[AdzP]

fyi

Interesting reading.

At www.oilcast.com you cant miss it.

Direct Link

[mididoctors]

I find the whole accuracy of the report in detail so bizarre as to be a facet of the nonsense way we get into these messes in the first place.

page 11 onwards with an explanation of fundamental awareness (e&P cost factors) is a testament to the shortsightedness of this modeling based on inventories without regard to resource base.. the price has been based on assumptions that inventories empty and fill rates and in so doing have controlled the price of energy in a way that dislocates its true worth as a EXTREMELY RARE STATISTICAL ANOMALY ALLOWED FOR BY THE LAWS OF THERMODYNAMICS where price should have been modeled to total assets from day one rather kept artificaly low by perceptions that think with-in the lifetime of a single individual..

we are living a disaster a century in the making and now our economy is suffering a disconnect that is almost impossible to jump across in good order as the price of oil is STILL way to cheap..

modern civilization's consumption must operate with mechanisms that are multi-generational in attitude and viewpoint

this is the proof the very fact your price forecast modeling shifts from one set of data to a different one is an admission you based the price on a TOTAL LOAD OF B******T in the first place...

rant rant rant..... etc

I guess the shell episode woke up a few people

Boris
london

[pup55]

We are not subscribers to the theory that global oil supply has hit some magical inflection
point that will result in permanent supply declines at some point in the near future.

page 15

[frankthetank]

Because "magically" the oil wells replenish themselves forever, keeping SUV's and H2's fueled for eternity

[mididoctors]

We are not subscribers to the theory that global oil supply has hit some magical inflection
point that will result in permanent supply declines at some point in the near future.

page 15

my brain is melting wading thru this idiocy...

what is this knowledge based on....

they publish extensive over detailed predictions on price and what have you and then cover the whole issue on assets in place with a couple of paragraphs of unsubstantiated claims based on no data or even a ref to an external source...

its absolutely f****** madness.

the inconsistencies are blatant... if they think investment can turn around production lets see some data to back this up..

and if they are right and demand destruction takes place and lowers the cost where in the name of gods flymo is the incentive going to come from to get E&P investment up..

its makes no sense.. the claims are bizarre as they are the reason why we can not expand production but still live in some dream state where it will happen "somehow" stuck in cycle of diminishing returns as depletion of you assets takes place even during demand destruction phases! 5-10 yr for a new investment cycle... why on earth should anyone invest if they think the price can go back down?

this is insanity

and it has to stop

Boris
London

[khebab]

We are not subscribers to the theory that global oil supply has hit some magical inflection
point that will result in permanent supply declines at some point in the near future.

page 15

It's pure trader madness, in their world the market is everything and everything is the market. They just want to know if they can make money from the oil market. I think this report will fuel speculation as your witnessing right now.

[pup55]

I will print this out for casual reading this weekend, but I think this character's line of reasoning is as follows:

a. Conditions of production and supply are such that there is a repeat of the pattern that prevailed during 1973-1982.

b. Therefore, some increase in the oil price will occur.

c. The oil price/gasoline price will be of more or less the same levels such that the percent GDP spent on fuel/oil will be about the same now as it was then, therefore X amount of dollars spent on energy.

d. Divide this number by the amount of oil we are using and that gives you a price (hence the $108. The authors state that this number is probably conservative, and might actually be closer to $135).

e. Certain companies (he provides a list) stand to fatten up temporarily while the high price regime is in place.

f. Eventually, two things will happen. "Demand destruction" will occur, and also, enough of these people will invest in new capacity and increase supply, and we will go back to a more normal price regime. The authors do not believe in a "magical peak" per the above comment on page 15, but think that the increase in profits will cause some of the political barriers to break down, especially in the middle east, and more holes to be drilled.

g. Based on the oil price being X you should be able to calculate the increased value of some of the companies in (e) and therefore fatten up temporarily by investing in them now (the point of the paper) by some known amount, and presumably cash in before the next glut. They claim there is still plenty of time to do this fattening.

h. They think this situation will last several years, at a minimum. There is no time table on when to bail out of this situation when the next glut happens.

i. There is a lot of dancing around the fact (but no outright coming out and saying it) that the 1973 and 1982 "demand destruction" situation was actually a hell of a recession and/or stinking economy for the whole period and so there is minimal talk about how to CYA on other companies or investments, or lifestyle issues such as employment that you have during the upcoming "special period".

If others have an "alternate" translation, they may feel free to comment, but this looks mainly like a blueprint for potential investors, rather than an armageddon prediction or detailed economic analysis, and the basic structure of life will stay pretty much the same during the period.

[khebab]

g. Based on the oil price being X you should be able to calculate the increased value of some of the companies in (e) and therefore fatten up temporarily by investing in them now (the point of the paper) by some known amount, and presumably cash in before the next glut. They claim there is still plenty of time to do this fattening.

So basically, they advise to make a lot of money on a few oil related companies while the rest of the economy is falling apart because of >$100 oil prices!

[mididoctors]

f. Eventually, two things will happen. "Demand destruction" will occur, and also, enough of these people will invest in new capacity and increase supply, and we will go back to a more normal price regime. The authors do not believe in a "magical peak" per the above comment on page 15, but think that the increase in profits will cause some of the political barriers to break down, especially in the middle east, and more holes to be drilled.

i think your translation for everyone is a good short hand for us all

its point f that has me going how the hell is that suppose to work?

its just a massive contradiction or it basically says the price will come down because of victory in ME for US policy..

well thats a low(sarcasm) risk arena for venture capital even if you thought the capacity was there!

I simply can not comprehend the childish thinking in this doc.. the fact one localizes oil production to certain areas of the globe which infers limits to production in itself..... how bloody obvious does it have to be.


Boris
london

[mididoctors]

I mean it is actually insane... i think pup55 is right about the investor motive

the only way you could make money as investor is if you accept the premise and create a recession you predict in-time to leave without any regard to reality at all!

It actually makes me angry to think that a recession may actually depress the price as the doc predicts as the super-spike speculative thing is a precursor to an accelerated speculative period that didn't conform to any norms including flawed established ones..

you could win with this on the grounds people just run with it but jump first..

if people create a recession through speculative buying above and beyond prudent advanced demand needs by end users that then creates a pice collapse and a global recession I will be extremely pissed off and we are going to give our self a continued delay to depletion economy but at the increasing risk of some large and larger hard crash everytime we do this...

the 79 shock and dislocation of the value of the economy from energy prices is not a good thing to try and repeat accidently never mind deliberately...

what really fries my noodle is that they could be right on the price in the short to medium term! its like the economy is getting further and frther away from reality in the way it reacts.

influential institutions like Goldham Sachs need a serious enema when they go off the rails like this in the face of facts

i am hopping mad ... literaly... i am transferring my weight from leg to the other pacing around the room

unbelievable... this is it is it?... the response to crisis by the leaders in financial sector.

its bloody disgraceful and there is no concrete why the market needs to behave in this way as realities of time scale and depleting resources are perfectly with-in the capability of markets made of forward thinking humans to deal with rationally without precipitating some mass mental breakdown or loss of sense of identity....

why? why? why? would you want to just be wrong but maintain your right in face of all evidence to the contrary.. then collude unconsciously(?) in mass self delusion when you could all still make money just dealing with the truth of it!

whats the difference?

Boris
london

[Yavicleus]

...brain...imploding...

This is just another reminder that I seriously need to get the money I have in my 401k and IRA out of stocks ASAP. Infact, maybe I should just cash out now and stuff the money into gold, because I doubt the economy or the dollar will be able to stand $100+ oil, and with so called 'investors' writing crap like this that ignores the fundamental reasons why oil will be going above $100, I see no reason why to trust them with any of my assets anymore.

[BabyPeanut]

We are not subscribers to the theory that global oil supply has hit some magical inflection
point that will result in permanent supply declines at some point in the near future.

page 15

It could just be a weasley way of saying "not yet" rather than "won't ever happen".

[mididoctors]

We are not subscribers to the theory that global oil supply has hit some magical inflection
point that will result in permanent supply declines at some point in the near future.

page 15

It could just be a weasley way of saying "not yet" rather than "won't ever happen".

probably right...city lawyers and all that...

I THINK ITS SHOCKING... how many associates of Goldman Sachs are cashing on this by selling off stocks while they create some last minute push with new investors covering sell off and gutting that last bit of profit to be had

i can not get over it

it is disgusting behavior with immense moral consequences..

its also really is fiddling while Rome burns nonsense.


Boris
london

[Licho]

I don't find anything shocking in this.. They are clearly stating what they are believing in and trying to document it.. They are stating clearly that in their opinnion the world is not running out of oil (yet), but given the time lag for new supply to go online, we will experience price spike similar to one in 70's, that will last until demand destruction reduces oil prices.

[pup55]

So basically, they advise to make a lot of money on a few oil related companies while the rest of the economy is falling apart because of >$100 oil prices!

Yeah, I think this is pretty much it.

These brokerage firm research types are assigned a market sector for analysis and not required to make any statements about what is happening outside their little box, although I am sure that they are thoughtful people and are well aware of what "demand destruction" means.

Interestingly, their prophesy is self-fulfilling. Putting out a sensational report like this, particularly being like they are a well-known company is like yelling "fire" in a crowded theatre, and I can't believe that they were not fully aware of what would happen. Last 2 days have been crazy.

[killJOY]

The fact is, these people are just plain ignorant, I don't care how important they are or how professional their fonts look:

First, they misstate peak oil as "running out of oil." "We do not believe the world is running out of oil." No, and neither do we at Peak Oil.com, idiots.

Then, they refer to the peak as "magical," showing a contempt for the science behind PO. Hubbert, Campbell, et al PREDICTED what is happening right now. Did GoldmanBallsacs? No, but they did predict one time that the market would hit 30,000.

I say screw 'em.

[DantesPeak]

GS was maybe somewhat lucky in delivering their update (from one reaffirmed at an energy conference only two weeks earlier) the day before a major power outage at the primary refinery for US gasoline in Venezuela. This does not mean I disagree with the comments above, but sometimes analyst get lucky by issuing the right report at the right time. Maybe they also had a feel that last week's blowup in Teaxs took out more gasoline than originally thought.

Anyway, we are used to discussing the price of oil in one way - but the value of the dollar and inflation in general also influence the price. Once the inflationary pyschology sets in that the dollar will drop or that inflation will accelerate, oil looks like a good investment. While a recession could make demand fall, that doesn't necessarily mean that the price will fall. In fact, wouldn't most here agree that currently federal and state governments are more likely to provide subsidies to persons/businesses to help them purchase energy as the price rises? This would short circuit market forces to reduce demand and keep demand up.

[mididoctors]

While a recession could make demand fall, that doesn't necessarily mean that the price will fall. In fact, wouldn't most here agree that currently federal and state governments are more likely to provide subsidies to persons/businesses to help them purchase energy as the price rises? This would short circuit market forces to reduce demand and keep demand up.

.how would that work?

if they did subsidize enough to bend the market then heir wouldn't be a recession (otherwise whats the point) and the price would just keep going up on some speculative wave.. if the gov unde writes the cost you would just hoard to push up he price even more as the Gov. will pay any price?

if you support the price of a heavily traded commodity like that against speculative flows rather than just the demand from actual users in the supply chain?

or is it dependent on waiting after bubble bursts or something?

Boris
london

[mididoctors]

Goldman Sachs just dumped 1.5 billion in exxon shares

extraordinary....

still waiting for $105 a barrel oil.. i guess they hold faith the superspike report as well far be it for me to question the integrity of goldman Sachs to hype their own position on the market..

is it legal? who runs this lot Satan?

these freaks are going to burn us all

I am pissed off

Boris
London

[rogerhb]

Goldman Sachs just dumped 1.5 billion in exxon shares

extraordinary....

is it legal? who runs this lot Satan?

these freaks are going to burn us all

Be careful now, knowing about Peak Oil may be treated as insider trading!

I'm sure the lawyers and receivers will have a field day post-peak.