$262 a Barrel Oil prices?

[Dawg52]

Do you think this is possible? It would certainly put a major dent in my company's bottom line. 

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

 

[Nords]

I think it's just as likely as $40/barrel oil.

Now that we've staked out both ends of the bell curve, how fat are the tails?

 

[unclemick]

Hmmm

Wouldn't last long - just finished the Tractor and Ag Show or something like that at the local civic center. Soybean diesel was one of the most popular boothes there. And a falling $ would help compete with the 'boys from Brazil'.

heh heh heh

 

[bearkeley]

$262 ? Why $262, why not $237.59?

Oil prices go up, they go down. If they go up too much too fast there is something call demand destruction and substitution which will moderate the price and bring it back down.

Look at how the recent crazy spike in natural gas prices wided out industrial demand in a matter of months, resulting in much more moderate prices and something of a bear market.

I think $250 is a bit out of the range of reasonable in the near future. Barring something sensational like Iran shutting in production in response to economic sanctions or saber ratteling by the EU or the Administration. If that happens then who knows?

OPEC is fully aware of the impact of higher oil prices on economic activity. They like $60.00 a barrel oil just fine as it maxes their revenues while not putting too much of a brake on economic output.

My guess is that prices will stay in the $50 - $80 range this year. Averaging $59.34. Barring hurricanes, wars, terrorist attacks, unforsee political events or an economic slow down.

The bio diesel is a nice thought but currently without substantial Government subsidies it is not cost effective at $60.00 a barrel.

If we don't want our national security to be tied to the whims of a small group of Muslim fundamentalists (I'm not talking about Al Queda) in the mid east, then the only possible meaning full solution is for American's to choose to drive smaller more efficient cars less, buy four stroke boat motors and to start installing things like ground source heat pumps instead of burning heating oil.

But I it think for most of us, that is just asking to give too much for their country and to even suggest such a thing may get you labeled a communist traitor.

We prefer to see other people like the oil companies as the problem. Keep in mind we have only 3% of global reserves but 25% of global consumption and that is with only 4% of the global population.

Anyway sorry about the rant, I guess will just have to put little more in the bank to account for higher energy prices when we retire to make of for the lack of a national energy policy.

 

[Marshac]

The bio diesel is a nice thought but currently without substantial Government subsidies it is not cost effective at $60.00 a barrel.

Using waste oil it is. Costs about $.75/gallon to make with methanol being the most expensive reagent. If you have a buddy that owns a McD (or 10 in our case), you're set.... unless you're like me and don't own a diesel powered vehicle

 

[brewer12345]

Using waste oil it is. Costs about $.75/gallon to make with methanol being the most expensive reagent. If you have a buddy that owns a McD (or 10 in our case), you're set.... unless you're like me and don't own a diesel powered vehicle

Marshac, how much methanol does it take to make a gallon of biodiesel?

 

[Marshac]

Out if curiosity, I crunched some numbers. I obtained futures prices for crude oil, gas, heating oil, and jet fuel for each month until Jan '07. I then compared the calculated distillate cost (using the crude price for that month) to the futures price of the distillate on a per gallon basis.

# gallons per barrel of crude:
Gas: 19.5
Heating Oil/Diesel: 9.7
Jet Fuel: 4.3

Refining costs: 15% (2003 average)

The resulting graph-

Things I find interesting:
* Market is betting that jet fuel demand will decrease
* Best time to purchase heating oil in 2006 for the 06/07 winter will be June (or sooner?).
* Unless the distillates are actually being sold for a loss, it seems as though the implied refining costs are 12%, not 15% (12% produces a future/calc spread of 0)

Anyways.... to make this at all relevant to the topic, I used this data to calculate gas prices using different crude prices. According to the EIA, taxes add about 23% to the price of gas, soooo.... ready for these prices per gallon? Ouch!

Oil      Gas     Cost per 15gal Tank
$100  $3.28  $49.20
$150  $3.69  $55.35
$200  $6.55  $98.25
$250  $8.20  $123

 

[mb]

Anyway sorry about the rant,  I guess will just have to put little more in the bank to account for higher energy prices when we retire to make of for the lack of a national energy policy.

I think that we need a few more rants like this,

MB

 

[Marshac]

Marshac, how much methanol does it take to make a gallon of biodiesel?

It really depends on the process used since a decent amount of the methanol used in the process can be recovered. Typical usage is 8 gallons of methanol per 40 gallons of oil, with a recovery rate of about 20%. The process of converting oil -> biodiesel is called transesterification, and some new techniques are being developed that eliminate the need for methanol (which is produced from natural gas).

 

[laurence]

Marshac, you rock. I learn something new everyday on this site. MENSA has nothing on the memberhsip of this board.

 

[sgeeeee]

It really depends on the process used since a decent amount of the methanol used in the process can be recovered. Typical usage is 8 gallons of methanol per 40 gallons of oil, with a recovery rate of about 20%. The process of converting oil -> biodiesel is called transesterification, and some new techniques are being developed that eliminate the need for methanol (which is produced from natural gas).

This is interesting stuff. . . but Marshac, are you getting rich? I'm hoping that you are gaining more than just knowledge. I'm hoping you are going to get filthy rich and retire very early. Please provide us with an update of your business.

 

[Marshac]

This is interesting stuff. . . but Marshac, are you getting rich?  I'm hoping that you are gaining more than just knowledge.  I'm hoping you are going to get filthy rich and retire very early.  Please provide us with an update of your business.   

The other guy got tied up during the holiday season with his pretzel franchise....his wife kept 'calling in sick' so he was forced to work. We also found that waste oil turns into this super nasty smelly dog-barf like mass during the cold winter months.... so we were talking about giving it a try come spring.

While we can make the stuff for cheap, the government complicates fuel sales (taxes, reporting, etc), so the plan is to target farmers since off-road vehicles/equipment are exempted from fuel taxes.

Did you know that businesses PAY to have their waste oil removed? What a scam!

 

[brewer12345]

It really depends on the process used since a decent amount of the methanol used in the process can be recovered. Typical usage is 8 gallons of methanol per 40 gallons of oil, with a recovery rate of about 20%. The process of converting oil -> biodiesel is called transesterification, and some new techniques are being developed that eliminate the need for methanol (which is produced from natural gas).

So it sounds like 40 gal of oil plus 8 gallons of methanol makes ?? gallons of biodiesel plus you recover maybe 1.5 gallons of methanol, right?

 

[HFWR]

Remembered this article from WAY back when...

http://www.motherearthnews.com/library/1979_September_October/Run_Your_Diesel_on_Soybean_Oil_

 

[Marshac]

So it sounds like 40 gal of oil plus 8 gallons of methanol makes ?? gallons of biodiesel plus you recover maybe 1.5 gallons of methanol, right?

It depends on how well you make it, and the quality of your oil. One of the byproducts is glycerin.... lots of glycerin. Sometimes soap as well.

We have only made small batches so far (the owner of the truck we have been putting it in swears that his truck runs better), so I can't really give you a good yield estimate. If you're really interested, I suppose you could google it

 

[brewer12345]

It depends on how well you make it, and the quality of your oil. One of the byproducts is glycerin.... lots of glycerin. Sometimes soap as well.

We have only made small batches so far (the owner of the truck we have been putting it in swears that his truck runs better), so I can't really give you a good yield estimate. If you're really interested, I suppose you could google it

Actually, I am only interested in order to get a rough idea of what this might mean for methanol demand if we get a federal-level push toward bio-diesel. Would you say that methanol-based biodiesel is the most likely/economic/cheapest route to getting biodiesel, or is there some other technology that works better/cheaper and can be used today?

 

[Nords]

One of the byproducts is glycerin.... lots of glycerin. Sometimes soap as well.

the owner of the truck we have been putting it in swears that his truck runs better.

I'll bet his piston rings are squeaky-clean, too! Do bubbles come out of the tailpipe?

 

[mrbill]

So if you accept that this might really happen...what are YOU doing to protect your retirement funds? What would you do? Time to put cash in the mattress?

 

[Marshac]

So if you accept that this might really happen...what are YOU doing to protect your retirement funds? What would you do? Time to put cash in the mattress?

Have exposure to energy in your portfolio.

 

[Marshac]

Actually, I am only interested in order to get a rough idea of what this might mean for methanol demand if we get a federal-level push toward bio-diesel.  Would you say that methanol-based biodiesel is the most likely/economic/cheapest route to getting biodiesel, or is there some other technology that works better/cheaper and can be used today?

Perhaps at this second, yes, but some Japanese scientists found a new catalyst for the transesterification process which (should) totally remove the need for methanol.

Michikazu Hara, of the Tokyo Institute of Technology in Yokohama, Japan, and his colleagues have used common, inexpensive sugars to form a recyclable solid acid that does the job on the cheap. Their research is reported in last week's issue of the journal Nature

http://news.nationalgeographic.com/news/2005/11/1114_051114_biodiesel.html?source=rss

If you're looking at this from an investment standpoint, you might look at who some of the big oil producers are since that will always be the main component regardless of the catalyst involved.

 

[cute fuzzy bunny]

I think I may have identified one of the reasons for $262 a barrel oil.

They decide a ski slope isnt cutting it and want a repro of Vail.

 

[MasterBlaster]

It does look like a Ski Slope.

However Where are the people on Skiis in the picture?

 

[cute fuzzy bunny]

Your wish is my command...

 

[justin]

It does look like a Ski Slope.

However Where are the people on Skiis in the picture?

These folks are still trying to figure out what's wrong with their sand. It's white, but why is it cold, and it turns to water after you hold it for a while. What's going on?

Side note: I'd like to see their cooling bill for that sucker.

 

[justin]

Or maybe this is the reason:

http://www.thepalm.ae/index.html

They keep on building new cities and islands out in the sea.