[Yoshua]

The WTI price chart reached its end point and blew up with a price spike.

We have now reached the point where money is being destroyed as we go down the Net Energy Cliff.

This is what Shortonoil predicted would happen.

The point where this would happen seems to be when half of the world's petroleum production reached EROI < 1:1 in 2021.

[AdamB]

The WTI price chart reached its end point and blew up with a price spike.

We have now reached the point where money is being destroyed as we go down the Net Energy Cliff.

Net energy is net energy, not price. Price is a consequence of a couple of things, supply and demand and whatnot, but it can be high with small amounts being supplied and demanded, or large ones. Net energy is the idea that peak oilers fled to when it turned out that they knew nothing about oil, gas, production, geology or economics. As long as they ignore the actual work on using net energy as a predictor done by Duncan and Hall and whatnot, they can just pretend it matters. Unfortunately, it doesn't, and that is because there is a market value difference in BTUs.

This is what Shortonoil predicted would happen.

No it isn't. He predicted the price would go to zero. A couple years ago, if memory serves. Selective memory much? You were there when under his various usernames he began to look more and more ridiculous. Even admitted he was just a troll, the quote is in my sig line.

The point where this would happen seems to be when half of the world's petroleum production reached EROI < 1:1 in 2021.

Good thing that isn't true in the least either. And a good thing that even a moron knows that net energy isn't about just oil, it is about energy. Duh.

[Armageddon]

How long can dementia Joe keep draining 1mbpd for the SPR?

[AdamB]

How long can dementia Joe keep draining 1mbpd for the SPR?

500+ million last month available, being removed at 5 million a week,the normal physics of fluid flow means that as pressure drops the rate will be forced to decrease at some point (but not if the things really are just big tanks, then they'll drain just like a tank), but call it 100 weeks tops.

Doesn't matter really to the market. The assumptions I just made are also made by the traders, and they know that reducing inventory was meant as a STRATEGIC reservoir, not as a market price manipulator. Biden doesn't know any more about economics apparently than peak oilers do. But the optics are better than doing nothing, and that is mostly what matters to politicians from either party, pretending to do something.

[Tanada]

How long can dementia Joe keep draining 1mbpd for the SPR?

500+ million last month available, being removed at 5 million a week,the normal physics of fluid flow means that as pressure drops the rate will be forced to decrease at some point (but not if the things really are just big tanks, then they'll drain just like a tank), but call it 100 weeks tops.

Doesn't matter really to the market. The assumptions I just made are also made by the traders, and they know that reducing inventory was meant as a STRATEGIC reservoir, not as a market price manipulator. Biden doesn't know any more about economics apparently than peak oilers do. But the optics are better than doing nothing, and that is mostly what matters to politicians from either party, pretending to do something.

Reminds me of an old joke from the Cold War days. A western economist was sent to observe in a Soviet state factory producing cast iron cookware. He noticed the employees spent a lot of time drunk and just barely meeting quota as often as not by cheating the system. He asked a senior employee why the workers took no pride in their jobs and got the answer. "As long as they pretend to pay us we pretend to work."

Politicians of all stripes want to appear to be working hard so they flail around 'doing something" which as often as not makes the problem worse, not better.

[AdamB]

Politicians of all stripes want to appear to be working hard so they flail around 'doing something" which as often as not makes the problem worse, not better.

Appearance matters. Politicians, as dumb as they generally appear to be (and sometimes actually are) know that circumstances beyond their control are often how they are defined. So in the moment, they are trying to set the perception, their they were, doing their best, trying and trying. And if it works, they claim it worked because of their arm waving. And if it didn't, A) they were trying and B) the cause was the other parties fault.

Pretty standard American politics I suppose.

[Yoshua]

Peak Oil 2018

We live now in a Post Peak Oil world. We are actually in a Post Peak Oil Natural Gas and Coal world.

The WTI did drop to zero in 2020 as Shortonoil predicted.

In 2021 we saw price spikes in oil natural gas and coal as artificial demand from trillions in printed money by the central banks hit a decline supply.

We are now seeing the destruction of money with high inflation around the world.

Peak Oil...EROI...Finance...Economy...turns out to be a very complex event.

[randomguyonabike]

Peak Oil 2018

We live now in a Post Peak Oil world. We are actually in a Post Peak Oil Natural Gas and Coal world.

The WTI did drop to zero in 2020 as Shortonoil predicted.

In 2021 we saw price spikes in oil natural gas and coal as artificial demand from trillions in printed money by the central banks hit a decline supply.

We are now seeing the destruction of money with high inflation around the world.

Peak Oil...EROI...Finance...Economy...turns out to be a very complex event.

It is a shame BW passed away. Wonder what he would say today....

[AdamB]

Peak Oil 2018

Cool. I'll talk about #6 this century.

We live now in a Post Peak Oil world. We are actually in a Post Peak Oil Natural Gas and Coal world.

Sure. Just like we were from 1979 through about 1995 or so. About 16 years we lived in the global peak oil of 1979. Roaring 80's some thought of that first decade as well.

The WTI did drop to zero in 2020 as Shortonoil predicted.

The prediction was for an annual price. Not a day or couple of days. And, you might have forgotten, but it certainly wasn't supposed to come BACK. Come on Yoshua, you haven't been around in awhile, at least you can pretend you aren't suffering from peaker idiotosis.

In 2021 we saw price spikes in oil natural gas and coal as artificial demand from trillions in printed money by the central banks hit a decline supply.

Good thing peak oil 4 years ago doesn't have anything to do with price, but is a volume claim. Come on Yoshua, what, seriously, peakoil idiotosis?

Peak Oil...EROI...Finance...Economy...turns out to be a very complex event.

Peak oil is easy. A maximum rate. Period. I didn't define it that way, McPeaksters did. Well, they did until it happened a couple times then they began to do what you and particularly Short on doing, dodge demonstrating having been wrong because you don't know squat about oil or resource or geology, and come up with a red herring to distract from having been afflicted with McPeakster-idiotosis.

[AdamB]

It is a shame BW passed away. Wonder what he would say today....

Who is a BW?

[AdamB]

U.S. Plans to Push Down Oil Prices Won’t Be Straightforward

The Biden administration announced plans Tuesday for the next tranche of sales from the strategic petroleum reserve, as well as a proposal for future purchases to refill the SPR.

Link

[vtsnowedin]

U.S. Plans to Push Down Oil Prices Won’t Be Straightforward

The Biden administration announced plans Tuesday for the next tranche of sales from the strategic petroleum reserve, as well as a proposal for future purchases to refill the SPR.

Link

That is behind a paywall so you have said nothing.

[JuanP]

U.S. Plans to Push Down Oil Prices Won’t Be Straightforward

The Biden administration announced plans Tuesday for the next tranche of sales from the strategic petroleum reserve, as well as a proposal for future purchases to refill the SPR.

Link

Thanks for that link, AdamB! I was wondering a couple of days ago how the SPR was doing and that article provided all the info I wanted.

[AdamB]

U.S. Plans to Push Down Oil Prices Won’t Be Straightforward

The Biden administration announced plans Tuesday for the next tranche of sales from the strategic petroleum reserve, as well as a proposal for future purchases to refill the SPR.

Link

That is behind a paywall so you have said nothing.

I didn't say anything. I posted the link to the article. The link worked for me. However, for the readers who may have missed the "continue to the article" button.

Mark is a good guy, his stuff is almost always worth reading.

About the author: Mark Finley is a fellow in energy and global oil at Rice University’s Baker Institute, and former senior U.S. economist at BP.

The Biden administration announced plans Tuesday for the next tranche of sales from the strategic petroleum reserve, as well as a proposal for future purchases to refill the SPR.

The sales announcement is the latest under the administration’s plan announced in March to sell 180 million barrels from the SPR over a six month period, part of a coordinated release of strategic stocks by members of the International Energy Agency.

The repurchase plan is subject to final Department of Energy rule-making. But as announced, it would allow the Department of Energy to arrange future purchases on a fixed-price basis—that is, agreeing a sales price in advance rather than buying barrels at an unpredictable future price. The administration argues that these new purchase terms (for oil to be purchased after fiscal year 2023) would boost investment by giving producers greater confidence in future prices.


Neither sales from the SPR nor its refilling are without problems, both practical and political in nature.

Crucially, the ability to purchase crude oil in the future—under fixed-price arrangements or the current protocols—is dependent on a future Congress authorizing the funds needed.

Whether the fixed-price provision will actually boost investment in new supply is unclear. Many U.S. producers already manage future price uncertainty via crude oil futures (and options). Recent NYMEX crude futures have had daily trading volume of 700 million barrels. The ability to lock in a predictable price is particularly needed since the amount of oil that would refill the SPR is relatively small in the context of the global crude market, and therefore would be unlikely to have a material impact on global prices. In the unlikely event that Congress authorized a complete refill of the SPR to its current authorized storage capacity of 714 million barrels within a single year, purchases would add roughly 640,000 barrels per day to global oil requirements for one year—in a global marketplace of roughly 100 million barrels per day. (Note that the global reference is the appropriate one, both because oil is traded in a global marketplace and because the U.S.—as discussed below—can purchase non-U.S. crudes for the SPR.)


A less-considered issue, nevertheless of high significance, is the mismatch that exists between the quality of crude oil produced in the U.S. and the crude most U.S. refineries utilize, which has historically been the basis for crude oil stored in the SPR.

In recent years, successive administrations (with help from successive Congresses) have sold crude from the SPR, most recently to mitigate the impact of rising global crude oil prices but also to fund SPR renovations and meet other spending objectives. SPR sales have been facilitated by the shale revolution, which eliminated U.S. (net) import dependence, eliminating the country’s obligation under the IEA treaty to hold oil inventories equivalent to 90 days of imports. The SPR reached a peak of just over 726 million barrels in late 2009; it had fallen to 638 million by the end of 2020 and now stands at 475 million barrels.

Historically, crude oil was placed in the SPR to meet the requirements of U.S. refiners, and there is a significant mismatch between that and the quality of crude produced by US shale operators. In particular, the average crude oil in the SPR is a close match for the average crude used by U.S. refineries, but both are significantly heavier than typical U.S. production. Moreover, most U.S. production is also relatively low in sulfur while U.S. refineries are generally configured to process higher sulfur crudes. Perhaps not surprisingly, then, this year’s crude oil sales from the SPR have been predominantly “sour” (or higher in sulfur)—to date, roughly 116 of 119 million barrels sold have been “sour.”

Continued SPR management in a fashion consistent with the historical pattern could however, raise challenges. First, the headline figure of 475 million barrels in the SPR could overstate the potential impact for U.S. refiners and global oil markets; sour crudes, which made up 60% of the SPR at the beginning of this year, are now half of the stockpile because the market has preferred buying sour crudes from the SPR so far this year. The most recent Energy Department sales notice switches from marketing predominantly sour crudes to lower-sulfur “sweet” crude, but it remains to be seen whether U.S. refiners will have a substantial appetite for such crudes, at a time when a relatively small number of SPR sales to foreign companies have already created significant political controversy.


And similarly on any potential refill in the future—the main U.S. crude streams are a poor match for the SPR, at least based on historical management practices. Indeed, the SPR reached full capacity at the end of 2009 with a cargo of Saharan Blend crude. But purchasing non-U.S. crudes could become a political liability even if it was necessary to manage risks faced by domestic refiners.

The steps that the administration is taking are supposed to help with pain at the pump, after national gasoline prices reached record levels earlier this year. Higher prices pose risks to the economy (via stretched consumer budgets and lower confidence) as well as to the administration (via lower job approval ratings). Indeed, the White House SPR announcement also included analysis by the Treasury Department, which concluded that the SPR sales from the U.S. and its allies had reduced gasoline prices by as much as 40 cents per gallon compared with what they would have been otherwise.

However, the SPR moves under consideration are not straightforward in terms of their practical implementation. Nor is their market or political impact.

[vtsnowedin]

Why would any producer sell oil to the SPR for less then the current market price? The answer is they will not. At a million barrels a day they are selling one percent of world demand and when they go to refill that one percent it will effect world prices as much as the current draw down has reduced it.
So once they stop selling our reserves they will probably have to refill it at market prices and slowly enough to not effect the markets so something less then a half million barrels a day.
Watch in case they decide to refill it with Russian oil.
And yes they are stupid enough to do that.

[Plantagenet]

oil price up 4% on news of unrest in Baghdad in the Green Zone

us-embassy-being-evacuated-baghdads-green-zone-breached

[vtsnowedin]

oil price up 4% on news of unrest in Baghdad in the Green Zone

us-embassy-being-evacuated-baghdads-green-zone-breached

It has come back down to $92.43. Perhaps on positive news from Ukraine.

[Outcast_Searcher]

oil price up 4% on news of unrest in Baghdad in the Green Zone

us-embassy-being-evacuated-baghdads-green-zone-breached

It has come back down to $92.43. Perhaps on positive news from Ukraine.

The price really moves around. It was up about 4 bucks yesterday.

I think it's WAY too hard to say anything meaningful re a trend in crude prices from one day. Also, oil tends to drop on days folks are worried about the economy, and the stock market was pretty weak today, as were commodities generally, like metals, food, etc.

Obviously, longer term, if Russia gives up and goes home, that will likely be a big short term downward-inducing move for crude oil. But good luck timing THAT with any accuracy, and with all the concerns about global energy demand out there, I wouldn't count on that move being huge if WTI is, say, below $100 or so. (Just spit-balling my personal opinion here).

I don't follow the oil supply / demand news day by day as I don't trade crude oil futures, and my oil stock trades tend to be based on hedged options, waiting for volatility risk value (theta, re the "Greeks") to fade away as it rapidly tends to on short term options. That kind of trading doesn't care much for the day to day except perhaps the day one is rolling short term contracts over.

[AdamB]

oil price up 4% on news of unrest in Baghdad in the Green Zone

us-embassy-being-evacuated-baghdads-green-zone-breached

It has come back down to $92.43. Perhaps on positive news from Ukraine.

Or "Lets Go Brandon" doing some of that, you know, non-traitorous based governing, new legislation, inflation reduction based policy stuff?

[vtsnowedin]

oil price up 4% on news of unrest in Baghdad in the Green Zone

us-embassy-being-evacuated-baghdads-green-zone-breached

It has come back down to $92.43. Perhaps on positive news from Ukraine.

Or "Lets Go Brandon" doing some of that, you know, non-traitorous based governing, new legislation, inflation reduction based policy stuff?

The price of gas the week Biden took office was $2.39 a gallon. Go ahead and spin that anyway you want.