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THE Price Of Crude Pt. 15

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

Re: THE Price Of Crude Pt. 15

Unread postby Outcast_Searcher » Sun 08 Aug 2021, 12:13:18

AdamB wrote:
vtsnowedin wrote:As good as the EIA is it does not have a crystal ball so has no real clue to future demand up or down.

It has no crystal ball. But overall, given the various economic assumptions made, they do quite well. Especially vs. the usual prognosticators of doom coming our way real soon now.

So saying they have "no clue" isn't reasonable. That's a far cry from "they don't know, because they don't know which economic scenario will prevail, and they might be a little off even within economic assumptions X being largely correct".
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price Of Crude Pt. 15

Unread postby vtsnowedin » Tue 10 Aug 2021, 15:00:42

Exxon is selling some assets. I expect it is because they think the Biden administration will render them unprofitable. Why buyers would want them Is perhaps the more difficult question.
HOUSTON (Reuters) - Exxon Mobil Corp ( XOM ) has begun marketing U.S. shale gas properties as it ramps up a long-stalled program that aims to raise billions of dollars to shed unwanted assets and reduce debt taken on last year.

The top U.S. oil producer three years ago set a goal of raising $15 billion from sales by December. More recently, it promised to accelerate lagging sales to whittle a record $70 billion debt pile.

The company's XTO Energy shale unit is seeking buyers for almost 5,000 natural gas wells in the Fayetteville Shale in Arkansas, spokeswoman Julie King confirmed. Exxon is marketing the properties itself and aims to receive bids this month, people familiar with the matter said.

https://www.fidelity.com/news/article/t ... R5-OUSBS_1
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Re: THE Price Of Crude Pt. 15

Unread postby Pops » Mon 20 Dec 2021, 12:04:14

I can't remember if it was this thread but somewhere I stated that to understand the oil price, just look at oil in storage. Here from Laherrere, oil in storage and inverse WTI

Image

I guessed storage changed first on changes in supply/demand and then price followed. But it is apparently the opposite, price goes up first, then speculators sell stored oil, when price comes down they hold.

Which makes sense and benefits the market by being a shock absorber of sorts.

But, prior to 2008-10, oil was in better supply, price was lower and so was storage. Then WTI correlated closely with the value of the dollar.

I'm going to assume then that when the market is chronically undersupplied (just as it was oversupplied before 2008) that price / stock relationship will complete the flip, with price high and storage low.
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Re: THE Price Of Crude Pt. 15

Unread postby vtsnowedin » Tue 21 Dec 2021, 06:58:38

As long as the Biden administrations war on fossil fuels continues I see producers restricting capital expenditures and field development as a way to increase profit margins and a way to just wait the Democrats out.
Given that I expect our domestic production to decline steadily for the next two to five years depending on events in Washington and elsewhere and once demand exceeds that shrinking supply prices worldwide will soar perhaps to the $150/b level with $5/gal gas in the US to become common.
Even if the Republicans take control of Congress in the midterms Biden will have veto control on them so none of his anti fossil fuel policies can be undone before 2025.
Of course the Democrats could wake up and realize those policies are unpopular and will hand the white house to the Republicans in 2024 and then change track sooner rather than later as a matter of survival. But so far there is no sign of that.
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Re: THE Price Of Crude Pt. 15

Unread postby Pops » Tue 21 Dec 2021, 11:12:45

vtsnowedin wrote:As long as the Biden administrations war on fossil fuels continues I see producers restricting capital expenditures and field development as a way to increase profit margins and a way to just wait the Democrats out.
Given that I expect our domestic production to decline steadily for the next two to five years depending on events in Washington and elsewhere and once demand exceeds that shrinking supply prices worldwide will soar perhaps to the $150/b level with $5/gal gas in the US to become common.
Even if the Republicans take control of Congress in the midterms Biden will have veto control on them so none of his anti fossil fuel policies can be undone before 2025.
Of course the Democrats could wake up and realize those policies are unpopular and will hand the white house to the Republicans in 2024 and then change track sooner rather than later as a matter of survival. But so far there is no sign of that.


You should change your channel, none of that is correct.

1) US production has been rising steadily for 18 months

Image


2) Biden has approved more drilling on public land per month than trump did in his first three years.

Image

AND though he lied about being forced to sell off leases in the Gulf so the climate activists wouldn't hang him, DOJ said he wasn't really "forced" and definitely need not have moved to sell as quickly as he did:
DOJ wrote:“While the order enjoins and restrains (the department of) interior from implementing the pause, it does not compel interior to take the actions specified by plaintiffs, let alone on the urgent timeline specified in plaintiffs’ contempt motion,”


Joe is a lifelong politician, old enough to know better than you and I what high gasoline prices mean to his presidency. He is attempting to thread the needle between oil price and GW— read that: PO & GW. Which is better than the last guy who only cared about his own ego and tried to tear down what progress has been made.

To me, attempting to transition before the peak surge in price is the only responsible path—I wrote about it in my first post here. Anyone reading here for any length of time should have at least a glimmer of what's at stake—and it is more than cheap gas.


3) capital expenditures have been falling since...trump was elected, (publicly traded cos) only starting to increase capex for the first time in the last 2 quarters after 5 years of decline.

Image

Image

Looking at figure 2 above you can see that those companies were running on borrowed money for 10 years, 2003 to 2013 back to '99 if you ignore the spike. And again, these are the publicly traded companies. Investors obviously got tired of throwing good money after bad. I can only imagine what private companies profits looked like, no wonder they went Bk.


The thing the pandemic did was allow us to slip unnoticed from Peak Demand right into Murphy's Energy Trap.
You can't drill your way out of GW or peak oil and you can't transition without paying the tab, just that simple. In fact part of the tab is higher cost for fossils because transitioning itself will cost a big increase in ff demand — that IS the energy trap. We haven't seen more than a hint of that.

We know Republicans (including Mansion/Sinema) will continue being paid by the FF industry to protect their profits and that a whole section of the media will be leading the charge. Biden is at least trying for a transition while keeping the naive liberal fools who don't understand the stakes onboard. He increased CAFE standards again today.

By 2024 — hopefully not until 2028 I expect the peak to be in, if not widely recognized. If we lose the government to the know-nothing Republican fossil fuel lobbyists before that another 8 years of trumpist denial will likely cook our goose because we'll have both PO and GW.

Hard to fathom why anyone who has read on this site would be against at least trying.

https://www.eia.gov/petroleum/
https://www.eia.gov/petroleum/weekly/ar ... _print.php
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Re: THE Price Of Crude Pt. 15

Unread postby Doly » Tue 21 Dec 2021, 15:23:37

Of course the Democrats could wake up and realize those policies are unpopular and will hand the white house to the Republicans in 2024


Do you still believe that votes have much to do with policies in the USA? Because I'd say the evidence for that is getting less and less convincing.
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Re: THE Price Of Crude Pt. 15

Unread postby Pops » Fri 28 Jan 2022, 10:21:04

Brent $91.01 right now

In December, OPEC+ added 253,000 barrels daily to its combined production falling well short of its 400,000-bpd target
OPEC’s underproduction fuels speculation about the cartel’s ability to ramp up production
Morgan Stanley: global spare oil production capacity will shrink from 6.5 million bpd at the moment to just 2 million barrels daily by the middle of the year

https://oilprice.com/Energy/Energy-Gene ... tfall.html
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Re: THE Price Of Crude Pt. 15

Unread postby JuanP » Fri 28 Jan 2022, 11:57:22

Pops wrote:Brent $91.01 right now

In December, OPEC+ added 253,000 barrels daily to its combined production falling well short of its 400,000-bpd target
OPEC’s underproduction fuels speculation about the cartel’s ability to ramp up production
Morgan Stanley: global spare oil production capacity will shrink from 6.5 million bpd at the moment to just 2 million barrels daily by the middle of the year

https://oilprice.com/Energy/Energy-Gene ... tfall.html


I expect oil prices to go over $100 this year and stay there until the next global recession. The next global recession could become the worst economic and financial crisis in human history. We've never experienced bubbles like the ones we have today. The global financial system could be broken beyond repair, IMO.

We are living in extremely interesting times. I would not have wanted to live at any other moment in time. I am fascinated with this shit.
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Re: THE Price Of Crude Pt. 15

Unread postby Doly » Fri 28 Jan 2022, 14:22:33

I expect oil prices to go over $100 this year and stay there until the next global recession. The next global recession could become the worst economic and financial crisis in human history.


And when are you expecting the next global recession to happen?
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Re: THE Price Of Crude Pt. 15

Unread postby JuanP » Fri 28 Jan 2022, 15:39:23

Doly wrote:
I expect oil prices to go over $100 this year and stay there until the next global recession. The next global recession could become the worst economic and financial crisis in human history.


And when are you expecting the next global recession to happen?


Your guess is as good as mine, probably better!
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Re: THE Price Of Crude Pt. 15

Unread postby Doly » Sat 29 Jan 2022, 14:49:18

JuanP, you are making a fairly precise prediction (oil going over $100 till the next global recession), and a fairly strong one (the next global recession is going to be really bad), but you can't make any guess about the timing of the next global recession? It makes me think that your method of making predictions is just pure guesswork, no actual analysis involved. I'm not aware of any sort of economic analysis that would produce those two predictions without any estimate for timing.
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Re: THE Price Of Crude Pt. 15

Unread postby ROCKMAN » Sat 29 Jan 2022, 18:04:00

Doly - By analysis I assume you're talking about making an economic model of the economy going forward. A model that will require a number of significent assumptions. Assumptions that will be guesses IMHO (as you accuse Juan) that will be difficult to defend. Just 4 years ago who would have predicted the pending rate increases by the Fed as a result of the economic dune by the pandemic?

As I've said a long time ago: modeling is like masterbating...nothing wrong with it as long as you don't start believing it's the real thing. LOL.
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Re: THE Price Of Crude Pt. 15

Unread postby JuanP » Sun 30 Jan 2022, 14:32:47

Doly wrote:JuanP, you are making a fairly precise prediction (oil going over $100 till the next global recession), and a fairly strong one (the next global recession is going to be really bad), but you can't make any guess about the timing of the next global recession? It makes me think that your method of making predictions is just pure guesswork, no actual analysis involved. I'm not aware of any sort of economic analysis that would produce those two predictions without any estimate for timing.


All I am making is an educated guess. I don't know much about economic analysis. I have discriminated against learning about economics all my life. I find the subject extremely boring. I only began to have a slight interest in the subject after the 2008 crisis, because I was very surprised by the US government's decisions and choices in its aftermath. By the way, when I say I expect a price over $100 I am thinking in terms of yearly averages, not the spot market at any particular instant. I could have been more specific about that detail.

Whatever my method for making "predictions" may be based on, it has worked very well so far, though I have made countless mistakes, of course, as we all do. I don't know the future or pretend to. I am just having fun here, not offering financial advise. I wouldn't be offended to be called economically illiterate, since I consider myself so.
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Re: THE Price Of Crude Pt. 15

Unread postby Doly » Mon 31 Jan 2022, 16:06:58

Assumptions that will be guesses IMHO (as you accuse Juan) that will be difficult to defend.


Yes. But you can debate underlying assumptions, if they are explicit, and attempt to check how reasonable or otherwise they are. If the underlying assumptions are just intuitive guesswork, it could well be right, but there isn't anything to talk about.

As I've said a long time ago: modeling is like masterbating...nothing wrong with it as long as you don't start believing it's the real thing. LOL.


Believing that models are the real thing isn't my big problem, though it does seem to be the problem of a lot of people. What a lot of people don't realise is that mental models, that are just in your head, are just as much of an issue as a model done in a computer. And at least with a model in a computer it's easy to tinker and to change assumptions to see what happens. With the mental models in people's heads, it gets a lot harder, especially when people can't even talk about what's in their head because it's just an intuition. Of course, we all have mental models. But we can all try to be a little more aware about what our mental models are.
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Re: THE Price Of Crude Pt. 15

Unread postby AdamB » Mon 31 Jan 2022, 22:27:29

Doly wrote:Believing that models are the real thing isn't my big problem, though it does seem to be the problem of a lot of people. What a lot of people don't realise is that mental models, that are just in your head, are just as much of an issue as a model done in a computer. And at least with a model in a computer it's easy to tinker and to change assumptions to see what happens. With the mental models in people's heads, it gets a lot harder, especially when people can't even talk about what's in their head because it's just an intuition. Of course, we all have mental models. But we can all try to be a little more aware about what our mental models are.


I built my first "big" model some time ago, and everyone was wildly enthused about the results and whatnot, and then I did a presentation to the big wigs, and one of them, after I mentioned the name of the model (which had the word "model" in the name) said, "That isn't a model! That's a tool!" Never did figure out the difference between the two.
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Re: THE Price Of Crude Pt. 15

Unread postby JuanP » Tue 01 Feb 2022, 14:58:15

Doly wrote:
Assumptions that will be guesses IMHO (as you accuse Juan) that will be difficult to defend.


Yes. But you can debate underlying assumptions, if they are explicit, and attempt to check how reasonable or otherwise they are. If the underlying assumptions are just intuitive guesswork, it could well be right, but there isn't anything to talk about.


Good points. I do, of course, have a very large number of underlying assumptions behind my ideas.

I assume that global population growth will continue the general trends it has been following in recent years, at least until a major crisis occurs. We have experienced population growth of around 80 million per year, with a decreasing trend, which is more clear as a percent rate than as an absolute number. Population growth is expected to continue until the end of the century. Most of this future population growth will occur in Africa. The UN expects Africa's population to approximately triple in the next 80 years.

I assume a reduction in production of currently producing assets of somewhere between 3% and 7% per year.

I assume that the data published in the past about declining discoveries is essentially true.

I also assume that the laws of science are mostly true.

I assume that multiple reports over the past handful of years of a shortage of investment in upstream production are true. Oil has had these cycles many times before.

I also assume that our species is facing a predicament that is a direct consequence of our human nature and That it was extremely predictable that this would happen sooner or later. We were bound, as a species, to explore the limits of what is possible, without much regard for the long term future consequences. Most people only pay serious attention to consequences they think could affect them or their loved ones personally.

That doesn't mean that predicting when any particular financial detail's time of occurrence will be is as equally predictable.

I'd welcome any feedback on these assumptions you want to share.
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Re: THE Price Of Crude Pt. 15

Unread postby dissident » Fri 04 Feb 2022, 16:19:35

https://www.youtube.com/watch?v=HB1eGDpEeQY

Long video but worth listening to Art Berman explain the global energy price crisis.
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Re: THE Price Of Crude Pt. 15

Unread postby theluckycountry » Fri 04 Feb 2022, 17:47:02

JuanP wrote:
Pops wrote:Brent $91.01 right now

I expect oil prices to go over $100 this year and stay there until the next global recession. The next global recession could become the worst economic and financial crisis in human history. We've never experienced bubbles like the ones we have today. The global financial system could be broken beyond repair, IMO.

We are living in extremely interesting times. I would not have wanted to live at any other moment in time. I am fascinated with this shit.


Extremely interesting times. The governments in concert with the big producers have been trying to control the oil price since the texas nation guard marched into the East Texas field in 1931, and have done a reasonable job too I might add. But it's hard to keep it low now, now supply is well below demand. Of course demand vanishes as price rises so to the economist everything seems normal, but I couldn't imagine a nation on earth that wouldn't wish it was US$20 a barrel again so they could repave their roads and get industry rolling.

As I have said before, the leaders at the top are fully aware of the consequences of peak oil and the broader markets will have their 'corrections' soon enough and we will be in a new new normal. Unfortunately for a few billion people in China and India that will spell the end of their hoped for rise out of poverty into 3rd world status. They know it already I guess, and the cover story as to why they are losing out, the magic virus, must be wearing a bit thin in certain quarters. Payback time can't be far away...
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Re: THE Price Of Crude Pt. 15

Unread postby AdamB » Fri 04 Feb 2022, 18:30:50

dissident wrote:https://www.youtube.com/watch?v=HB1eGDpEeQY

Long video but worth listening to Art Berman explain the global energy price crisis.


Art Berman...Art Berman...oh yeah! The guy who proclaimed in 2011 that there wasn't any oil of significance in the Bakken and whatnot! I remember him now. So he has decided to pretend to be an economist now? Well, I suppose that makes sense when you've turned yourself into a cautionary tale for fledgling geologsts. I remember going to one of his presentations where he proclaimed that the first horizontal well was drilled in the early 1980's....I didn''t have the heart to tell him that when I was drilling them not 8 years later, I was being taught by old farts who had been doing it for 30 years.

Turns out, his undergrad studies were in history. Perhaps....a pattern is developing? :lol:

Art Berman...worth listening to....GOOD ONE!!
Last edited by AdamB on Fri 04 Feb 2022, 19:36:19, edited 1 time in total.
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Re: THE Price Of Crude Pt. 15

Unread postby mousepad » Fri 04 Feb 2022, 19:06:08

AdamB wrote:Turns out, his undergrad studies were in history. Perhaps....a pattern is developing? :lol:

LOL. Good one Adam !!
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