 1 MM/bbl/d higher than 24 months ago.
Image

So there you have it, production in the USA (and Russia) is falling, not off a cliff but at a pretty noticeable rate. At the same time OPEC has been pumping hard to try and make what money they could at these relatively low prices compared to what it was 24 months ago. Result of all that OPEC effort? Barely up 1 MM/bbl/d from 2014 and struggling to hold that level. On top of all that 'great' news world oil demand has increased from just 88.1 MM/bbl/d in 2011 to 92.6 MM/bbl/d 2015 average. In just the last two years world demand grew 2.6 MM/bbl/d despite all the nattering about slow downs in the world economy and some actual evidence the world economy has slown somewhat from its 2013-2014 pace.

So here is your scenario, the world supply/demand balances on the knife edge in February 217 and tips over into deficit. By the end of the year (conservatively) the deficit has grown to 1 MM/bbl/d. If there is a war or major event that disrupts supply from the Persian Gulf region the deficit is much higher much sooner, but we are playing conservative numbers here. How long does your 3000/bbl of excess storage last? Simple division says 8 years, but that presumes no interruptions and smooth growth in world demand. Neither of those is remotely realistic. If we are a bit more realistic we have to acknowledge nobody is likely to start big exploration and development until the stockpiles start to get drawn down, i.e. until at least February 2017 not much exploration or development. It takes years to identify, prove and put new fields into full production.

But we have all those idle shale fields just sitting there you say? No not really, the main players have continued drilling the sweet spots this entire time and making modest profits doing so, at least we presume so. But nearly all of those shale beds in the USA that were being drilled like mad from 2009-2014 have had enough holes poked in them to identify the production rates for many different areas. After all that is how the main players are able to keep drilling the sweet spots today.

From what the oil folks around here have told us repeatedly right now the service companies are working on razor thin margins just to stay in business, so the price to hire a rig, drill and frack a hole is as cheap as it gets today. With the start of the draw down from stockpiles in February there will be an increased interest in drilling and those service companies will be more in demand, which means their fees will be going up. Higher fees mean fewer sweet spots, not more.

It was widely believed around here that Fracking in the USA was losing money on the average well at $75/bbl oil. Even if the service companies have come up with a few innovations in the last 24-36 months it is unlikely the number is greatly lower than that, or there would be more drilling going on in this $40-$50/bbl band we have been in since MARCH! Think about it for a moment, prices have not been below $40/bbl for 5 months in a row, and from mid April to mid July they were over $45/bbl. So if fracking is now so much cheaper than it was why hasn't the drilling boom reignited? The real answer is, the price is not that much lower fundamentally from what it was in 2014.

The only thing that WAG 3000 MM/bbl in storage will do is buy us a little time. Once OPEC or the international oil traders believe the market will be in supply/demand balance in 1Q 2017 they will have an incentive to charge more for the oil they are producing that day and every day after. When that happens prices will increase and be sustained at a higher level. BUT, when prices are higher that creates a greater incentive to pull oil out of storage and use the stored oil to reduce effective costs of end products by refineries. Thus even if the notional shortfall is only 1 MM/bbl/d the storage consumption rate is liable to be much more than that. Storage is not free, it costs money to maintain the oil in those tanks and is mostly being done right now to hedge against the price rise when it sets in not too far in the future.

So looking at it less conservatively there is more likely 2000/bbl in storage than 3000. As soon as demand exceeds production prices will start climbing and every dollar they climb makes it cheaper to use stored oil than newly produced oil. In fact if the pattern holds the companies with storage will buy some oil on the market but use cheaper stored oil and place the newly purchased oil in storage for when prices are even higher. The effect is buffering the price increase to the refiners. Some of them however will go for the big quarterly profit by not buying much and selling more, drawing down their total but profiting short term in the process. All together this means if for example prices hit $60/bbl by February, which does not seem unreasonable, a lot of oil that was stored while prices were in that less than $40/bbl range January and February 2016 will be taken out of storage, if it has not already been sold off and refined. The $45/bbl range covers December 2015, March and April 2016 and about three weeks in July-August 2016 and this last week. From the way things turn over it is highly likely the oil bought last December was already consumed or will have been by February 2017.
At end of August 2015 active storage USA stood at Total US Petroleum Inventory +5.7 to 1,984.0
weekly-petroleum-supply-reports-2015-t70770-40.html
At end of August 2016 active storage USA stood at Total US Petroleum Inventory +4.5 to 2099.8
weekly-petroleum-supply-reports-2016-t72195-60.html
Total increase YOY 115.8 MM/bbl or about 5 weeks of supply. Just for fun,
At end of August 2014 active storage USA stood at Total US Petroleum Inventory +1.4 to 1,813.9, so in two full years of "glut cheap" oil prices storage only increased by 285.9 MM/bbl. Who are all these people who honestly believe that a measly increase in USA storage that would supply oil for 1 lousy month without additional production is so significant? At a draw down rate of 1 MM/bbl/d by the end of 2017 that oil will be long since burned into CO2 and H2O.

So for whatever its worth (not much I know) the oil price plateau we are currently on will not last another six months baring a nuclear war or other civilization crashing event. Will we spike back over $100/bbl? Heck I dunno, maybe? When the supply is lower than demand either supply has to grow or demand has to shrink. I don't think total supply has much if any growth left in it. Some, in some places certainly, but will that even offset declines in older fields? Nobody knows for certain and if they claim they do they are trying to sell you something.

The future is uncertain, no two ways about that, but I was not expecting this two year reprieve we got from November 2014 to November 2016. If anyone had told me that OPEC was going to defend market share without regard to prices in 2014 I would have believed, and said loudly, that they were off their rocker. I still believe that ultimately KSA shot themselves in the foot with little gain by pumping flat out to try and hold market share, but its their oil and their choice, not mine. All the old economic projections from people like Steve Kopits were based on them defending price as they had stated that was their goal for decades. The sudden change certainly caught me off guard, and a whole lot of other people as well.
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Re: Oil prices will never recover (II)

Unread postby onlooker » Mon 05 Sep 2016, 06:34:56

Call me if you wish biased but I read into Tanada's expert post a pessimistic outlook in the near term future. Basically, Shale/fracking cannot increase substantially their production regardless it seems of price. Even more so a price increase will be detrimental to all consumers big and small. In my poll I asked can the US economy deal with over $80 dollars per barrel oil? I do not think it can. Again my take is the Economy both here and abroad has been slowly weakening in a fundamental sense. Even as some speak of efficiency gains I see world economies that over time became more complex and more reliant on oil over all. On top of this we have the edifice of our debt based economies becoming even more distorted by increasing debt loads taken on. One has to expect some sort of correction at some time, that is the history of fiat money and debt accumulation. So in this scenario of razor thin margins to keep things humming we are now faced with an oil industry unable to find easy cheap oil with a favorable EROEI and economies unable to withstand prices beyond 80 or 100 dollars.
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Re: Oil prices will never recover (II)

Unread postby vtsnowedin » Mon 05 Sep 2016, 07:55:07

onlooker wrote:Call me if you wish biased but I read into Tanada's expert post a pessimistic outlook in the near term future. Basically, Shale/fracking cannot increase substantially their production regardless it seems of price. Even more so a price increase will be detrimental to all consumers big and small. In my poll I asked can the US economy deal with over $80 dollars per barrel oil? I do not think it can. Again my take is the Economy both here and abroad has been slowly weakening in a fundamental sense. Even as some speak of efficiency gains I see world economies that over time became more complex and more reliant on oil over all. On top of this we have the edifice of our debt based economies becoming even more distorted by increasing debt loads taken on. One has to expect some sort of correction at some time, that is the history of fiat money and debt accumulation. So in this scenario of razor thin margins to keep things humming we are now faced with an oil industry unable to find easy cheap oil with a favorable EROEI and economies unable to withstand prices beyond 80 or 100 dollars.
I think the debt crisis and peak oil are two
separate things,each bad by themselves and each making the other worse.
There were prosperous economies and boom and bust cycles before oil and there will be after oil. The question is will the two come to a crisis together and trigger a population crash?
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Re: Oil prices will never recover (II)

Unread postby Tanada » Mon 05 Sep 2016, 08:24:40

onlooker wrote:Call me if you wish biased but I read into Tanada's expert post a pessimistic outlook in the near term future. Basically, Shale/fracking cannot increase substantially their production regardless it seems of price. Even more so a price increase will be detrimental to all consumers big and small. In my poll I asked can the US economy deal with over $80 dollars per barrel oil? I do not think it can. Again my take is the Economy both here and abroad has been slowly weakening in a fundamental sense. Even as some speak of efficiency gains I see world economies that over time became more complex and more reliant on oil over all. On top of this we have the edifice of our debt based economies becoming even more distorted by increasing debt loads taken on. One has to expect some sort of correction at some time, that is the history of fiat money and debt accumulation. So in this scenario of razor thin margins to keep things humming we are now faced with an oil industry unable to find easy cheap oil with a favorable EROEI and economies unable to withstand prices beyond 80 or 100 dollars.


On the up side the USA vehicle fleet takes about 17 years to completely turn over from new model sold to date of scrapping. That means a lot of cars/trucks sold in 2007-2008, 2010-2014 (7 years of the 17 year cycle) are somewhat or a great deal more fuel efficient than the average we had in 2006. This makes the USA (I live here so I am more focused here) buffered from the price spike back up to or over $80/bbl. When prices shot over $80/bbl all the way to $146/bbl in 2008 it had a very large impact on the economy because most people then were driving very inefficient gas guzzlers compared to what Joe6P is driving today. There is also the factor that it has been less than a year since prices fell under $50/bbl in October 2015, so most consumers still remember $3/gal gasoline not that long ago and that those prices lasted a long time.

So the upshot is $80/bbl in 2017 will not have nearly as stark a shock effect as it had in 2008. The economy stumbled along from 2009-2014 and a lot of us lost long term jobs, but it was not a total chaos inducing collapse. The other side of that is the economy of North Dakota and Ohio and a few other places where a lot of fracking was taking place in 2014 have been thrown in the meat grinder by less than $75/bbl oil prices. When prices go back up drilling will increase in all those places again. I don't think it will go as wild as it did before the bubble burst because there just isn't this huge range of 'virgin territory' today that there was in 2009 when the fracking boom started. But I do think they will be drilling and fracking many more wells than they were in August 2016 by the end of 2017. We have to wait and see to learn how much oil that adds to the USA market and world economy, my hope is they will be drilling enough to put USA on a plateau for a few years.
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Re: Oil prices will never recover (II)

Unread postby onlooker » Mon 05 Sep 2016, 08:28:39

But I do think they will be drilling and fracking many more wells than they were in August 2016 by the end of 2017. We have to wait and see to learn how much oil that adds to the USA market and world economy, my hope is they will be drilling enough to put USA on a plateau for a few years.

Yes, Tanada good points and this seems a distinct possibility We shall have to wait and see what transpires in the next 3 to 5 years.
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Re: Oil prices will never recover (II)

Unread postby Observerbrb » Mon 05 Sep 2016, 09:08:55

rockdoc123 wrote:
So...a lesson in demand/supply for the slow kids in the class.


What is the main aspect that determines the "Oil value" in your opinion ?

rockdoc123 wrote: Demand is increasing regardless of what the dolts on this site seem to believe.


I don't know why you resort to insulting others to make a point about your position. I haven't insulted anyone so far, so I definitely can demand that you apologize for this innapropiate outburst.
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Re: Oil prices will never recover (II)

Unread postby ennui2 » Mon 05 Sep 2016, 09:17:25

Observerbrb wrote:The spike in 2008 doesn't invalidate the ETP model - We are hitting a downtrend in oil prices since two-three years ago. That wasn't true in 2008.


I still don't follow your logic. There was a downtrend in oil in the 90s too. Was ETP valid in the 90s? If so, why did oil prices then go up? ETP only makes sense when it's used as a tool to make it sound all "scary" that oil is currently cheap.
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Re: Oil prices will never recover (II)

Unread postby Observerbrb » Mon 05 Sep 2016, 09:49:25

ennui2 wrote:
Observerbrb wrote:The spike in 2008 doesn't invalidate the ETP model - We are hitting a downtrend in oil prices since two-three years ago. That wasn't true in 2008.


I still don't follow your logic. There was a downtrend in oil in the 90s too. Was ETP valid in the 90s? If so, why did oil prices then go up? ETP only makes sense when it's used as a tool to make it sound all "scary" that oil is currently cheap.


Three words: Cost of production

Image

Image
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Re: Oil prices will never recover (II)

Unread postby onlooker » Mon 05 Sep 2016, 09:50:22

ETP is measuring three things: One, the characteristics of the product/resource in question relative to similar products in this case the traits of the type of oil we call shale or tar sands. Second, the thermodynamic profile and metrics involved in trying to access this resource and thirdly the production history of said resource to then extrapolate or do a regression analysis to try and predict future levels of production. So your claim of making it "scary" is infantile. This is pure scientific and mathematical calculations. They are inherently logical and without prejudice. The results then are NOT the ETP model but the deductions of many who understand that the nature of Oil, its importance to the Economy and how the flow of energy and its allocation is the principal matter to be discerned relative to Oil. In light of this Shale and similar products are not allocating to society the same Net energy that light sweet crude did. Think of the similar and more simple application of EROEI. The process to frack Shale is utilizing more energy and giving less. In turn the Economy will feel this via contraction including demand contraction, in turn the energy and finances needed to continue to extract this resource will also be declining thus you have scenario of declining production and demand simultaneously. Okay.
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Re: Oil prices will never recover (II)

Unread postby ROCKMAN » Mon 05 Sep 2016, 10:49:35

"If so, why did oil prices then go up?". Response: "Three words: Cost of production." The price of oil HAS NEVER been determined by how much it cost to drill the wells. The folks that buy the Rockman's oil have no idea of what it cost him to develop that production. But if they did it still wouldn't change THE OIL PURCHASE PRICE THEY SET. They don't give a crap if the Rockman loses money...the bastards! LOL.

Just another misread of cause/correrlation: the price of oil determines how much the Rockman et al are willing to pay to drill. When we running drillijg economics the oil price is THE determinent metric. The oil patch had all the tech needed to develop the shales sitting on the shelf in 2002. What we didn't have was a high enough oil price. For instance the booming shale play in the 90's (the Austin Chalk carbonate shale in Texas) saw thousands of horizontal wells drilled. The economics worked then when the inflation adjusted oil price was less then today because those wells didn't require the very expensive frac jobs the Eagle Ford et al did. In fact towards the end of the recent shale boom the frac jobs were costing more then the hz well itself.

And the oil price/active level relationship holds today: the price of oil didn't fall because the wells became less expensive. In fact just when the price collapse began drilling had become more expensive then ever before. Today development costs are lower because lower oil prices crushed demand for services. Simple supply/demand dynamic that typically determans costs.
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Re: Oil prices will never recover (II)

Unread postby Plantagenet » Mon 05 Sep 2016, 11:25:02

SumYunGai wrote:Image

The Etp maximum price curve has descended over time. In the graph above you can see how the 2008 oil spike relates to the Etp maximum price curve, which was much higher then than it is now. The oil price could not be maintained above the Etp maximum price curve, just like now. So the Etp model is very consistent, even when looking at the past. See?


So according to the ETP model Oil will cost nothing by 2020?

Hello? Hello?

That has to be the silliest graph ever posted at this site!

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Re: Oil prices will never recover (II)

Unread postby pstarr » Mon 05 Sep 2016, 11:40:06

It's not silly at all. It makes perfect sense to me. I have been saying the same thing, 'the Oil-Price Triangle Death', long before there was even ETP. One more time for the idiots:

    There is a cost-production basement below which it is not profitable to extract oil. And there is a demand-price ceiling above which demand is destroyed. And the vertices of two intersecting lines is when the economy comes to a grinding halt?

I have said this for years, it was proven out by the Great Recession and all previous recessions. It is quite possible the oil-price crash could happen quicker than you think. You are the worst hypocrite on this site. So stop laughing and posting obnoxious unnecessary bandwith-stealing graphics. You pretend to care about carbon emissions, insult me for not being a GW doomer. Yet you travel around the world like the stupid lazy white American tourist you are. Your posts are hollow of content, and full of global warming electron waste.
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Re: Oil prices will never recover (II)

Unread postby onlooker » Mon 05 Sep 2016, 12:00:03

"And the vertices of two intersecting lines is when the economy comes to a grinding halt?" So the production side of the equation needs higher and higher prices to stay afloat but the demand side of the equation needs lower and lower prices to not be destroyed as Net Oil becomes less available and as depletion continues its merciless progression. Of course our denier friends will just deny this exquisitely elegant and logical proposition.
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Re: Oil prices will never recover (II)

Unread postby Observerbrb » Mon 05 Sep 2016, 12:05:10

ROCKMAN wrote:"If so, why did oil prices then go up?". Response: "Three words: Cost of production." The price of oil HAS NEVER been determined by how much it cost to drill the wells.


It seems that you didn't follow my logic. I will try to do my best: Prices are low now, because cost of production is high.

A = Economy (needs energy/human labour/capital etc to thrive)
B = Oil Industry and its externalities (docks, military, roads, transport, trucks, mining...)

There is a direct feedback loop between A and B. If A is "strong enough", it will demand more and more of B's products. If A is strong enough, B can also has more resources and capital available to explore and invest in new projects to satisfy A's demand.

As soon as the cost of producing B's products (and externalities) goes up, A's has to step up the effort to provide B with enough capital and resources (thus the continuous price spike from 2001 to 2013/2014) to obtain and invest in the same resources that will later feed A. Enormous flows of capitals and resources go now from A to B: B producing countries and B industries get massive benefits from it (this happened especially from 2007 to 2014)-

However, everything has a limit. A is almost completely exhausted (its interest rates cannot go lower, the economy cannot be "heated" more, its debt has reached a saturation point and it has now to reduce spending/implement austerity measures) and cannot longer provide enough capital to B - The oil price plunges, but the cost of production don't. "A" gets some temporary relief (though its vital signs are horrible: The huge debts are not going anywhere, only its maturity is serviced, interest rates cannot be raised without desestabilizing the whole system and causing further damage to B - via capital outflow from B to A), but B starts to collapse dramatically. B collapse is so hard that offsets any gain made by A. B collapses - killing A in the process.
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Re: Oil prices will never recover (II)

Unread postby pstarr » Mon 05 Sep 2016, 12:16:51

onlooker wrote:"And the vertices of two intersecting lines is when the economy comes to a grinding halt?" So the production side of the equation needs higher and higher prices to stay afloat but the demand side of the equation needs lower and lower prices to not be destroyed as Net Oil becomes less available and as depletion continues its merciless progression. Of course our denier friends will just deny this exquisitely elegant and logical proposition.

Actually, a slight misrepresentation, on the demand side. The demand side needs lower oil prices relative to its elasticity in each unique economy. That is why Egypt's economy collapsed twice when oil spiked to $70 and bread riots erupted.
It was reported in Time Magazine-'Bread Is Life: Food and Protest in Egypt' that high-oil prices made farm products out of reach to average people.


In 1977, what came to be known as the Egyptian Bread Riots broke out after the state ended its subsidies of basic food staples. Hundreds of thousands of poor Egyptians took to the streets; scores were killed and hundreds were injured. Thirty years later in 2007 and 2008, as food prices soared and food riots swept cities across the globe, panic over a disruption in the supply chain of flour and bread in Egypt again unfolded into deadly protests.

Only an idiot fails to see the connection between the cost of oil, which pervades every manufacturing and agriculture sector, and the health of an economy. The same inelasticity is apparent in every economy, just at a different price point. So we in America could afford $70 eau d'bakken. Egypt could not. Most other economies in the world could not. But $70 is necessary to continue with new drilling and old wells are in steep decline. This has nothing to do with ETP
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Re: Oil Prices Will Never Recover Pt. 3

Unread postby StarvingLion » Mon 05 Sep 2016, 13:08:26

The Middle East Oil Complex is bankrupt and now requires solar pv's and whatnot to power it.

That means the EROEI in the Middle East oil is well below 10.

Obviously, the Manufacturing Complex will soon own the Hydrocarbon Complex. Even Russian Rosneft and Rosatom will completely fail. Their energy economy is fruitless and pointless much like all the IOC's and NOC's.

The Oil "Experts" on this site are completely clueless.

The etp'ers are simply wishful thinking chart monkeys.

Is there anybody answering the phone?
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Re: Oil Prices Will Never Recover Pt. 3

Unread postby rockdoc123 » Mon 05 Sep 2016, 13:23:03

So we in America could afford $70 eau d'bakken. Egypt could not. Most other economies in the world could not. But $70 is necessary to continue with new drilling and old wells are in steep decline.


Once again go to the data that has been posted here several times. Brent remained in and around $100/bbl from January 2011 through to August of 2014 and throughout that period global GDP continued to advance. Even in Egypt GDP/capita rose from $2518 to $2707 by 2015 with a period of flat growth corresponding to the revolution in 2011. The issue with Egypt is that the poverty level is exceptionally high (almost 30% are below the poverty line). There are virtually no social safety nets and an ever growing digital Divide. The poor in Egypt, and there are a lot of them are very vulnerable to any sort of economic shock. I worked there for a few years back when Cairo only had about 7 million people (it now has 20 million) and even then the amount of abject poverty was astounding. A few pennies increase in the cost of unleavened bread can mean the difference between survival and starvation for many. As an example of how sensitive this is unsubsidized bread in 2008 sold for the equivalent of 4 cents a loaf whereas cheaper quality gov't subsidized bread sold for $1 cent. The demand for subsidized bread increased considerably during that time period....3 cents apparently being the difference between survival and starvation. To blame the bread riots on high oil prices is to ignore everything else that was going on in Cairo including the tremendous amount of corruption, black market trading and runaway inflation which had been going on well before the rise in oil price. But Cairo is not the world and when you are talking about a prediction for oil prices it's impact is not that great.
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Re: Oil Prices Will Never Recover Pt. 3

Unread postby ennui2 » Mon 05 Sep 2016, 13:46:02

There you go, PStarr. You've got a bad case of peak-oil-doom-colored blinders.

The world is more complicated than you're able to comprehend.
"If the oil price crosses above the Etp maximum oil price curve within the next month, I will leave the forum." --SumYunGai (9/21/2016)
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Re: Oil Prices Will Never Recover Pt. 3

Unread postby kublikhan » Mon 05 Sep 2016, 14:10:18

onlooker wrote:
ennui2 wrote:If you support ETP then the price simply can't go up. It can only go down, in lock-step with the economy.
No that is not my understanding of ETP. Only that it states that the production profile will be interacting with the economic status. This could then lead to what Economists term Stagflation. Meaning a period whereby the Economy is running very sluggish while prices inflate. So, unless somebody here who qualifies as an expert like Rockman or Tanada corrects me I stand by this progression of both falling production and falling demand punctuated by periods of the price skyrocketing as demand becomes inflexible due to the nature of the pivotal role of Oil and does not decline further for awhile.


Observerbrb wrote:The ETP doesn't say anything about the oil volume produced or demand by the way, (shortonoil said that it has to go up to balance the net-energy losses... at least as long as oil producers can), it says that Oil prices are going down and will never recover its previous levels. For example, they will never go back to 60 USD (Unless a systemic and a fast shock occurs... then it will quickly adjust to its previous levels)
Onlooker and Observerbrb, sounds like you have 2 different understandings of what the ETP model is saying about the direction of oil prices. Observerbrb said ETP says prices will never pass $60 again. Onlooker says prices will inflate with periods of skyrocketing prices. Based on that graph Whatever posted and comments made by shortonoil, it sounds like Observerbrb's interpretation of the ETP model is correct. Shortonoil does not seem to allow for skyrocketing prices from what I've seen. Not that I think that is going to happen in reality. As far as what will actually happen, I think we will see prices rise again.
The oil barrel is half-full.
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