Ready for $262 bbl oil?

[wayneL]

The apocalypse cometh:

http://money.cnn.com/2006/01/27/news/international/pluggedin_fortune/index.htm

Ready for $262 a barrel oil?
Two of the world's most successful investors say oil will be in short supply in the coming months.
FORTUNE Magazine
By Nelson Schwartz, FORTUNE senior writer
April 11, 2006: 2:31 PM EDT

DAVOS, Switzerland (FORTUNE) - Be afraid. Be very afraid.

That's the message from two of the world's most successful investors on the topic of high oil prices. One of them, Hermitage Capital's Bill Browder, has outlined six scenarios that could take oil up to a downright terrifying $262 a barrel.

Meanwhile, back at the ranch:

Texans Forced To Pawn
Shops To Get Extra Gas $$
CBS 11 News
4-22-6


DALLAS -- High gasoline prices are causing some people to take desperate measures.

Pawn shops say their business is increasing, with some customers saying they're selling things to buy gas.

Gas prices are climbing again, with most stations prices hovering at, or just below $3.00 a gallon. For some people the high fuel prices are overwhelming.

"We just have customers come in and have to tell us that they need money 'till the end of the week, for gas to get back and forth to work," said pawn shop owner, Gerald Costner.

Everything from high end jewelry, to name brand purses, and televisions pawn shop owners say they are seeing it all come in. They say customers are frustrated and have no place to go to get extra cash for gas.

"Some of the construction people tell us they are having to pawn their tools to buy gas, but when they pawn their tools they can't go out and work in the construction business 'cause their tools are in pawn. So it kind of a catch-22," Costner said.

Mary Rodriguez has worked at the Casa View Pawn Shop for five years. She says she's seen people of all ages coming in looking for help.

"We've always had a clientele of the young kids, or middle age kids, and now we're getting an older generation. Which, it just seems wrong that they have to pawn things just to get gas, or ya know, to make ends meet on things like that."

As prices continue to rise at the pumps, many motorists say they don't see things getting better anytime soon, for the consumer.

"It is frustrating, but the thing is they know they can get away with it, because people need gas," Rodriguez said.

At Casa View Pawn, the owner says they've seen the increase in numbers over the past couple months.

 

[professor_frink]

that's gotta translate to at least 3.50 a litre for petrol- would love to see the look on the face of someone filling up their 4wd at that price!
You'd think if you had to pawn your crap to put fuel in the car, then maybe it's time to by a smaller car. Or a bike. Or some skates. Or a bloody horse.

 

[crackaton]

Most people who drive gas guzzlers lease them and just right the fuel costs of on tax. It's the average joe who will suffer big time, they will get hit with fuel bills travelling to and fro work, and then increased food etc. Sad state of affairs.

 

[Bobby]

Hello Wayne.,

The apocalypse cometh ?,

Then the four horsemen do ride again !.
When that happens Armageddon cometh too.

Bob.

 

[wayneL]

Hello Wayne.,

The apocalypse cometh ?,

Bob.

Just a bit of poetic licence

 

[Bobby]

Just a bit of poetic licence

Wayne,

I did like it, you never know what can become real.

Regards Bob.

 

[Smurf1976]

I maintain my view that at some point in the future, quite probably within 10 years, energy will become the issue in Australian politics. The likes of health and hospitals, tax, child care, defence, the environment, interest rates etc will be all but forgotten when that day comes for they will be trivial issues in comparisson. And come it will.

Quite simply, we are on a completely unsustainable path and, with a few exceptions, everything we've done as a country (and planet) since around 1990 has been to make the eventual situation worse. Prior to that we did actually have some progress with moves away from oil and gas for power generation, improving vehicle fuel efficiency and so on. But since then it's all been downhill in the name of doing whatever is easiest today and worry about tomorrow when it comes.

To list but one example, natural gas. Quite often we hear that "there's enough for over 100 years". That's not true - it's about 60 years - and then you need to factor in a doubling of consumption as a partial replacement for oil. And then of course "normal" demand growth. So much for gas being abundant. A child born today is likely to be just completing university or TAFE studies when worldwide production of gas peaks.

As for oil, suffice to say that discovery has been trending lower for the past 43 years and this has been a well established fact for about 30 years. No amount of scientific, political, military or economic effort has even halted the trend of decline, let alone actually reversing it. Drilling to find trivial oil fields in response to rising prices doesn't fix the problem even though it may be profitable for the company concerned. Meanwhile, we have an outright explosion in the global population of gas guzzlers.

Judge for yourself how it will end but oil and gas are clearly not being used at a rate which is sustainable for even one human lifetime. This clearly can't go on too much longer and it won't be pleasant when the growth stops and then turns to decline.

IMO worldwide demand for uranium and high grade coal will soar when the trouble hits so they too will be expensive. Hence my frequently expressed view that Australia ought to rely as much as possible on hydro, geothermal, other renewables and brown coal. They are not subject to conflict, pricing cartels, nuclear hazards or massive price increases and are quite reliable with proper design and operation.

 

[nizar]

that's gotta translate to at least 3.50 a litre for petrol- would love to see the look on the face of someone filling up their 4wd at that price!
You'd think if you had to pawn your crap to put fuel in the car, then maybe it's time to by a smaller car. Or a bike. Or some skates. Or a bloody horse.

Trust me if price of oil gets to >usd100, then petrol would be the least of our worries

Inflation would mean costs spiral out of control for everything, so demand would be surpressed as a result - then ultimate chaos, companies lose profitability, global equity markets collapse, unemployment shoots up, etc etc...

Lets hope it doesnt come to that

 

[clowboy]

Nizar,


All that from a mere $25 a barrel increase?

Ill admit that $100 a barrel oil will have some serve and widespread ramifications but ultimate Chaos?

 

[mime]

$100 a barrel? I don't think that will happen this year unless something major happens. I heard that 2 of the 5 major Iraq oil fields are operational. Sanity will come back soon.

 

[Smurf1976]

$100 a barrel? I don't think that will happen this year unless something major happens. I heard that 2 of the 5 major Iraq oil fields are operational. Sanity will come back soon.

The best estimate that I can come up with at present is that Iraq seems to be producing about 1.8 million barrels per day in smoothed "trend" terms. It's all over the place, hence the smoothing, but that's my best estimate of where it's at. It's been slowly increasing on a trend basis for quite some time now. I'm using US government data which, while dubious in a lot of areas, is generally considered reasonably accurate when it comes to actual oil production (though their data is widely regarded as rubbish where the question of reserves is concerned).

 

[wayneL]

$100 a barrel? I don't think that will happen this year unless something major happens. I heard that 2 of the 5 major Iraq oil fields are operational. Sanity will come back soon.

Well who the hell knows? But "Sanity" is long odds and the real roughie of the field. "Something Major" is the odds on favourite in my book

Place yer bets

 

[tech/a]

Hmm so why are bears not screaming.

Overpriced,crash in oil prices just around the corner?

Supply and Demand??

Are rescources so different?

 

[noirua]

The average cost of petrol in Europe today is A$2.30 per litre for unleaded.

As to the future, oil will weaken in the longer term as new - mixed bag of... - technologies gradually increase their percentage of the power market. The States have a 20 year plan that will eliminate the purchase of foreign oil.

It will be interesting to see what happens when Arab oil eventually falls in price rapidly. The US may abandon it's support for Saudi Arabia and leave them to the wolves.

 

[wayneL]

Hmm so why are bears not screaming.

Overpriced,crash in oil prices just around the corner?

Supply and Demand??

Are rescources so different?

Tech you seem to be looking for support for your view.

It's OK to be a bull. You've stated your case and your reasons for being a bull, go ahead and be one and bugger everyone else! You don't have to continually snipe.

As I and others have said... bears are bulls and bulls are bears.

The most classic instance of this is in the interest rate/bond markets. To be a interest rate bear, you MUST be a bond bull, and visa versa.

An economic bull, must (well usually anyway) be a gold and oil bear. Because oil, in particular, will take out the economy if it keeps rising. This is in fact what seems to be happening, and it will take out the economy....bearish.

BTW There are commodity bears as well.

 

[tech/a]

Wayne I understand that and no that wasnt my motive.

Oil has increased 400% and gold 250% not hearing cries of over priced yet hearing that in the rescource sector--just wondering?

 

[bullmarket]

Good morning everyone

Imo a fairly significant contributor to the price of oil atm is obviously the 'fear' factor....ie....the threat to continued global oil supplies due to ever simmering and slowly increasing geo-political tensions in various parts of the world.

Sure, oil looks expensive when converted back to the price of petrol at the bowser but oil could also still be very cheap atm given the combination of global demand for oil (especially China) and the threat to future supplies.

But China stated last week they are now looking at ways to slow down their unsustainably high economic growth and so we'll just have to wait and see how successful they will be and what affect it will have on commodity prices.

More food for thought

cheers

bullmarket

 

[ducati916]

With regards to oil;

The decline in the ratio of energy recovered, to the amount of energy expended has been falling consistently.

In 1916 the ratio was 28:1
In 1985 the ratio was 2:1
Currently, it is almost 1:1

In certain geographic locations, the ratio has turned negative.
GDP growth brings forward the "Peak oil" scenario, while recession will delay peak oil. With China's growing demand, and the sustainability, or growth in US demand + the rest of the world argues sooner rather than later.

The higher the price, the later peak oil as the ability to purchase the required quantity is curtailed.

Wayne I understand that and no that wasnt my motive.

Oil has increased 400% and gold 250% not hearing cries of over priced yet hearing that in the rescource sector--just wondering?

Gold, unlike oil has very limited practical useage.
It is therefore almost by definition a speculative medium.
Currently, the speculative component of the gold price is circa 40%

Oil by comparison fuels economic growth, and without it, GDP will stall.
Gold is a a luxury item, oil is currently a necessity (to the industrialized nations)

jog on
d998

 

[wayneL]

With regards to oil;

The decline in the ratio of energy recovered, to the amount of energy expended has been falling consistently.

In 1916 the ratio was 28:1
In 1985 the ratio was 2:1
Currently, it is almost 1:1

Duc, or somebody else,

Could you explain this a bit further please? What does this mean?

 

[mime]

I just watched the doco Enron: The smartest guys in the room and listened to the energy traders talk during the California energy crisis(they forced the price of energy up and down when ever they wanted). I wouldn't rule out speclators pushing the price up to make quick profit. I'm on a knifes edge whether to sell my energy or not. If the price gets to $80 a barrel I may move.