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Old 02-24-2011, 11:23 AM   #21
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Maybe this would be good for the country in the long run. Not only would it make alternative energy sources more attractive to investors and consumers, but we might start drilling fro our own oil as a stop gap. Both create jobs and opportunity here at home. I would rather see the U.S. producing our own energy rather than depending in others, both friendly and unfriendly, for our energy.
But the question is, when will the economy recover sufficiently that it can start affording these initiatives? All these speculator-driven oil shocks will do is kill any recovery trying to take hold.
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Old 02-24-2011, 11:23 AM   #22
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Oil is unique in many ways. People don't change their demand for it much as the price goes up. Economists call that in-elastic demand or nearly in-elastic demand.

So when the demand is constant and the supply drops significantly, the price will shoot up.

The other issue is that it can take 10-15 years to bring a known oil field into full production. The lead times for these things are really long.

So even though the demand is there it can take years for the supply to catch up.
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Old 02-24-2011, 11:46 AM   #23
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The other issue is that it can take 10-15 years to bring a known oil field into full production. The lead times for these things are really long.

So even though the demand is there it can take years for the supply to catch up.
Libya is 2% of world production. Even if that all stopped for a couple of months, the Saudis could turn on the taps a little bit more and compensate for that in about an hour.

There is absolutely no indication that the Libyan protestors, or those in any other country affected by the current demonstrations / uprisings / revolutions, want to drastically reduce the standard of living of everyone by turning off the flow of dollars. People - starting with the media - need to get a sense of proportion: Saudi Arabia isn't about to sink wthout trace, leaving some huge gap in world oil production.

The current jump in oil prices, like the previous one, is almost entirely down to speculation. This bubble will burst, and we can get back to worrying about other minor things - more minor than having anti-aircraft guns fired at us, anyway.
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Old 02-24-2011, 11:48 AM   #24
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The current jump in oil prices, like the previous one, is almost entirely down to speculation. This bubble will burst...
Agreed about the speculators. Unfortunately, the way oil prices are tracking the stock market and economic indicators since the crash of 2008, the only way the bubble will burst is if the economy experiences a severe double-dip. That's the only way to get the rats scurrying for cover.
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Old 02-24-2011, 11:51 AM   #25
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Libya is 2% of world production. Even if that all stopped for a couple of months, the Saudis could turn on the taps a little bit more and compensate for that in about an hour.

There is absolutely no indication that the Libyan protestors, or those in any other country affected by the current demonstrations / uprisings / revolutions, want to drastically reduce the standard of living of everyone by turning off the flow of dollars. People - starting with the media - need to get a sense of proportion: Saudi Arabia isn't about to sink wthout trace, leaving some huge gap in world oil production.

The current jump in oil prices, like the previous one, is almost entirely down to speculation. This bubble will burst, and we can get back to worrying about other minor things - more minor than having anti-aircraft guns fired at us, anyway.
Nobody is that concerned with Libya. What the markets are concerned about is some of the big producers like Saudi Arabia doing a Libya/Egypt and the production slowing or stopping.

That is the risk premium we are seeing now in the oil markets.
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Old 02-24-2011, 11:55 AM   #26
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.......... I would rather see the U.S. producing our own energy rather than depending in others, both friendly and unfriendly, for our energy.
Darn right, especially those Canadians.

Crude Oil and Total Petroleum Imports Top 15 Countries
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Old 02-24-2011, 12:11 PM   #27
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Here's a fearless prediction on the topic "What will Americans do if gasoline prices spike?"

We will buy more cars.

The two car family with one SUV will become a three car family that parks the SUV during the week while someone communtes in the new Honda Civic.
They'll keep the SUV because its resale price has tanked and because it still works for Home Depot runs on the weekend. That's the way we do things in the US of A.

Of course we'll do some other things, too.
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Old 02-24-2011, 12:14 PM   #28
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Quoting Lee Iacocca...

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People want economy and they will pay any price to get it.
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Old 02-24-2011, 01:44 PM   #29
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DW and I were talking about this the other day. If and when gas hits $5/gal, I don't think that high a price will happen as this country won't let it happen.
And we're going to prevent it from happening...how?
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Old 02-24-2011, 02:11 PM   #30
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The two car family with one SUV will become a three car family that parks the SUV during the week while someone communtes in the new Honda Civic.
They'll keep the SUV because its resale price has tanked and because it still works for Home Depot runs on the weekend. That's the way we do things in the US of A.
Well, given that the financial illiteracy of the majority is why most of us here, you could be right.

Let's take a 45-mile round-trip commute and a 15mpg SUV versus a 30mpg Civic at $5/gallon. The Civic saves $7.50/day in gas, or $1800/year. If it costs $18K to buy and $300/year to insure, you'll break even in 12 years. Oh, I forgot the interest on the loan to buy it; make that 20 years. Longer if $5/gallon gas is temporary, or if you only have a 25-mile commute.

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People want economy and they will pay any price to get it.
Yep... they also won't adjust their driving style, that's for sissies and tree huggers.
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Old 02-24-2011, 02:14 PM   #31
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And we're going to prevent it from happening...how?
TJ
All it would take is lifting the moratorium on drilling. If we threaten to drill in Alaska, the price of oil would drop $20 a barrel overnight.
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Old 02-24-2011, 05:20 PM   #32
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Oil is unique in many ways. People don't change their demand for it much as the price goes up. Economists call that in-elastic demand or nearly in-elastic demand.

So when the demand is constant and the supply drops significantly, the price will shoot up.

The other issue is that it can take 10-15 years to bring a known oil field into full production. The lead times for these things are really long.

So even though the demand is there it can take years for the supply to catch up.
Somewhat in-elastic. The world, led by the US in 2008-09 and other countries besides China in 2009, reduced demand noticeably after the last runup. And if oil hit $220 per barrel, I would expect an even more noticeable decline. Let's hope we don't find out any time soon though...
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Old 02-24-2011, 06:05 PM   #33
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If oil were to go to $220 a barrel, I think we would something similar to what we saw during the Arab Oil Embargo of 1973-1974.

We didn't have SUV's then, but a lot of people did drive large American made cars, vans, and pickups with gas guzzling V-8's. This meant there was a sudden increased demand for market for smaller 4 cylinder Japanese cars such as Datsun, Honda and Toyota. Yes, new cars are expensive, but who says you can't buy a used one that can be nearly as dependable.

Theft of gasoline was a problem. Many people dealt with this by buying locking gas caps. There was a huge demand for these in 73-74.

Hopefully, we won't end up with gasoline rationing, as we did then. It's no fun to be told you can buy gas only on either odd or even days depending on weather your license plate number was odd or even. Waiting in line with irate motorists for an hour or more to fill up my gas tank is not my idea of what I want to be doing in ER.

I'm not too concerned right now. 90% of things that people worry about simply never happen.
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Old 02-24-2011, 08:56 PM   #34
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Gas is skyrocketing in my area. I drove by a station today whose price was 3.59

I hope alternate technologies, carpooling and telecommuting all result from this. Whether or not you believe in peak oil there is a finite supply of oil and eventually if we want to continue our lifestyles we need to have alternatives developed.
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Old 02-24-2011, 09:10 PM   #35
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It's not just the price of gas in the tank which is going up in tandem with the rise in crude prices.

The fuel surcharge which airlines add to the cost of airtickets is also rising: Hong Kong Approves Cathay Pacific Fuel Surcharge Rise For March | Real Time Market News | Dow Jones In spite of which, the total demand for air travel is also still going up.
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Old 02-24-2011, 09:42 PM   #36
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I make my living in the energy business (technical side). I do very well when oil spikes. I love expensive oil.

But price spikes don't last long. People do adjust their consumption patterns. As I recall, after the first Oil Crisis, oil consumption in the US took 10 years to recover, and we got by just fine.

And more oil comes on-line. Yes, it takes a long time to develop a field, but there are a lot of fields that are already in development.

Personally, I would like to see the US produce nothing--keep it in the ground. This is a game of musical chairs. I want somebody else to run out of oil first. Read "Twilight in the Desert". I would love to see Saudi Arabia dry up. All they have is oil and sand and they are pissing away their oil and its benefits.
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Old 02-25-2011, 07:57 AM   #37
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Personally, I would like to see the US produce nothing--keep it in the ground. This is a game of musical chairs. I want somebody else to run out of oil first. Read "Twilight in the Desert". I would love to see Saudi Arabia dry up. All they have is oil and sand and they are pissing away their oil and its benefits.
+1. I've always thought this was part of our unspoken energy policy.
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Old 02-25-2011, 09:05 AM   #38
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Personally, I would like to see the US produce nothing--keep it in the ground. This is a game of musical chairs. I want somebody else to run out of oil first. Read "Twilight in the Desert". I would love to see Saudi Arabia dry up. All they have is oil and sand and they are pissing away their oil and its benefits.
I agree, and that has been the US energy policy for almost 40 years, capping wells like crazy. Funny, we almost never hear about the HUGE oil discovery in North Dakota a few years ago, because it's not light sweet crude that you only have to dig down a few thousand feet of sand to get............
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Old 02-25-2011, 09:28 AM   #39
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There are alot of projections and tipping points. Below is a good article on the topic. What really burns me, ha ha, is the resistance to seeking, using, alternative energy. I believe that we should end the subsities that Oil gets and give it to all the alternatives. Sure it is painful now - but so is being held hostage by dictators. A mixed solution of Solar,Wind, Wave, Nuclear, Bio etc... is continually proposed and loses all of its momendum because it costs more then Oil, but what is the real cost of our dependance? Add the ME wars to the price of a gallon of gas as a war tax @ the pump and we will be driven away from oil! We, mankind, tend to wait till the crises is upon us before acting, rather than avoiding it and taking the actions years ahead to avoid it. Seems pretty stupid to me.

End of Cheap Oil @ National Geographic Magazine

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Old 02-25-2011, 09:54 AM   #40
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There are alot of projections and tipping points. Below is a good article on the topic. What really burns me, ha ha, is the resistance to seeking, using, alternative energy. I believe that we should end the subsities that Oil gets and give it to all the alternatives. Sure it is painful now - but so is being held hostage by dictators. A mixed solution of Solar,Wind, Wave, Nuclear, Bio etc... is continually proposed and loses all of its momendum because it costs more then Oil, but what is the real cost of our dependance? Add the ME wars to the price of a gallon of gas as a war tax @ the pump and we will be driven away from oil! We, mankind, tend to wait till the crises is upon us before acting, rather than avoiding it and taking the actions years ahead to avoid it. Seems pretty stupid to me.

End of Cheap Oil @ National Geographic Magazine

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Well, to start with, get rid of the stupid subsidies for ethanol. Ethanol is one of the most energy intensive renewbale fuels out there, you have to use a ton of OIL to make ethanol, and a lot of water. Plus, you are using food crops to make a gasoline alternative that many experts feel damages modern engines...........
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