2007-2008 Crude Oil Cost

[Mark F. Barnes]

Have a nice day!

[BryanS]

Get ready for $7 gas, $200 oil... in 2012... PEAK OIL IS RIGHT AROUND THE CORNER. And I am telling you, we are going to be screwed!

SAN FRANCISCO (MarketWatch) -- Surging crude prices, which could surpass $200 a barrel in four years on tight supplies, could push gasoline prices to as high as $7 a gallon, CIBC World Markets analysts said Thursday.

Crude supplies are actually lower than some official estimates indicate, while demand is unlikely to fall anytime soon, according to a statement by analysts led by Jeff Rubin at CIBC, an investment bank. They forecast that these tighter supplies and continued strong demand will drive oil and gasoline prices to roughly double their current levels by 2012.

[N Judah]

Demand in China isn't going down anytime soon so we can be certain that the price of gas will just go up and up. However, I think there is too much uncertainty about the rate of the increase. What would happen if the government just accepted the inevitable and pre-emptively taxed gas so that it would always cost, say, about as much as it costs in Europe right now? (As the price of gas went up, the amount of tax would go down.) That way there would be no surprises and people could just make an adjustment once and then get on with their lives. In the meantime there would be extra tax money which could go towards transit solutions which would help people make that adjustment.

[ricco67]

Don't forget that India is undergoing its own transition as well.

We won't be seeing $1.00 gas again unless someone misplaces a decimal.

[RedScare]

Demand in China isn't going down anytime soon so we can be certain that the price of gas will just go up and up. However, I think there is too much uncertainty about the rate of the increase. What would happen if the government just accepted the inevitable and pre-emptively taxed gas so that it would always cost, say, about as much as it costs in Europe right now? (As the price of gas went up, the amount of tax would go down.) That way there would be no surprises and people could just make an adjustment once and then get on with their lives. In the meantime there would be extra tax money which could go towards transit solutions which would help people make that adjustment.

There is no incentive for politicians to increase the gas tax in a market that has seen gas prices spike 25% in just over a month. In fact, as you mentioned earlier, John McCain proposed lowering the gas tax for the summer. Luckily, gridlock in Congress keeps them from doing anything. Changes ARE being made. US gas demand is stagnant or slightly falling, even as the population increases. This means that people are cutting back. Large SUV sales are down 22 to 30% this year from last, and last year was down from the year before. As people are forced to decide just how badly they need that extra room, many are deciding that they can drive on less.

Resistance to transit improvements and expansion is falling as well. It is the nature of the beast. You oppose it when you don't need it. As things get tighter, you voice less opposition. When you realize that you may need it, you start demanding that it meet your expectations. Who knows, in a few more years, fiscal conservatives may start decrying the wasteful spending on highway construction.

[TheNiche]

Demand in China isn't going down anytime soon so we can be certain that the price of gas will just go up and up. However, I think there is too much uncertainty about the rate of the increase. What would happen if the government just accepted the inevitable and pre-emptively taxed gas so that it would always cost, say, about as much as it costs in Europe right now? (As the price of gas went up, the amount of tax would go down.) That way there would be no surprises and people could just make an adjustment once and then get on with their lives. In the meantime there would be extra tax money which could go towards transit solutions which would help people make that adjustment.

One thing that I've noticed is that the NYMEX forward price curve for light sweet crude discounted for risk and time is increasingly close to zero anticipated change going forward for several years. Even just a few months ago, the forward price curve had been decreasing at such a rate as hedging price risk for a new exploration and production project was very expensive.

With greater confidence in the sustained high price of oil on the part of Wall Street, producers are more free to develop new capacity at such a rate as is necessary to counter the high prices.

I don't think that $1.00 gasoline is in our future, but I do firmly believe that peak oil theory has no justification in reality.

[JLWM8609]

2) Biofuels policy in the U.S. and E.U. is having very serious adverse consequences, and even as global demand for food is spiking, there's less to go around. Between 20% and 50% of agricultural feedstocks have been diverted to biofuels production, which only comprises 1.5% of transportation fuel supply. Recent legislation ignores these problems and is compounding the problem. In the mean time, the cost of biofuels (including subsidies) is still relatively high compared to raw gasoline or diesel, and mileage per gallon is lower, so the legislation has only increased the price of transportation fuels.

In Houston, we had a biodiesel retailer who would sell his B99 blend biodiesel for less than regular diesel. After Texas made B99 illegal in this region for some reason, he had to start selling B100 and raise the price. So, his prices are anywhere from 10 cents higher than the cheapest available diesel in town. HOWEVER, there is a biodiesel retailer off of 290 in Waller who sells B100 that meets stringent ASTM-6751D specs for $3.75/gal. Consider that regular diesel is upwards of $4.19/gal at the most expensive pumps in town. If only he was closer to town, I don't think driving almost 40 miles to save 15-50 cents is worth it.

[memebag]

I don't think that $1.00 gasoline is in our future, but I do firmly believe that peak oil theory has no justification in reality.

I agree. There's no way to accurately gauge how much oil is left, and no way to predict how much it will cost to get at it in the long run.

Here's what I do know: The price of oil will go up and down until it goes up and down just one last time. No one will know which increase is the last one until after the last decrease.

[RedScare]

I don't think that $1.00 gasoline is in our future, but I do firmly believe that peak oil theory has no justification in reality.

I firmly believe E. King Hubbert's justification in reality over yours.

E King Hubbert

Hubbert was born in San Saba, Texas. He attended the University of Chicago, where he received his B.S. in 1926, his M.S. in 1928, and his Ph.D in 1937, studying geology, mathematics, and physics. He worked as an assistant geologist for the Amerada Petroleum Company for two years while pursuing his Ph.D. He joined the Shell Oil Company in 1943, retiring from that firm in 1964. After he retired from Shell, he became a senior research geophysicist for the United States Geological Survey until his retirement in 1976. He also held positions as a professor of geology and geophysics at Stanford University from 1963 to 1968, and as a professor at UC Berkeley from 1973 to 1976.

[TheNiche]

I firmly believe E. King Hubbert's justification in reality over yours.

It sounds like the justification for your take on the issue has more to do with a person than with reason. This is very typical of lawyers, politicians, and other vile scoundrels.

No one will know which increase is the last one until after the last decrease.

Sober up and try again, please.

[memebag]

Sober up and try again, please.

Ok, I'll try again:

The price of oil will go up and down until it goes up and down just one last time. No one will know which increase is the last one until after the last decrease.

Was that any better?

[RedScare]

It sounds like the justification for your take on the issue has more to do with a person than with reason.

Yes, I tend to believe a scientist who spent his entire career studying geology and the peak oil phenomenon, AND who has been proven correct several times (and yet to be proven wrong) over someone who has no education or experience in the field.

I'm weird like that.

[TheNiche]

No one will know which increase is the last one until after the last decrease.

Was that any better?

No.

[7000]

[jgriff]

I guess there is a little more oil to be found out there.

http://www.bloomberg.com/apps/news?pid=206...id=aBUoYKhu7PWk

[CDeb]

Yes, I tend to believe a scientist who spent his entire career studying geology and the peak oil phenomenon, AND who has been proven correct several times (and yet to be proven wrong) over someone who has no education or experience in the field.

The man also retired 30 years ago. The advances made in petroleum geology in that time are like going from the Wright Flyer to the Space Shuttle.

[Pumapayam]

I guess there is a little more oil to be found out there.

http://www.bloomberg.com/apps/news?pid=206...id=aBUoYKhu7PWk

I am currently working on the compressor module right now for that Petrobras FPSO. I feel like I am part of history!

Great article.

[jgriff]

I am currently working on the compressor module right now for that Petrobras FPSO. I feel like I am part of history!

Great article.

That's great. You're one of the people actually out there doing something to help keep gas prices down. There are many others who just like to complain and tell other people what to do about the price of oil.

[Pumapayam]

That's great. You're one of the people actually out there doing something to help keep gas prices down. There are many others who just like to complain and tell other people what to do about the price of oil.

Yeah, no kidding. I actually model the whole module on the ship and run steady state conditions (vibrations) and environmental (hurricanes and transit) and see if it passes without failing.

We all know if something failed, that leads to many days, weeks, months of downtime with no production, plus lost money.

[BryanS]

Peak Oil: http://www.lifeaftertheoilcrash.net/. Scary stuff.

We started heading down the hill, in 2005. Better learn to dig and plant patatos. Around 2030, financial markets collapse. It will be over, then. Regardless of how much oil we find, some day we are going to run out. It will be a very bad day, when that happens.

[jgriff]

We started heading down the hill, in 2005. Better learn to dig and plant patatos. Around 2030, financial markets collapse. It will be over, then. Regardless of how much oil we find, some day we are going to run out. It will be a very bad day, when that happens.

To quote Chris Rock.... I know they say "never say never" but I'm saying never.

We are never going to run out of oil. We'll stop using it long before all the crude oil in the world is gone.

[TheNiche]

Peak Oil: http://www.lifeaftertheoilcrash.net/. Scary stuff.

We started heading down the hill, in 2005. Better learn to dig and plant patatos. Around 2030, financial markets collapse. It will be over, then. Regardless of how much oil we find, some day we are going to run out. It will be a very bad day, when that happens.

More laughable than scary. The chart doesn't even show a y axis or legend. It categorizes the early 70's as "years of plenty (debt) when the consumer debt load is stagnant. It counts "Sex, Drugs, Rock & Roll" as an event. And in about 2047 and again in 2051, apparently, everybody goes back in time by a couple years.

This is propaganda. It is based in fiction.

[ricco67]

While I'm not going to outright dismiss your chart, I believe there are a number of flaws in regards to its future path (and yes, I have read the website).

While there is no argument from me that we ARE going to run out of oil, your chart is merely predicting what they "believe" will happen in the future with no real reliable data as to what/when true production of oil will subside and I believe that is totally irresponsible.

Currently there are no "peaks" in production aside from those that are limited to the infrastructure and technology in that particular region and there is no true way to figure out how "productive" an oil reserve will be until it reaches the end of its life and even THAT is no guarantee. There are currently wells in production that were dismissed as not being cost effective prior to the new techniques used.

If you're going to run a chart like that, then perhaps you should run one for each major oil patch in the world, and only THEN can you even get a ballpark (give or take 20 years) as to what may happen.

[feufoma]

So my gasoline savings has only netted me an extra $2,000 a year even at $5.00 per gallon. Even assuming the 50.5-cent per mile IRS reimbursement as a true total cost, I've only saved $5,050 a year.

Now, $5,050 a year isn't chump change, but it doesn't nearly begin to cover the increase in housing cost when moving from the Burbs to ITL.

I agree. However, people could choose to pay about the same for an ILP house (say $200-300k) as they do on a suburban home that has more square footage and a yard. I do that very thing and it's not that big of a deal. Do more with less... There's no reason to have a huge home filled with a bunch of stuff.

[ricco67]

I agree. However, people could choose to pay about the same for an ILP house (say $200-300k) as they do on a suburban home that has more square footage and a yard. I do that very thing and it's not that big of a deal. Do more with less... There's no reason to have a huge home filled with a bunch of stuff.

I hear ya'. It amazes me how people try to justify the size of the homes. They NEED 5 rooms for this or that.... insane.

[memebag]

Regardless of how much oil we find, some day we are going to run out. It will be a very bad day, when that happens.

We are never going to run out of oil. We'll stop using it long before all the crude oil in the world is gone.

As I said before (and made TheNiche think I was intoxicated), no one will know we're out until after we're out. There could always be more oil in the ground, or some cheaper way of getting it out. This could be the final price increase, but we won't know that for sure until we see no more price increases.

[ricco67]

As I said before (and made TheNiche think I was intoxicated), no one will know we're out until after we're out. There could always be more oil in the ground, or some cheaper way of getting it out. This could be the final price increase, but we won't know that for sure until we see no more price increases.

To a certain extent its true. I'm not an oil guy, but I've known enough that there are ways to know when a well isn't going to produce much more.

[Mark F. Barnes]

Rock-hounds have been speculating for years on how much actual reserves we have, and how many untapped reservoirs there are, and every time you turn around we find more in remote places that were unknown until it was actually found. The there are the area we aren't allowed to drill. The ANWR alone contains reserves somewhere around 7-12 billion bbls possibly more, only we can't get to it because of the conservationist screaming we're bothering the Caribou. 2030? I say poppycock...........

[CDeb]

I agree. However, people could choose to pay about the same for an ILP house (say $200-300k) as they do on a suburban home that has more square footage and a yard. I do that very thing and it's not that big of a deal. Do more with less... There's no reason to have a huge home filled with a bunch of stuff.

My house is around $150k and I think it is pretty reasonably sized. Even downsizing further, I would be hard pressed to find something ITL (in a place I'd want to live) in that price range. Ergo, the extra I spend in gasoline is worth it to me.

Rock-hounds have been speculating for years on how much actual reserves we have, and how many untapped reservoirs there are, and every time you turn around we find more in remote places that were unknown until it was actually found. The there are the area we aren't allowed to drill. The ANWR alone contains reserves somewhere around 7-12 billion bbls possibly more, only we can't get to it because of the conservationist screaming we're bothering the Caribou. 2030? I say poppycock...........

A few billion here, a few billion there....

Bakken Formation

I it looks like we've just discovered a new

[memebag]

To a certain extent its true. I'm not an oil guy, but I've known enough that there are ways to know when a well isn't going to produce much more.

But there isn't a good way to know there are no more wells. And we never get all the oil out, we just get as much as it makes economic sense to get. As the price goes up, so does the amount of oil we pump from each source.

[TheNiche]

This could be the final price increase, but we won't know that for sure until we see no more price increases.