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Aygeear
A Day Late And A Dollar Short
join:2000-12-03
Stockton, CA

Aygeear

Member

Here we go again, folks

Oil at $150/barrel and gas at $4/gallon by mid-summer.......

Wanna bet?

nc1165
join:2001-04-10
Delray Beach, FL

nc1165

Member

What's the excuse catalyst this time? Uprising in Venezuela? Strike in Brazil? I would wager falling USD as an ingredient to this latest batch of screw u stew. The one event that would throw a shovel load into the fan blades would be if Israel takes adavantage of our presence in Iraq and lobs a few into Iran over our heads and pulls us into a 'got your back' conflict.

Aygeear
A Day Late And A Dollar Short
join:2000-12-03
Stockton, CA

Aygeear

Member

said by nc1165:

What's the excuse catalyst this time?
Same old, same old.... Peak Oil.... reserves are limited! As the economy recovers demand for oil increases... limited supply means higher prices.

We've got to get going on biodiesel, gasoline from coal and shale, electric cars, nuclear power, wind and solar power, alternative renewable and sustainable substitutes for OIL!
horsemouth1
Please Clarify My CSP
Premium Member
join:2002-03-13
canada

horsemouth1

Premium Member

Yes.
This man is the future. I cant believe people have the lack of brains to give him grief.
»100% Electric Alfa Romeo Spider, Finally, IT's ALIVE!

Boredness
So bored...
Premium Member
join:2005-07-07
Fresno, CA

1 edit

Boredness to Aygeear

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to Aygeear
Oil and gas prices always go up to the highest levels in the summertime. People are too busy enjoying the hot weather to care much. That's camping and motorboat season!

gillespie
Premium Member
join:2001-11-28
USA

1 recommendation

gillespie to nc1165

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to nc1165
They don't need an excuse, they do it because they can.

aurgathor
join:2002-12-01
Lynnwood, WA

aurgathor to Aygeear

Member

to Aygeear
said by Aygeear:

Oil at $150/barrel and gas at $4/gallon by mid-summer.......

Wanna bet?
Yup. How much?

Anyhow, not a chance. Maybe in 2 - 3 years.

Aygeear
A Day Late And A Dollar Short
join:2000-12-03
Stockton, CA

Aygeear

Member

Click for full size
said by aurgathor:
said by Aygeear:

Oil at $150/barrel and gas at $4/gallon by mid-summer.......

Wanna bet?
Yup. How much?

Anyhow, not a chance. Maybe in 2 - 3 years.
You may be right... I'm just guessing the rise will be as swift as the fall...

aurgathor
join:2002-12-01
Lynnwood, WA

1 recommendation

aurgathor

Member

Given the recesssion, the chance of that is practically 0.

On paper, it can be as fast as the rise to the $150 peak, (which took a while) but ultimately, a lot will depend on the state of the world economy -- there's no chance for premium pricing (barring certain exceedingly unlikely events like a war with Iran) while the the recession is ongoing.

Aygeear
A Day Late And A Dollar Short
join:2000-12-03
Stockton, CA

Aygeear

Member

said by aurgathor:

Given the recesssion, the chance of that is practically 0.

On paper, it can be as fast as the rise to the $150 peak, (which took a while) but ultimately, a lot will depend on the state of the world economy -- there's no chance for premium pricing (barring certain exceedingly unlikely events like a war with Iran) while the the recession is ongoing.
The recession may be ongoing, but the price of oil is based on speculation. If the speculators believe the recession is easing, or the supply of oil tightens due to production shortages (or other events) the price will skyrocket as it has in the past. So, it's possible the effects of the recession will not play as great a role in the future price of oil as in the recent past.

nc1165
join:2001-04-10
Delray Beach, FL

nc1165 to Aygeear

Member

to Aygeear
I remember hearing on the radio (NPR?) that the price we are seeing is based on West Texas (sweet) crude, not the stuff we import.

Also, I believe that one factor which has yet to be figured into the formula is whether the economy in entering a deflationary or inflationary period. From what I've been reading, economists are saying it could go either way and is to early to tell.

aurgathor
join:2002-12-01
Lynnwood, WA

aurgathor to Aygeear

Member

to Aygeear
Sustaining prices well above what would be dictated by supply and demand based purely on speculation is going to be much more difficult this than before. I would actually think we can see $80, or maybe even $100, but much above that, nope.

However, there's a good comment by nc1165 about inflation -- that can have a significant effect on price.

Aygeear
A Day Late And A Dollar Short
join:2000-12-03
Stockton, CA

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Aygeear

Member

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This is a guessing game at best, and aurgathor guesses $80-$100 while I guess $150. Anyone else care to venture a guess or an opinion?

For the last six years the price of oil has been escalating at an exponential rate. The current pause is just a "blip" on the curve. The underlying cause of the sharp rise in prices is diminishing reserves. "Peak Oil" has arrived.

The oil-producing nations have lost billions due to the current economic recession. They are eager to recoup their lost revenues and will raise oil prices back to previous levels as soon as possible, perhaps by mid-summer, and probably not later than the end of this year.
cmaenginsb1
Premium Member
join:2001-03-19
Palmdale, CA

cmaenginsb1 to Aygeear

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to Aygeear
While "Peak Oil" may have arrived, the global economic slump has diminished consumption across all sectors and will continue to do so for the next few years at least. More and more ships,trains are parked as their simply isn't a need for them to keep operating. Electrical demand has decreased as more and more factories either cut shifts or sit idle.

Then you have the recent OPEC production cuts that did little to raise oil prices as fast as they wanted. I think that oil needs to rise or you're going to have some dire situation in some of the oil producing nations, something we need to be aware of since we are still dependent on them.

While speculation is responsible for some of the wild swings and it's possible again, if it reaches $140 a bbl, I can see our crazy Congress try to ban speculation outright. (They don't seem to care whether it would be legal or not).

No the "sweet spot" is around $80-$100 which would make the oil producers happy and keep them stable and prevent a huge increase in fuel costs impact the economy even more. For the first time I actually agree with aurgathor on something .

pupowski
Premium Member
join:2002-03-22
Staten Island, NY

pupowski

Premium Member

said by cmaenginsb1:

.....While speculation is responsible for some of the wild swings and it's possible again, if it reaches $140 a bbl, I can see our crazy Congress try to ban speculation outright. (They don't seem to care whether it would be legal or not)....
The CFTC and/or exchanges can and have regulated excessive speculation prior to the deregulation fad. One way is to limit holdings controlled by any entity to a % of open interest. This practice begs for re-instatement, even without a bubble, due to excessively large speculative positions. That is what collapsed several hedge funds,destabilizing or manipulating commodity markets in the process. There is no commodity or stock market too big to manipulate.

»www.opednews.com/article ··· 770.html

P Ness
You'Ve Forgotten 9-11 Already
Premium Member
join:2001-08-29
way way out

P Ness to Aygeear

Premium Member

to Aygeear
said by Aygeear:

said by nc1165:

What's the excuse catalyst this time?
Same old, same old.... Peak Oil.... reserves are limited! As the economy recovers demand for oil increases... limited supply means higher prices.

We've got to get going on biodiesel, gasoline from coal and shale, electric cars, nuclear power, wind and solar power, alternative renewable and sustainable substitutes for OIL!
Yep same old argument since the 1970's...80's..90's..
and i think the 10th time on this board.

oh we will prob hit 80 because of the summer fake gas inflation period...or some fake "incident"....

sigh

Aygeear
A Day Late And A Dollar Short
join:2000-12-03
Stockton, CA

Aygeear

Member

said by P Ness:

Yep same old argument since the 1970's...80's..90's..
and i think the 10th time on this board.
Obviously a very popular argument.........
Spice300
Premium Member
join:2006-01-10

Spice300 to Aygeear

Premium Member

to Aygeear
The price will not reach $150 / barrel in 2009.

The price is likely to reach around $70 / barrel because that is the target wanted by Saudi Arabia and is just below the amount needed to make new off-shore rigs in the Gulf of Mexico profitable. In other words Saudi Arabia is more interested in thwarting competition and alternative energy than making the price skyrocket again risking further demand destruction.

The world economy is unlikely to recover in 2009. Obama's plan calls for the U.S. economy to recover in fourth quarter 2009 which is when fuel demand seasonally declines. China's corporate economy is strung out on credit with few customers. This will bite them hard eventually.

Even if hyperinflation occurs in the U.S. this year, it would be something in the range of 10% to 30% annual rate, insufficient to raise the cost of crude oil to $150 / barrel. Devaluation of the U.S. dollar relative to other currencies could be a bigger factor. The Fed. purchasing $300 billion of U.S. treasuries, is not enough to debase the currency by half. The majority of G20 countries are currently not interested in unseating the U.S. dollar as the world reserve currency. The world economy will have to fall into depression first.

As for peak oil the decline in demand is around 4 Mb/d which is about the same as the global annual decline rate of existing oil wells. Since the price undershot to about $30 / barrel, some of the new oil well projects were suspended. There is spare capacity currently and some new oil will be brought to market this year. Both demand and supply are unlikely to bump into one another this year. A collision between supply and demand is more likely to occur in 2010. The price of natural gas is also set to skyrocket in 2010 due to the decline in rig counts since last summer.

nc1165
join:2001-04-10
Delray Beach, FL

nc1165

Member

said by Spice300:

The price will not reach $150 / barrel in 2009.

The price is likely to reach around $70 / barrel because that is the target wanted by Saudi Arabia and is just below the amount needed to make new off-shore rigs in the Gulf of Mexico profitable. In other words Saudi Arabia is more interested in thwarting competition and alternative energy than making the price skyrocket again risking further demand destruction.
Yes, given there are no unforeseen events which would push the commodity artificially (major earthquake in Venezuela, Israel bombs Iran, etc.). Who knows what (or whom) is lurking in the bakground, like a shadow government waiting to unleash mayhem. Cheney is a joker in the deck. I'll never trust him.
cmaenginsb1
Premium Member
join:2001-03-19
Palmdale, CA

cmaenginsb1 to pupowski

Premium Member

to pupowski
said by pupowski:

said by cmaenginsb1:

.....While speculation is responsible for some of the wild swings and it's possible again, if it reaches $140 a bbl, I can see our crazy Congress try to ban speculation outright. (They don't seem to care whether it would be legal or not)....
The CFTC and/or exchanges can and have regulated excessive speculation prior to the deregulation fad. One way is to limit holdings controlled by any entity to a % of open interest. This practice begs for re-instatement, even without a bubble, due to excessively large speculative positions. That is what collapsed several hedge funds,destabilizing or manipulating commodity markets in the process. There is no commodity or stock market too big to manipulate.

»www.opednews.com/article ··· 770.html
Sorry by banning speculation I meant banning the commodities market on oil.
Spice300
Premium Member
join:2006-01-10

Spice300 to nc1165

Premium Member

to nc1165
said by nc1165:

Yes, given there are no unforeseen events which would push the commodity artificially (major earthquake in Venezuela, Israel bombs Iran, etc.). Who knows what (or whom) is lurking in the bakground, like a shadow government waiting to unleash mayhem.
It depends on the events because currently OPEC has significant spare capacity. The disruption of Venezuela's crude oil production, 2.0 Mb/d in Feb. 2009 with even less being exported, is insufficient to create a shortage by itself. Iran shutting down oil production and shipping in the Middle East would certainly be enough.

aurgathor
join:2002-12-01
Lynnwood, WA

aurgathor

Member

Israel is most likely just bluffing, and with no attack, there will be no shutdown there.

pupowski
Premium Member
join:2002-03-22
Staten Island, NY

pupowski to cmaenginsb1

Premium Member

to cmaenginsb1
said by cmaenginsb1:
said by pupowski:
said by cmaenginsb1:

.....While speculation is responsible for some of the wild swings and it's possible again, if it reaches $140 a bbl, I can see our crazy Congress try to ban speculation outright. (They don't seem to care whether it would be legal or not)....
The CFTC and/or exchanges can and have regulated excessive speculation prior to the deregulation fad. One way is to limit holdings controlled by any entity to a % of open interest. This practice begs for re-instatement, even without a bubble, due to excessively large speculative positions. That is what collapsed several hedge funds,destabilizing or manipulating commodity markets in the process. There is no commodity or stock market too big to manipulate.

»www.opednews.com/article ··· 770.html
Sorry by banning speculation I meant banning the commodities market on oil.
A ban isn"t necessary, just a limit on the % of paper contracts vs those that can be settled with physical delivery.

T1 Rocky
join:2002-11-15
Dallas, TX

T1 Rocky

Member

I don't understand why oil soared and I don't understand why it came back down. And I've asked the question and noone has given me a straight answer. That is what really scares me.

aurgathor
join:2002-12-01
Lynnwood, WA

aurgathor

Member

Both of these questions were answered here at one point or another.
Spice300
Premium Member
join:2006-01-10

2 recommendations

Spice300 to T1 Rocky

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to T1 Rocky
said by T1 Rocky:

I don't understand why oil soared and I don't understand why it came back down. And I've asked the question and noone has given me a straight answer. That is what really scares me.
Although there are many who disagree, it mainly is related to supply and demand.

Since crude oil is traded using the U.S. dollar, its value is part of the explanation. When the U.S. dollar is stronger, crude oil is cheaper and when it is weaker, crude oil is more expensive. Likely due to massive deficit spending during the Bush administration, the U.S. dollar had been weakening for years. The peak and subsequent decline in the price of crude oil in July 2008 correlated with a sudden strengthening of the U.S. dollar which was likely caused by banks hoarding U.S. dollars in preparation for the subprime crisis which peaked in fourth quarter of 2008.

In 2005 world crude oil production hit a plateau between 73 Mb/d and 74 Mb/d (million barrels per day) while the spare capacity of oil producers dropped nearly to zero. Demand remained strong especially in China. Keep in mind that the crude oil market is mainly the global export market and that consideration must be given for all oil importing countries, not just the U.S. Basically demand for light sweet crude oil was strong but the oil producers could not raise supply to meet the demand causing the price to rise. They were physically unable to get the oil out of the ground and delivered to market fast enough. The higher price causes consumers to use less especially in third world countries that are not able to outbid the U.S., Europe and China. The high price reduced demand to make it match the stagnant production.

Oil wells are getting harder to find and more expensive to develop. For 24 years the world has been discovering less oil per year than we have been using. There is a distinct market tendency to develop the easiest and cheapest oil wells first, leaving harder and more expensive oil wells for later. At some time all of these factors converge causing the rate at which the world can extract oil from the ground to reach a maximum which is called peak oil. The world has been either near or at peak oil since 2005 on what is called an extended plateau.

The steep price decline was caused by demand for crude oil suddenly dropping, the U.S. dollar strengthening and Saudi Arabia bringing new oil to market beginning in May 2008. The high price of crude oil was reducing demand, but in my opinion, not enough to cause the sudden decline in demand. The subprime crisis causing economic carnage seems to have been the principal driver reducing construction, travel and spending. Buying fewer products means less energy is used to manufacture and transport those products. Losing jobs causes people to use less energy. There is a strong correlation between recessions and less energy consumption. This snowballed quickly because just one month later demand was at least 1.5 Mb/d lower as evidenced by Russia's invasion of Georgia eliminating about 1.5 Mb/d from the world market for most of August while the price continued declining.

Here is a presentation by James Hamilton discussing many of the same issues and debunking the speculative bubble argument:

Causes and Consequences of the Oil Shock of 2007-08, James D. Hamilton, Department of Economics, University of California, San Diego, 2009 Spring (PDF warning)

pupowski
Premium Member
join:2002-03-22
Staten Island, NY

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pupowski to Aygeear

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»www.bloomberg.com/apps/n ··· WdWt_B2k

"OPEC, Asia May Call for Curbs on Speculation in Oil"

Better late than never. This is precisely what I, and many others have suggested.The CFTC needed a kick in the ass from the global community. They have become spineless lackeys of financial fraudsters over the Clinton Bush era.
»www.forbes.com/forbes/20 ··· oil.html

"Free markets" in oil have been largely fiction since the Texas railroad commission started manipulating oil prices 90 years ago.Some say TRC was the model for OPEC. »eh.net/bookreviews/library/1051
Spice300
Premium Member
join:2006-01-10

Spice300

Premium Member

said by pupowski:

... Curbs on Speculation in Oil"
I hope the entire world regulates speculation away so that next time production and demand for crude oil intersect, no one can blame speculators for the consequences.

Aygeear
A Day Late And A Dollar Short
join:2000-12-03
Stockton, CA

Aygeear

Member

Update, May 20, 2009, $62.04 per barrel
Spice300
Premium Member
join:2006-01-10

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Spice300

Premium Member

I think the price will stay between $60 / barrel and $80 / barrel and then drop a little next fall. I anticipate another price spike beginning next year which might rise as high as $200 / barrel. The price of natural gas will probably rise in tandem. My forecast assumes no significant war or natural disaster during the period. I anticipate Obama's attempts to stimulate the economy will fail this year. Another variable is the ongoing devaluation of the U.S. dollar. If interest rates on U.S. treasuries, begin rising sharply due to a lack of buyers, inflation may kick in hard.