PDA

View Full Version : $200 Oil - Who's Going to Pay For It?


xbarretx
03-11-2008, 10:52 AM
http://seekingalpha.com/article/68016-200-oil-who-s-going-to-pay-for-it

In March of 2005, Goldman Sachs kicked off the oil speculation boom by releasing a report that "Oil Could Spike to $105."

At the time oil was around $55 a barrel, already up considerably from $25 a barrel before the Iraq war (the second one) surprisingly caused oil prices to spike.

[Interesting note: The first Iraq war is what made our current President his first millions as he sold his stock the same month his dad invaded Iraq and spiked oil from $18 a barrel in July 1990 to $27 in August. After bankrupting his first company (aptly called Arbusto Energy), in which he was partners with Salem Bin Laden (Osamaís Father) through James Bath (who also worked with BCCI who conducted the largest bank fraud in US history while laundering gun money for George I in the 80s), Junior merged Arbusto with Spectrum 7, became the CEO and bankrupted them. Spectrum 7 was then sold to Harken with the financial help of BCCIís Kalid bin Mahfouz, who took over for Bin Laden on his death and bought 17% of Harken in exchange for the Bush bail-out which ended up giving him 400,000 shares of Harken stock (Bush was investigated by the SEC but was cleared - how would he know his dad was going to invade Iraq?!?)...]

Anyway, so there was no way our President could have foreseen the impact that invading Iraq (again) would have on the American economy (or his familyís extensive oil holdings) but Goldman Sachs was on top of the situation as they were the largest trader of energy derivatives. Goldmanís 2005 report cited " Thin spare capacity in the energy supply chain, and long response times for bringing on supply additions, as well as robust demand in the United States and in developing heavyweights China and India, despite the recent rapid increase in energy costs."

Now that the mission has been accomplished at $105, Goldman (who has made record income on the massive increase in energy prices and energy trading even while losing their shirts on the other bubble, housing) has now upped the anti and is boosting their low-end range to $80 and says: "$200 a barrel could be a reality in the not-too-distant future in the case of a "major disruption"."

This report, released Monday morning by the same guy who was right about $105 (even though he said that would be a super-spike, not the norm), drove oil to $108 a barrel in Mondayís trading and knocked the markets right off their early morning recovery and sent them back towards the 1/22 lows.

What Goldman doesnít explain though, is who is going to pay for this $200 a barrel oil? I pointed out to members of my site Monday afternoon that todayís $2 rise in oil prices will cost US consumers $280M next week. At 20M barrels a day of consumption, $200 a barrel oil would be $4Bn a day spent just on oil! Thatís about $1Bn a day more than weíre paying now, $365Bn a year or double what Bush is dumping into the economy in order to shut us all up while oil goes over $105 a barrel while the dollar "super spikes" below 73.

http://static.seekingalpha.com/uploads/2008/3/11/chart_us_dollar.gif

Thatís right, our own US dollar finished the day today at an all-time low of 72.96, down 40% since Jan 2002 so the joke is on OPEC, who is only getting $60 worth of our 2002 currency for their $100 barrels of oil. Unfortunately, the joke is also on us as that dollar you have in your pocket is worth just 60 cents while the average American is making LESS money than he did in 2002.

Couple stagnant wages with declining home prices, increased property taxes (because local governments actually have to BALANCE their budgets), rising food and other commodity prices and you have to wonder where Goldman, and their investors, think US consumers are going to scare up an extra $1Bn a day to pay for oil. By herding investors into commodities at this level, Goldman is leading sheep to the slaughter as spikes that look like this rarely end well for the latecomers:

Perhaps if oil were the only thing going up in price Goldman could squeeze another $1Bn a day out of US consumers, but letís keep in mind that the rest of the world has to fork over $3Bn a day as well in order to support $200 a barrel oil. Thatís on top of the $4Bn a day we are all paying already - thatís a lot of money. Oil is not, however, the only thing thatís affected as food and other goods rise along with the price of oil.

The CRB index should be at around 308 (220 in 2002 x 140% to adjust for the dollar) but has outpaced the dollar decline by a whopping 33%, a nice toppy little number thatís just begging for a retracement to 370 very soon. While a 40% decline in the dollar may have helped Goldman and Bush achieve their primary goals, itís hard to see how we are going to manage enough of a decline in our currency to push oil and the CRB up another 100% from here.

A 40% decline in the dollar led to a 33% increase in the CRB and the dollar is at 72 against a global basket of currencies so it will take 3 more 40% declines in the dollar to get us to $200 oil, Following the same path weíve been on to get to $100 oil, that would be going from 72 to 43 to 26 to 16, giving us a US inflation rate of roughly 450% overall. This is the dream of starry-eyed energy traders who are too bad at math to realize that if they do successfully drive oil prices up to $200 a barrel and double their money, that the money they have will only be worth 1/4 of what it was when they started.

Really people, think about it - we are talking about $8 per gallon gas. We are talking about $160 to fill up your tank and $1,000 a month to heat a home. Weíd better start giving people monthly raises now as itís going to be really hard to know if our employees will be able to afford to drive the car to work with projected increases of .10 per gallon per month for the next 4 years.

The average US driver has a car that gets 20 miles a gallon and drives 15,000 miles a year. Thatís 750 gallons a year. $4 a gallon is $3,000 more dollars of what used to be disposable income going up in smoke. Even if we conservatively assume that all the other increases in the CRB translate to "just" another $3,000 in forced spending and we cap utility increases at $500 (super conservative numbers) then we still have the average US wage earner needing $6,500 more in net wages to support $200 oil.

That would be roughly $10,000 pre-tax or roughly a 40% increase in the average personís salary JUST TO STAY EVEN WITH WHAT THEY ARE SPENDING NOW. So I ask Goldman Sachs, I ask the commodity bulls and I ask our President - who is going to pay for this?

We are talking about the destruction of the very fabric of our society here, not a "rally." The rise of oil is a crisis and needs to be treated as such as it will do more to destroy your way of life than a hundred terrorist attacks could possibly hope to do and it wonít change unless you demand that it change. Our "leaders" set their agendas based on the polls, maybe itís time we start setting the agendaÖ

Itís time to get mad!

Bowser
03-11-2008, 10:56 AM
Interesting read, and scary.


What pisses me off about all of this is that oil reserves are the highest they've been in 15 years.

BucEyedPea
03-11-2008, 10:59 AM
I think it's time I look into that oil well my mum left me, but which I thought was dry.

BucEyedPea
03-11-2008, 11:02 AM
'Er scrap that! I think the greenies and libbys are getting the exact thing needed to spur alternative renewable energy. Look at it as the glass being half-full.:D

HonestChieffan
03-11-2008, 11:07 AM
Diesel was $7 in Italy 2 years ago. The world did not come to an end.

StcChief
03-11-2008, 11:14 AM
Do your part. Use synthetic (i.e. Mobil one) for engine lubrication. drive less. Recycle plastic (made from oil)

Hog Farmer
03-11-2008, 11:14 AM
Goldman Sachs is pretty much right on with their predictions. when corn was at 3.00/ bushel they came out saying it was to go to $5.40. That's exactly where it went.

BucEyedPea
03-11-2008, 11:15 AM
Diesel was $7 in Italy 2 years ago. The world did not come to an end.

Then again, everything Europe is much smaller with places much closer together there. Not as much is needed as it is here with our more expansive geography. Unless you live in NE, Delaware or Maryland.

HonestChieffan
03-11-2008, 11:21 AM
well actually a mile is a mile...in Europe or the US. The big difference is we have a wastefull lifestyle that the Eropeans do not. When gas is high enough, Americans will finally adapt and we will be fine.

pikesome
03-11-2008, 11:28 AM
well actually a mile is a mile...in Europe or the US. The big difference is we have a wastefull lifestyle that the Eropeans do not. When gas is high enough, Americans will finally adapt and we will be fine.

????

You realize we have states bigger than Italy right?

We'd need a population of 1.8 billion (with a "b") to equal the pop density.

That has more than a little bearing on how bad fuel prices hurt here vs Italy.

dirk digler
03-11-2008, 11:29 AM
well actually a mile is a mile...in Europe or the US. The big difference is we have a wastefull lifestyle that the Eropeans do not. When gas is high enough, Americans will finally adapt and we will be fine.

What she is saying is true. In Europe everything is so compressed you can go from city to city alot cheaper than you can in the US except in the NE. Also in Europe they have alot of trains that can take you from place to place unlike here where we only have Amtrack.

xbarretx
03-11-2008, 11:34 AM
????

You realize we have states bigger than Italy right?

We'd need a population of 1.8 billion (with a "b") to equal the pop density.

That has more than a little bearing on how bad fuel prices hurt here vs Italy.

mr comic relief :) they dont call you dr giggles for nothing ya know ;)

BucEyedPea
03-11-2008, 11:34 AM
well actually a mile is a mile...in Europe or the US. The big difference is we have a wastefull lifestyle that the Eropeans do not. When gas is high enough, Americans will finally adapt and we will be fine.
Actually, they use kilometers.:D Apples and oranges.:evil:

Even with a mile being a mile if everything you need is either in: walking distance, bicycle riding distance, short public transit distance or closer driving distance. Then those miles ( or kilometers) take on a different importance not to mention lump sum total of fuel needed or used.

Just another way of saying, it's all relative.

BucEyedPea
03-11-2008, 11:35 AM
What she is saying is true. In Europe everything is so compressed you can go from city to city alot cheaper than you can in the US except in the NE. Also in Europe they have alot of trains that can take you from place to place unlike here where we only have Amtrack.

Yup! And that Amtrack needs to cover more rail miles too than a train in Europe.

xbarretx
03-11-2008, 11:36 AM
Interesting read, and scary.


What pisses me off about all of this is that oil reserves are the highest they've been in 15 years.

i agree 100% if you go to the link you can view the interesting graphs/visuals. i was going to post htem on here but figured id get flamed to death for doing so.

the best point of the article talks about how the rising cost of oil is hurting them (speculators and OPEC) as they are only making 60% of the full amount. if the price were lower, demand would be higher, thus youd be WAY closer to equilibrium.

xbarretx
03-11-2008, 11:40 AM
Goldman Sachs is pretty much right on with their predictions. when corn was at 3.00/ bushel they came out saying it was to go to $5.40. That's exactly where it went.

but donít you think thatís in part due to the fact that they have so much capital they can generate great influence on commodities?

BucEyedPea
03-11-2008, 11:40 AM
It's times like these, I think of the wise words of Monty Python:
"Always look on the bright side of life." *whistles*

Think of it this way, we need less snail-mail or air-mail which saves fuel.
With video conferencing business will need less meetings. Heck! Virtual conventions can take place on the web. Meanwhile, it buys time for the hydrogen industry to get its act together, which it is, until it reaches critical mass.

*whistles*

(gonna check out that oil well still though)

xbarretx
03-11-2008, 11:44 AM
It's times like these, I think of the wise words of Monty Python:
"Always look on the bright side of life." *whistles*

Think of it this way, we need less snail-mail or air-mail which saves fuel.
With video conferencing business will need less meetings. Heck! Virtual conventions can take place on the web. Meanwhile, it buys time for the hydrogen industry to get its act together, which it is, until it reaches critical mass.

*whistles*

(gonna check out that oil well still though)

Honestly Buc, who can rebuttal with well oil prices are super high..i guess i should check out the oil well that was willed to me. LMAO you get props my friend and i owe you some rep when it lets me send it again LMAO (laughing with...not at :thumb: )

Bowser
03-11-2008, 12:00 PM
For BEP...

<object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/jHPOzQzk9Qo"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/jHPOzQzk9Qo" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object>

BucEyedPea
03-11-2008, 12:16 PM
Thank you Bowser! ROFL That's it!

"If life seems jolly rott'n. There's something you've forgott'n!"

Words of wisdom!

Logical
03-11-2008, 11:54 PM
http://seekingalpha.com/article/68016-200-oil-who-s-going-to-pay-for-it

In March of 2005, Goldman Sachs kicked off the oil speculation boom by releasing a report that "Oil Could Spike to $105."

At the time oil was around $55 a barrel, already up considerably from $25 a barrel before the Iraq war (the second one) surprisingly caused oil prices to spike.

[Interesting note: The first Iraq war is what made our current President his first millions as he sold his stock the same month his dad invaded Iraq and spiked oil from $18 a barrel in July 1990 to $27 in August. After bankrupting his first company (aptly called Arbusto Energy), in which he was partners with Salem Bin Laden (Osamaís Father) through James Bath (who also worked with BCCI who conducted the largest bank fraud in US history while laundering gun money for George I in the 80s), Junior merged Arbusto with Spectrum 7, became the CEO and bankrupted them. Spectrum 7 was then sold to Harken with the financial help of BCCIís Kalid bin Mahfouz, who took over for Bin Laden on his death and bought 17% of Harken in exchange for the Bush bail-out which ended up giving him 400,000 shares of Harken stock (Bush was investigated by the SEC but was cleared - how would he know his dad was going to invade Iraq?!?)...]

Anyway, so there was no way our President could have foreseen the impact that invading Iraq (again) would have on the American economy (or his familyís extensive oil holdings) but Goldman Sachs was on top of the situation as they were the largest trader of energy derivatives. Goldmanís 2005 report cited " Thin spare capacity in the energy supply chain, and long response times for bringing on supply additions, as well as robust demand in the United States and in developing heavyweights China and India, despite the recent rapid increase in energy costs."

Now that the mission has been accomplished at $105, Goldman (who has made record income on the massive increase in energy prices and energy trading even while losing their shirts on the other bubble, housing) has now upped the anti and is boosting their low-end range to $80 and says: "$200 a barrel could be a reality in the not-too-distant future in the case of a "major disruption"."

This report, released Monday morning by the same guy who was right about $105 (even though he said that would be a super-spike, not the norm), drove oil to $108 a barrel in Mondayís trading and knocked the markets right off their early morning recovery and sent them back towards the 1/22 lows.

What Goldman doesnít explain though, is who is going to pay for this $200 a barrel oil? I pointed out to members of my site Monday afternoon that todayís $2 rise in oil prices will cost US consumers $280M next week. At 20M barrels a day of consumption, $200 a barrel oil would be $4Bn a day spent just on oil! Thatís about $1Bn a day more than weíre paying now, $365Bn a year or double what Bush is dumping into the economy in order to shut us all up while oil goes over $105 a barrel while the dollar "super spikes" below 73.

http://static.seekingalpha.com/uploads/2008/3/11/chart_us_dollar.gif

Thatís right, our own US dollar finished the day today at an all-time low of 72.96, down 40% since Jan 2002 so the joke is on OPEC, who is only getting $60 worth of our 2002 currency for their $100 barrels of oil. Unfortunately, the joke is also on us as that dollar you have in your pocket is worth just 60 cents while the average American is making LESS money than he did in 2002.

Couple stagnant wages with declining home prices, increased property taxes (because local governments actually have to BALANCE their budgets), rising food and other commodity prices and you have to wonder where Goldman, and their investors, think US consumers are going to scare up an extra $1Bn a day to pay for oil. By herding investors into commodities at this level, Goldman is leading sheep to the slaughter as spikes that look like this rarely end well for the latecomers:

Perhaps if oil were the only thing going up in price Goldman could squeeze another $1Bn a day out of US consumers, but letís keep in mind that the rest of the world has to fork over $3Bn a day as well in order to support $200 a barrel oil. Thatís on top of the $4Bn a day we are all paying already - thatís a lot of money. Oil is not, however, the only thing thatís affected as food and other goods rise along with the price of oil.

The CRB index should be at around 308 (220 in 2002 x 140% to adjust for the dollar) but has outpaced the dollar decline by a whopping 33%, a nice toppy little number thatís just begging for a retracement to 370 very soon. While a 40% decline in the dollar may have helped Goldman and Bush achieve their primary goals, itís hard to see how we are going to manage enough of a decline in our currency to push oil and the CRB up another 100% from here.

A 40% decline in the dollar led to a 33% increase in the CRB and the dollar is at 72 against a global basket of currencies so it will take 3 more 40% declines in the dollar to get us to $200 oil, Following the same path weíve been on to get to $100 oil, that would be going from 72 to 43 to 26 to 16, giving us a US inflation rate of roughly 450% overall. This is the dream of starry-eyed energy traders who are too bad at math to realize that if they do successfully drive oil prices up to $200 a barrel and double their money, that the money they have will only be worth 1/4 of what it was when they started.

Really people, think about it - we are talking about $8 per gallon gas. We are talking about $160 to fill up your tank and $1,000 a month to heat a home. Weíd better start giving people monthly raises now as itís going to be really hard to know if our employees will be able to afford to drive the car to work with projected increases of .10 per gallon per month for the next 4 years.

The average US driver has a car that gets 20 miles a gallon and drives 15,000 miles a year. Thatís 750 gallons a year. $4 a gallon is $3,000 more dollars of what used to be disposable income going up in smoke. Even if we conservatively assume that all the other increases in the CRB translate to "just" another $3,000 in forced spending and we cap utility increases at $500 (super conservative numbers) then we still have the average US wage earner needing $6,500 more in net wages to support $200 oil.

That would be roughly $10,000 pre-tax or roughly a 40% increase in the average personís salary JUST TO STAY EVEN WITH WHAT THEY ARE SPENDING NOW. So I ask Goldman Sachs, I ask the commodity bulls and I ask our President - who is going to pay for this?

We are talking about the destruction of the very fabric of our society here, not a "rally." The rise of oil is a crisis and needs to be treated as such as it will do more to destroy your way of life than a hundred terrorist attacks could possibly hope to do and it wonít change unless you demand that it change. Our "leaders" set their agendas based on the polls, maybe itís time we start setting the agendaÖ

Itís time to get mad!

Nice analysis, are precious metals still a good investment or will the bottom drop out?

SBK
03-12-2008, 12:08 AM
I think the price of oil has gone way up because the dollar isn't worth spit anymore. I could be wrong, but when I see oil, gold, precious metals, Euro, and anything else that can be pegged to the dollar hitting record highs, and the dollar hitting record lows....well, I tend to think it's a dollar problem, not an oil, gold, Euro problem.

Three cheers for the FED!!!

banyon
03-12-2008, 08:18 AM
I think the price of oil has gone way up because the dollar isn't worth spit anymore. I could be wrong, but when I see oil, gold, precious metals, Euro, and anything else that can be pegged to the dollar hitting record highs, and the dollar hitting record lows....well, I tend to think it's a dollar problem, not an oil, gold, Euro problem.

Three cheers for the FED!!!

While I don't disagree that the problems are significantly related, I don't think the FED is the sole problem here. Looking at these two (admittedly older, but i couldn't find more recent) graphs, the price appears to track pretty closely independently of the currency. I think Europe isn't feeling the effects, as their trade ministry has said because their strong currency allows them to offset these costs in other areas when importing. Also, what BEP says about the transportation is true also. Mass Transit is a way of life and they don't have nearly so far to go.

http://www.theoildrum.com/files/OilPrices_Oct07_USDollar.png

http://www.theoildrum.com/files/OilPrices_Oct07_€uro.png

Gasoline consumption worldwide (YIKES! :eek:)

http://www.blogsmithmedia.com/www.autobloggreen.com/media/2007/07/petrol-by-country.jpg

bkkcoh
03-12-2008, 09:06 AM
In central Ohio, gas is $3.45 a gallon and the cost per barrel is roughly 110, if the price per barrel goes to $200, how much is $7.00 gas going to cripple the Us economy and how soon will the liberals and environmental groups allow for the uncapping of the currently capped wells and also allow for more more oil exploration on US soil.

They were saying that when crude was at $20 a barrel, it wasn't cost effective to explore and drill into some known oil reserves, that level has passed and probably will never will be seen again. :banghead:

xbarretx
03-12-2008, 09:11 AM
Nice analysis, are precious metals still a good investment or will the bottom drop out?

IMHO thats now how you should ask that question. if ... IF IF .. IF the dollar continues its free fall into worthlessness then you bet your sweet biffy baby (my 12 grade english teacher said that all the time) as precious metals are used to hedge against weak currency. so if you feel the dollar isnt done falling then yes .. buy buy BUY as metals now will be a discount in the future as the greenback drops. if you feel were close to the bottom i wouldnt buy b/c the price of gold would drop in comparrison to the greenback b/c you would be buying them at a premium. Note i am not the author of the analysis, im just a MBA student whose taken more than his fair share of economy and finance classes.

xbarretx
03-12-2008, 09:11 AM
I think the price of oil has gone way up because the dollar isn't worth spit anymore. I could be wrong, but when I see oil, gold, precious metals, Euro, and anything else that can be pegged to the dollar hitting record highs, and the dollar hitting record lows....well, I tend to think it's a dollar problem, not an oil, gold, Euro problem.

Three cheers for the FED!!!

no SBK your 99.9999999999999999999999999999999999% correct with a .01% margin of error :)

xbarretx
03-12-2008, 09:14 AM
While I don't disagree that the problems are significantly related, I don't think the FED is the sole problem here. Looking at these two (admittedly older, but i couldn't find more recent) graphs, the price appears to track pretty closely independently of the currency. I think Europe isn't feeling the effects, as their trade ministry has said because their strong currency allows them to offset these costs in other areas when importing. Also, what BEP says about the transportation is true also. Mass Transit is a way of life and they don't have nearly so far to go.



good point man, i think the reason everyone wishes Greenspan was still in there is b/c Bernanke for some reason thinks that fighting a inflationary recession with more inflation works. seriosuly at this rate they might as well make barrowing money free, let the bottom fall out let the american public get @$$ raped by inflation and unemployment so then....the FED will start using fiscal policy for its intentions (to stimulate economic growth)

p.s. the making the cost of barrowing money was a joke :) no flaming please :)

tiptap
03-12-2008, 09:16 AM
In central Ohio, gas is $3.45 a gallon and the cost per barrel is roughly 110, if the price per barrel goes to $200, how much is $7.00 gas going to cripple the Us economy and how soon will the liberals and environmental groups allow for the uncapping of the currently capped wells and also allow for more more oil exploration on US soil.

They were saying that when crude was at $20 a barrel, it wasn't cost effective to explore and drill into some known oil reserves, that level has passed and probably will never will be seen again. :banghead:


If you can show me where any geophysicist or petroleum engineer or even a wildcat prospector can locate 20 million barrels (600 million gallons)/ day production, even along the continental coast, among US territories. And I mean all of it, not a partial answer of 2 million barrels or such (I can't find over 1 million to be added), then it might make a difference in price. But it is a non renewable resource and we need to invest in the next paradigm of energy sources.

xbarretx
03-12-2008, 09:20 AM
If you can show me where any geophysicist or petroleum engineer or even a wildcat prospector can locate 20 million barrels (600 million gallons)/ day production, even along the continental coast, among US territories. And I mean all of it, not a partial answer of 2 million barrels or such (I can't find over 1 million to be added), then it might make a difference in price. But it is a non renewable resource and we need to invest in the next paradigm of energy sources.

Rep up the :cuss:ing wazooo! the only comforting item about this oil bubble is that logic would suggest we would be investing in alternatives to oil....will that happen?? my answer is it depeends on whom our next pres is.

banyon
03-12-2008, 09:40 AM
In central Ohio, gas is $3.45 a gallon and the cost per barrel is roughly 110, if the price per barrel goes to $200, how much is $7.00 gas going to cripple the Us economy and how soon will the liberals and environmental groups allow for the uncapping of the currently capped wells and also allow for more more oil exploration on US soil.

They were saying that when crude was at $20 a barrel, it wasn't cost effective to explore and drill into some known oil reserves, that level has passed and probably will never will be seen again. :banghead:

I'm sorry, but this last part doesn't make any sense at all to me. The higher the price of oil, the MORE cost effective it is to explore, not less. it seems like you have this exactly backwards.

It's also the reason that Alberta is hoping (http://www.chiefsplanet.com/BB/showthread.php?t=164319&highlight=alberta)for this trend to continue as it will make their bitumen deposits that much more valuable.

xbarretx
03-12-2008, 09:53 AM
I'm sorry, but this last part doesn't make any sense at all to me. The higher the price of oil, the MORE cost effective it is to explore, not less. it seems like you have this exactly backwards.

It's also the reason that Alberta is hoping (http://www.chiefsplanet.com/BB/showthread.php?t=164319&highlight=alberta)for this trend to continue as it will make their bitumen deposits that much more valuable.

i think the dark horse that makes that statement correct is that inflation is why the question of cost effectivness comes into play. out of that 20 dollar a barrel, the dollar was stronger thus oil received larger margins of profit and less of a foreign exchange rate loss. now that oil continues to bubble and grow as a bubble (which yes will burst) over 100 oil profit margins are far less due to exchange rate loss. so by not being cost effective i think he means that for all the monies spent towards exploration the returns are far less now then in the past when margins were favorable. take inflation out of the equation and big oil would not be receiving record profits IMHO. on the other hand, oil to sell at a lower margin is always better than no oil sold at all. so the bottom line is that its always cost effective but OPEC's main job currently is to convince us all that theres a boat load of oil still left. once its no longer arcane knowledge that peak oil has occured people (economies) will be forced to spend else where to avoid stopping dead when oil is gone and an econimic infrastructure that is solely based on oil can no longer function. so the time is now more so then ever to being investing in renewable energy.

bkkcoh
03-12-2008, 10:10 AM
If you can show me where any geophysicist or petroleum engineer or even a wildcat prospector can locate 20 million barrels (600 million gallons)/ day production, even along the continental coast, among US territories. And I mean all of it, not a partial answer of 2 million barrels or such (I can't find over 1 million to be added), then it might make a difference in price. But it is a non renewable resource and we need to invest in the next paradigm of energy sources.

http://www.energyandcapital.com/articles/bakken-oil-production/613

Oil Production in the Bakken

The Bakken oil play stretches across Montana, North Dakota and into Southeastern Saskatchewan. We're talking about some potentially massive reserves of oil, too. The amount of oil in place has been estimated between 271 billion and 503 billion barrels of oil. A recent U.S. Geological Survey (USGS) sets the amount of original oil in place at 413 billion barrels.

Okay, so how much of an oil boom are we talking about?

Even if we take the lower estimates, that's still a huge amount of oil, far more than the 36 billion barrels of oil believed to be in Alaska's North Slope.

Let's just say that North Dakota oil production has been growing significantly. Crude oil production has been strong, up to about 40 million barrels in 2006. That's roughly a 20% increase since 2004.

Although I wanted to keep the topic on the U.S. side of the Bakken play, it wouldn't feel right if I didn't briefly mention the Canadian part of the formation.

As you may have known, I feel the oil sands in Alberta are going to play a significant role in future Canadian oil production. But having said that, remember that the Alberta oil sands are highly viscous and must be heated in order to extract the oil. The process can become quite energy intensive.

Trust me, there's a world of a difference between the heavy oil in Alberta and the light sweet crude underneath the Bakken play in Southeastern Saskatchewan. Now that the Alberta government are implementing oil royalties, trying to dip into oil companies' pockets, Saskatchewan property is starting to look more attractive.

Don't be surprised to see an exodus of smaller oil companies looking to exploit the rich oil resources in the neighboring province.

Investing in Peak Oil and the Bakken


So the question for investors is hoping to get into the action, "What do we do next?"

With an increasing interest in the Bakken oil formation , oil production from both North Dakota and Montana will inevitably increase over the next few years, creating a substantial opportunity for investors.

Now, I'm not trying to suggest that these plays will reverse peak oil in the U.S. After viewing the EIA's figures, there are too many areas in decline to save our oil production.

However, that doesn't mean you need to throw in the towel just yet...

If you're interested in learning about more exciting plays involved in the Bakken formation, please feel free to check out the $20 Trillion Report here.

Until next time,



Keith Kohl




www.energyandcapital.com

xbarretx
03-12-2008, 10:13 AM
http://www.energyandcapital.com/articles/bakken-oil-production/613

Oil Production in the Bakken

www.energyandcapital.com


very VERY interesting and i didnt know that.

just as a dumb question are you agreeing with my statement or disagreeing ? :p

bkkcoh
03-12-2008, 10:45 AM
very VERY interesting and i didnt know that.

just as a dumb question are you agreeing with my statement or disagreeing ? :p


Neither of the 2 are a quick answer, I don't think anyone can really argue about that fact.

DC has dragged their feet for a long time, both parties have, in trying to come up with a legitimate alternative fuel. And no, I don't think e85 is that good of an alternative either.


If there could be profits to be made with alternative fuel source, it would have been done by now, or at least there would be sources that are a lot closer to public consumption.

xbarretx
03-12-2008, 11:20 AM
Neither of the 2 are a quick answer, I don't think anyone can really argue about that fact.

DC has dragged their feet for a long time, both parties have, in trying to come up with a legitimate alternative fuel. And no, I don't think e85 is that good of an alternative either.


If there could be profits to be made with alternative fuel source, it would have been done by now, or at least there would be sources that are a lot closer to public consumption.


yes e85 is dumb. it compounds inflation and i hate CORN becuase of it.

as for profits, i disagree slightly on the if profits could be made it would have been done. profits can be made, the only issue was if there was a seemingly infinite amount of oil, why put of the capital for R&D? now that people arent sold on peak oil not happening there will be large amounts of profit to be made. here let me give you a reasonably priced car that doesnt use oil and thus your not chained over a barrel with your pants around your ankles. oh and by the way this new form of transportation (car) is more friendly to the environment. trust me people willl buy it. hybrids are a good idea but there not the answer b/c WE WILL RUN OUT OF OIL...its not a question of yes we will or will not its a question of timeing as in when.

im not into conspiricy theories but i can make a good bet that oil companies are greasing the palms of many people to stop such technologies from comming to market. with the US being such a large consumer ... it would ruin the oil industry if we all of the sudden stopped using it. i for one look forward to a day similar to that.

bkkcoh
03-12-2008, 11:29 AM
...
as for profits, i disagree slightly on the if profits could be made it would have been done. profits can be made, the only issue was if there was a seemingly infinite amount of oil, why put of the capital for R&D? now that people arent sold on peak oil not happening there will be large amounts of profit to be made. here let me give you a reasonably priced car that doesnt use oil and thus your not chained over a barrel with your pants around your ankles. oh and by the way this new form of transportation (car) is more friendly to the environment. trust me people willl buy it. hybrids are a good idea but there not the answer b/c WE WILL RUN OUT OF OIL...its not a question of yes we will or will not its a question of timeing as in when.

im not into conspiricy theories but i can make a good bet that oil companies are greasing the palms of many people to stop such technologies from comming to market. with the US being such a large consumer ... it would ruin the oil industry if we all of the sudden stopped using it. i for one look forward to a day similar to that.

Wouldn't that be like like playing the violin while the city burned? Unless of course, the oil companies do think the world's crude supply is infinite. If they thought the supplies were finite, I would think they would try to hedge their bets and develop alternative fuel(s) in order to protect thier income. If you were in thier position, wouldn't you? I think I would.

The country will not stop using oil products on x date regardless. That will not happen.

xbarretx
03-12-2008, 11:41 AM
Wouldn't that be like like playing the violin while the city burned? Unless of course, the oil companies do think the world's crude supply is infinite. If they thought the supplies were finite, I would think they would try to hedge their bets and develop alternative fuel(s) in order to protect thier income. If you were in thier position, wouldn't you? I think I would.

The country will not stop using oil products on x date regardless. That will not happen.


correct, we will never be using 0 oil until it runs out. there are still petroleum(sp) products we need and use i.e. plastic. as for oil hedging there bets of course they want to hedge there bets but...once another technology comes out to the masses, there precious cash cow's value will hit the floor. oil for transportation is a large mouth to be filled. oil for products is dwarfed in comparrison. so yes Oil is probably hedging but there keeping all there secrets under wraps until they get to a point when they have only a small amount of oil as to not render oceans of the stuff semi worthless.

p.s. liked the violin analogy :)

banyon
03-12-2008, 12:03 PM
Wouldn't that be like like playing the violin while the city burned? Unless of course, the oil companies do think the world's crude supply is infinite. If they thought the supplies were finite, I would think they would try to hedge their bets and develop alternative fuel(s) in order to protect thier income. If you were in thier position, wouldn't you? I think I would.

The country will not stop using oil products on x date regardless. That will not happen.

Why would the oil companies have any responsibility except to maximize corporate profits right now? They have no duty to think or care long term. Arguably, they could be sued for questionable business judgment detrimental to their shareholders.

They don't have to think oil supplies are infinite at all to screw the rest of us in the meantime. Figuratively, I have no problem casting them as Nero in this play.

Calcountry
03-12-2008, 12:17 PM
All we need now, is a busy Hurricane season and we have 5 dolla gas.

StcChief
03-12-2008, 12:18 PM
All we need now, is a busy Hurricane season and we have 5 dolla gas.
and take N.O. completely out to sea

bkkcoh
03-12-2008, 12:22 PM
Why would the oil companies have any responsibility except to maximize corporate profits right now? They have no duty to think or care long term. Arguably, they could be sued for questionable business judgment detrimental to their shareholders.

They don't have to think oil supplies are infinite at all to screw the rest of us in the meantime. Figuratively, I have no problem casting them as Nero in this play.


You do have a point to a certain degree, but companies shouldn't put all of their eggs in one basket, even though the eggs are golden

xbarretx
03-12-2008, 12:23 PM
Why would the oil companies have any responsibility except to maximize corporate profits right now? They have no duty to think or care long term. Arguably, they could be sued for questionable business judgment detrimental to their shareholders.

They don't have to think oil supplies are infinite at all to screw the rest of us in the meantime. Figuratively, I have no problem casting them as Nero in this play.

yep, see my post Ban..we think alike my friend :thumb:

xbarretx
03-12-2008, 12:23 PM
You do have a point to a certain degree, but companies shouldn't put all of their eggs in one basket, even though the eggs are golden

bird in the hand worth two in the bush. thats why they rape us now when they could really rake it in later

bkkcoh
03-12-2008, 12:26 PM
bird in the hand worth two in the bush. thats why they rape us now when they could really rake it in later

But according to how the democrats are going to take the billions of dollars of profits from big oil, they may be a little afraid of Hillary and/or Obama.


But we all know the bird will eventually have to sh!t

xbarretx
03-12-2008, 12:30 PM
But according to how the democrats are going to take the billions of dollars of profits from big oil, they may be a little afraid of Hillary and/or Obama.


But we all know the bird will eventually have to sh!t

correct but please note, the Dems arenít taking profits by cutting there tax breaks. they are making record profits and as such donít need the breaks. in the past the US could subsidize oil to a point to help the economy now its past that point and we might as well start getting our fingers out of the oil pie.

bkkcoh
03-12-2008, 12:35 PM
correct but please note, the Dems arenít taking profits by cutting there tax breaks. they are making record profits and as such donít need the breaks. in the past the US could subsidize oil to a point to help the economy now its past that point and we might as well start getting our fingers out of the oil pie.

But didn't Hillary say they would end the tax breaks and tax some of their profits away from them....

xbarretx
03-12-2008, 12:38 PM
But didn't Hillary say they would end the tax breaks and tax some of their profits away from them....

yes i beleive your correct. i think the spin was tax them to put towards renewables and or alternatives. good call

regardless the oil bubble will continue to grow until it bursts which should be Q4 08 Q1 09. my reasoning is the idea that we should have a democratic pres by that time. McCain wont do crap except help big oil continue its ways just as GWB has got filthy rich over oil.

patteeu
03-12-2008, 12:55 PM
yes i beleive your correct. i think the spin was tax them to put towards renewables and or alternatives. good call

regardless the oil bubble will continue to grow until it bursts which should be Q4 08 Q1 09. my reasoning is the idea that we should have a democratic pres by that time. McCain wont do crap except help big oil continue its ways just as GWB has got filthy rich over oil.

How has GWB (a) helped big oil continue it's ways (whatever that means) and (b) gotten filthy rich over oil?

xbarretx
03-12-2008, 01:15 PM
How has GWB (a) helped big oil continue it's ways (whatever that means) and (b) gotten filthy rich over oil?

(b) im just going by the article i posted and besides Pat, the Bush's have oil connections. thats no secret.

(a)as for continue its ways, i mean selling that we have lots of oil and that peak oil hasnt hit.


Quote:

[Interesting note: The first Iraq war is what made our current President his first millions as he sold his stock the same month his dad invaded Iraq and spiked oil from $18 a barrel in July 1990 to $27 in August. After bankrupting his first company (aptly called Arbusto Energy), in which he was partners with Salem Bin Laden (Osama’s Father) through James Bath (who also worked with BCCI who conducted the largest bank fraud in US history while laundering gun money for George I in the 80s), Junior merged Arbusto with Spectrum 7, became the CEO and bankrupted them. Spectrum 7 was then sold to Harken with the financial help of BCCI’s Kalid bin Mahfouz, who took over for Bin Laden on his death and bought 17% of Harken in exchange for the Bush bail-out which ended up giving him 400,000 shares of Harken stock (Bush was investigated by the SEC but was cleared - how would he know his dad was going to invade Iraq?!?)...]

Anyway, so there was no way our President could have foreseen the impact that invading Iraq (again) would have on the American economy (or his family’s extensive oil holdings) but Goldman Sachs was on top of the situation as they were the largest trader of energy derivatives. Goldman’s 2005 report cited " Thin spare capacity in the energy supply chain, and long response times for bringing on supply additions, as well as robust demand in the United States and in developing heavyweights China and India, despite the recent rapid increase in energy costs."

end quote:

the main point im trying to make isnt lets all gather a Frankenstein-esk mob with torches and pitchforks in hand and head up the the Bush house and make our own version of storming the Bastille. its simply that if we (as in the US) don’t make an effort to get off oil by substantial margins....were just paddling our selves up :cuss: creek and will soon be left without a paddle when oil runs dry.

tiptap
03-12-2008, 04:48 PM
http://www.energyandcapital.com/articles/bakken-oil-production/613

Oil Production in the Bakken

The Bakken oil play stretches across Montana, North Dakota and into Southeastern Saskatchewan. We're talking about some potentially massive reserves of oil, too. The amount of oil in place has been estimated between 271 billion and 503 billion barrels of oil. A recent U.S. Geological Survey (USGS) sets the amount of original oil in place at 413 billion barrels.

Okay, so how much of an oil boom are we talking about?

Even if we take the lower estimates, that's still a huge amount of oil, far more than the 36 billion barrels of oil believed to be in Alaska's North Slope.

Let's just say that North Dakota oil production has been growing significantly. Crude oil production has been strong, up to about 40 million barrels in 2006. That's roughly a 20% increase since 2004.

Although I wanted to keep the topic on the U.S. side of the Bakken play, it wouldn't feel right if I didn't briefly mention the Canadian part of the formation.

As you may have known, I feel the oil sands in Alberta are going to play a significant role in future Canadian oil production. But having said that, remember that the Alberta oil sands are highly viscous and must be heated in order to extract the oil. The process can become quite energy intensive.

Trust me, there's a world of a difference between the heavy oil in Alberta and the light sweet crude underneath the Bakken play in Southeastern Saskatchewan. Now that the Alberta government are implementing oil royalties, trying to dip into oil companies' pockets, Saskatchewan property is starting to look more attractive.

Don't be surprised to see an exodus of smaller oil companies looking to exploit the rich oil resources in the neighboring province.

Investing in Peak Oil and the Bakken


So the question for investors is hoping to get into the action, "What do we do next?"

With an increasing interest in the Bakken oil formation , oil production from both North Dakota and Montana will inevitably increase over the next few years, creating a substantial opportunity for investors.

Now, I'm not trying to suggest that these plays will reverse peak oil in the U.S. After viewing the EIA's figures, there are too many areas in decline to save our oil production.

However, that doesn't mean you need to throw in the towel just yet...

If you're interested in learning about more exciting plays involved in the Bakken formation, please feel free to check out the $20 Trillion Report here.

Until next time,



Keith Kohl




www.energyandcapital.com

I am glad to hear about the Bakken finding. But the estimates of finding oil in amounts like Prudhoe haven't brought the big name oil companies in to drill. And the reason is that they are not of the opinion that those fields are near that big. I hope those wildcatters are right. There is some self service to advance that fields are that big if you already hold the leases. You make your profit by reselling the lease up front and not have the investment in developing the field. And I don't see anyone stopping those guys from looking for that oil.

I am not sure what to make of people bringing up the Alberta tar find. It has to be mined. You know dig it up heat it up and hope the tar melts. Same for when people bring up the Oil Shale in Colorado since it is neither oil or shale. Again we are talking about mining operations.

So ramping up for those sources means investing in the infrastructure to do so. Just like we would re invest in refining installations for newly discovered oil reserves should they be in volume to meet our needs.

I think a more mixed energy source is more viable. The mature industries of oil, Natural Gas, Coal and such have enough presence. But investment in solar and wind and increase in Nuclear renewable sources seems a better decision.

xbarretx
03-12-2008, 06:26 PM
I think a more mixed energy source is more viable. The mature industries of oil, Natural Gas, Coal and such have enough presence. But investment in solar and wind and increase in Nuclear renewable sources seems a better decision.

i agree, clean coal is what we really need. the US has the largest supply of coal in the world im told. but solar/wind/nuclear .... yes those are our current answers :thumb:

Logical
03-12-2008, 10:03 PM
IMHO thats now how you should ask that question. if ... IF IF .. IF the dollar continues its free fall into worthlessness then you bet your sweet biffy baby (my 12 grade english teacher said that all the time) as precious metals are used to hedge against weak currency. so if you feel the dollar isnt done falling then yes .. buy buy BUY as metals now will be a discount in the future as the greenback drops. if you feel were close to the bottom i wouldnt buy b/c the price of gold would drop in comparrison to the greenback b/c you would be buying them at a premium. Note i am not the author of the analysis, im just a MBA student whose taken more than his fair share of economy and finance classes.

Which is why I just invested $250K in various precious metal mutual funds.

xbarretx
03-13-2008, 12:41 AM
Which is why I just invested $250K in various precious metal mutual funds.

shiest man, talk about rolling in the bank. for you to be 250k confident that the dollar has lots of space to continue falling in, id say the US is in for some bad times. im ok with that in the near future providing the f'ers who keep buying up oil lose a crap load when there bubble bursts.

the good news is that in the next decade our students will get to dicuss the dot com bubble and then the housing bubble and then the oil bubble :toast:

bkkcoh
03-13-2008, 09:01 AM
...
I think a more mixed energy source is more viable. The mature industries of oil, Natural Gas, Coal and such have enough presence. But investment in solar and wind and increase in Nuclear renewable sources seems a better decision.


I would agree, but where are the nuclear plants going to be built, nobody wants them in their backyard. It would be interesting to know what France does with the nuclear waste, don't they produce about 80% of thier power with nuclear?

Does solar really produce enough energy to be used on a larger scale?

Windmills can't be placed in certain loacations because of the number of birds that would be killed having to fly in or around the windmills.

xbarretx
03-13-2008, 10:24 AM
I would agree, but where are the nuclear plants going to be built, nobody wants them in their backyard. It would be interesting to know what France does with the nuclear waste, don't they produce about 80% of thier power with nuclear?

Does solar really produce enough energy to be used on a larger scale?

Windmills can't be placed in certain loacations because of the number of birds that would be killed having to fly in or around the windmills.

as for nuclear dont we just bury the used rods in the salt flats?

as for solar, if there were enoguh panels and things were more efficent then of course. i mean dont we get most of our electricity from COAL anyways? it would help offset some of that and less coal transportation means less oil used. can the US ever be 100% off oil? not until it runs out IMHO but can we severly slash our use enough to use our own supplys and not have to import...i say yes. would it cost a boat load and take lots of time yes...but in the end the dividends would more than make up for it.

Logical
03-13-2008, 10:54 AM
shiest man, talk about rolling in the bank. for you to be 250k confident that the dollar has lots of space to continue falling in, id say the US is in for some bad times. im ok with that in the near future providing the f'ers who keep buying up oil lose a crap load when there bubble bursts.

the good news is that in the next decade our students will get to dicuss the dot com bubble and then the housing bubble and then the oil bubble :toast:

True dat, when the oil bubble bursts, that will be a sweet day indeed.

xbarretx
03-13-2008, 03:10 PM
Which is why I just invested $250K in various precious metal mutual funds.

i found you two articles that say were in for a sh?t storm. if you did invest 250k your in for some big gains (knock on wood)

http://money.cnn.com/2008/03/13/markets/morningbuzz/index.htm?postversion=2008031311

and

http://news.yahoo.com/s/ap/20080313/ap_on_bi_ge/diving_dollar

if anything, we know that the "market" is based on emotion ... and going along with what i had origionally stated.....the emotions are no longer sweet. :huh:

xbarretx
03-13-2008, 07:08 PM
and this one ...

http://money.cnn.com/2008/03/13/markets/gold/index.htm?postversion=2008031316

tiptap
03-18-2008, 06:18 AM
I would agree, but where are the nuclear plants going to be built, nobody wants them in their backyard. It would be interesting to know what France does with the nuclear waste, don't they produce about 80% of thier power with nuclear?

Does solar really produce enough energy to be used on a larger scale?

Windmills can't be placed in certain locations because of the number of birds that would be killed having to fly in or around the windmills.


If they would make me energy czar, I would find ways to bring battery and electrical motor driven vehicles out in mass. I think the Big Three can keep up. Federal investment in start ups would be ok. The existing electrical capacity in the grid, AT NIGHT, would be able to charge up the COMMUTING vehicles of daily living. So people would have two cars, but one of them would be electrical for less than 100 mile commutes. Throw in a much larger emphasis on car pooling and we could make a real dent in oil consumption. Next the decade plan would move toward updating building codes to assure energy efficiency and focus on fixing older structures both business and personal homes.

These measures would buy time to ramp up solar cells and passive solar heating. Those sources could add to grid. We already have large buildings that are run on solar electricity using their own roofs. See Federal Express. The nuclear options take time and our success in aggressively pursuing other sources would give us a better limit on the number of Nuclear Plants that half to be built. And the time to negotiate location and the disposal of waste.