Midpack
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I agree, so much so that my VGENX will be in my AA for many, many years.
Oil - is it moving towards a bubble
- Thread starter chinaco
- Start date
i never understood the love of biofuels and it's nothing more than the agriculture law that congress passes every few years to give pork to flyover country
there is enough oil in the US and Canada that hasn't been touched yet and not including ANWR to last us hundreds of years at current levels. once we get a big city democrat or a desert republican into the white house this madness will end
there is enough oil in the US and Canada that hasn't been touched yet and not including ANWR to last us hundreds of years at current levels. once we get a big city democrat or a desert republican into the white house this madness will end
You should go get it; you'll be a very rich man.
Texarkandy
Thinks s/he gets paid by the post
- Joined
- Feb 12, 2008
- Messages
- 1,281
I've read some stuff lately re: oil prices that a big part of the fault is financial speculators (futures & other kinds of financial paper) - Frankly, I hope a lot of them are in Europe if the bottom falls out at some point!!!!
I'm also considering the argument is valid that certain producing countries taking advantage of the current world geopolitical/financial events.
Thoughts on that anyone?
I'm also considering the argument is valid that certain producing countries taking advantage of the current world geopolitical/financial events.
Thoughts on that anyone?
If you consider the vast amount of energy available from a barrel of oil, and the benefits industry and society gain from this highly dense, versatile, easily transportable commodity, I think it's safe to say it's value is actually much, much higher than $105.
I've read that a barrel of oil yields approximately 20 gallons of gasoline, and if you think about the amount of work output that 20 gallons of gas contributes to society (think transportation, chainsaws, lawn mowers, generators, farm equipment, etc.), I don't think there is an easily conceivable upper limit as to what this resource is truly worth.
I've read that a barrel of oil yields approximately 20 gallons of gasoline, and if you think about the amount of work output that 20 gallons of gas contributes to society (think transportation, chainsaws, lawn mowers, generators, farm equipment, etc.), I don't think there is an easily conceivable upper limit as to what this resource is truly worth.
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
You really think someone like Chavez down in Venezuela would do something like that?
HFWR
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Oil is consumed at the rate of 86m bbl/day, which is a pretty big market, but probably still tweakable at the margins...
HFWR
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
You really think someone like Chavez down in Venezuela would do something like that?
Candidate for the 51st state...
Do you smell sulfur, Hugo?
Independent
Thinks s/he gets paid by the post
- Joined
- Oct 28, 2006
- Messages
- 4,629
The US uses about 7 billion barrels of crude per year. US "proved reserves" are about 23 billion barrels. "Technically recoverable" are 163 billion barrels. "Technically Unrecoverable" are 337 billion. "Oil Shale" is 2,000 billion barrels. http://www.netl.doe.gov/KeyIssues/images/FE_oilpyramid_lg.jpg
I don't think that the only thing between us and "hundreds of years" of supply is one president. The issue is cost (both dollars and environment). I don't know if the cost of getting that "technically recoverable" oil is $65/barrel or $100/barrel. I'm sure that it's not $30/barrel.
Rustic23
Thinks s/he gets paid by the post
In lies the problem. In the oil crunch of the 70's, folks rushed out and cranked alternate energy projects. Shale oil for one. They lost their shirts! Turns out there was/is enough cheap oil for the producers to lower the price and drive them out of business. Unless government is going to guarantee $65 to $100/barrel price, private investors will not take the risk.
At some point in time (perhaps we're in that time now), we'll have to experience pain and much higher energy prices for an extended period of time so that we're forced to develop alternate energies. Once we come out the other end of that alternate energy development period, which could last 20 or 30 years or more, the price of oil will probably drop. I'm probably paranoid but much of the time I feel like there are powers out there that control things just enough to stop full scale development of alternate energies. If the price of oil gets "too high" and too many alternative energies start taking root, watch OPEC and the oil producing countries flood the market with more oil to slow alternative energy technology creation. Also I've never felt that the Bush administration was actually watching out for us but watching out more for big business. By this I mean they're not doing enough to encourage production of alternative energies. At this point I believe creating alternate energies and becoming energy independent has as much to do with our national security as attacking Iraq perceivably was.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Back then, there was large excess capacity outside OPEC. When the cartel was instituted that capacity began to be produced. Once it was online the price plummeted, in part due to the new non-OPEC capacity, and in part from conservation efforts.
On the other hand, today there is almost no excess outside OPEC, and a questionable amount inside it. Also there is small production growth outside OPEC to offset field depletion, and even less visibility of new supply 4 or 5 years down the road. To my way of thinking, this would increase OPEC control, not decrease it.
That seems like a safe bet.
Ha
Last edited:
HFWR
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Maybe $20 for a quart of oil...
Independent
Thinks s/he gets paid by the post
- Joined
- Oct 28, 2006
- Messages
- 4,629
If the WSJ article is correct, then it seems the government could guarantee a price. Here's my modest proposal:
The US Federal gov't contracts with private firms that are going to develop the Canadian tar sands. The agreement is to buy X barrels of crude per year, for Y years, at a fixed price of $50 per barrel. The private firms fund their capital investment by issuing bonds denominated in US dollars, so they aren't taking a currency risk.
When the oil is delivered, the gov't auctions it off to the highest bidder.
If the auction price is above $50, the profit is rebated to US taxpayers through an FIT credit.
In that case, we're paying a lot for gasoline, so the rebate brings our actual cost down to the $50.
If the auction price is below $50, the loss is recoverd from US taxpayers through an FIT surcharge.
In that case, gasoline is cheap, and the surcharge brings our actual cost up to the $50.
We've essentially hedged the price of crude with a huge futures contract, with a strike price of half the current market.
The fact that nobody has suggested this indicates either a lack of imagination, or a belief that the $15 quoted in the WSJ article isn't representative of the full cost (including environmental impacts) of massive developments of the Canadian tar sands.
Midpack
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
You're right, but it's not as sinister as you might think. The price of anything is limited by (among other things), the price of alternatives. If you were selling a product with more demand than supply (like oil), and you had pricing responsibility, you (and all your counterparts) would be expected to set pricing just under viable alternatives to make the most you could for your shareholders. It wasn't that many years ago that oil companies weren't making such great profits and so it didn't pay for them to build refineries (and ironically helped put us in our current conundrum). No one felt sorry for them then (if we had, maybe they would have built refineries), so we can't blame them for taking advantage of market conditions now. I'm invested in VGENX because I believe all this. And the idea they would price oil to benefit mankind or encourage alternatives, is well...
I agree with your conclusion. The real problem is how much is left in the ground and how much it costs to recover it.
However I think that you have mixed up a couple of numbers. The US consumes about 21M bbl/day. Second in consumption is the European Union at about 15M bb/day. The US produces 7-8M bbl/day and is third in production behind Saudi 11M bbl/day and Russia at about 10 bbl/day. (Data is from the CIA Fact book.)
We are the third leading producer in the world, pumping more that twice as much oil as Iran, Kuwait, Venezuela, or Mexico, but we still need to import more than Saudi produces. A serious case of NOT LBYM.
MB
Last edited:
Patrick
Full time employment: Posting here.
I have a 1980 electric car that gets the equivalent of 150 mpg at today's gas prices. It uses golf cart batteries. If gas goes back to 50 cents, it'll still be cheaper for me to drive my electric than my gas car.
Patrick
Full time employment: Posting here.
Just imagine if we had taken all the money and labor we've put into the Iraq debacle and spent it on alternative energy instead. We'd probably already have solution.
Patrick
Full time employment: Posting here.
I heard this too. Financials suck, stocks are dropping, the dollar is falling, so people are turning to commodities as the place to put their cash. Makes sense.
Patrick
Full time employment: Posting here.
Some dude (I can't remember his name because I've seen so many of them) on TV said it's going to at lease $150 a barrel before pulling back.
Patrick
Full time employment: Posting here.
OK, I'll admit it, I guess I don't understand the new math. If oil is $100/barrel and 1 barrel yields 20 gallons of gasoline, then $100/20 = $5/gallon of gas, right? Yet we're only paying about $3/gallon. Are the oil companies eating the other $2/gallon for us?
OK, I'll admit it, I guess I don't understand the new math. If oil is $100/barrel and 1 barrel yields 20 gallons of gasoline, then $100/20 = $5/gallon of gas, right? Yet we're only paying about $3/gallon. Are the oil companies eating the other $2/gallon for us?
There is 42 gallons in a barrel.
Depending on the type of crude and the processing crude oil will yield various amounts of propane, butane, gasoline, jet fuel, diesel, fuel oil, lubricating oil, asphalt, etc.
They of course all have value.
MB
OK, I'll admit it, I guess I don't understand the new math. If oil is $100/barrel and 1 barrel yields 20 gallons of gasoline, then $100/20 = $5/gallon of gas, right? Yet we're only paying about $3/gallon. Are the oil companies eating the other $2/gallon for us?
I may be wrong, but I thought oil spot price bids were going for $100 a barrel. I further thought that large processors had long-term contracts locked in at various price points under that.
Rustic23
Thinks s/he gets paid by the post
Independent,
That could work, depending on the amount of oil, the reserve is a place for it, also the Government uses a lot of oil products. However, too easy, and no place for the politic ans to get their cut.
That could work, depending on the amount of oil, the reserve is a place for it, also the Government uses a lot of oil products. However, too easy, and no place for the politic ans to get their cut.
