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Bad News Coming in Bunches, With No Let-Up in Sight
Sadly, we have self-interested, fraudulent, incompetent, ignorant boobs running our government and private sector. 95% of them are just crooks.
Unless the American public's apathy turns to empathy and we demand better than we have we are doomed to disintegrate into a bankrupt 3rd world country.
Where Have All the Peak Oil Believers Gone?
Annual consumption is approximatley 31.5 billion barrels (assuming consumption of 86mmbod). Mathematically we have 33 years of reserves, however realistically we have less than 20 years of reserves left on the planet. Each year, without major discoveries oil production will decline 3-5% and consumption will increase by the same %.
Say what you want about peak oil but it is here now.
At current prices there will be little incentive to drill the deep mega-expenisve offshore and Alaskan wells necessary to supplement our needs going forward. Current prices will also inhibit the pursuit of renewable energy sources. Let OPEC have their make believe production cuts but over time it won't matter at all.
So, for the time being, enjoy lower gasoline prices and get back in those gas guzzling SUV's because in the near future the party will end badly.
Oil Production on the Rise
The Bakken shale my have 271 billion barrels of oil in place but less than 10% is recoverable by current technology
Oil Production on the Rise
The Oil Bubble Will Meet the Same Fate as Tech, Housing
The year 2020:
1 billion cars on the world's roads versus 450,000,000 now.
1 billion middle class people on the planet that want all the amenities the middle class (although shrinking) here want.
World oil consumption reaches 115-117mmbopd. No way will production keep anywhere near that.
Tens of billions spent on alternantive energy which, at best, could back out 3% of hydrocarbon consumption.
We still wont have one additional nuclear plant which is by far the most potent alternative energy source and could back out hyrdrocarbon consumption by 25%
We still wont have an energy policy due to the continuing disintegration of the quality of people in Congress
If oil companies started the process of drilling on offshore and nature preserves we still wont have one drop of that oil by 2020
Conclusion:
If a viable alternative for hydrocarbon consumption is found but yet not discovered we will be looking at $200 oil not far in the future
Comparing the dot.com tech bubble and the housing bubble to an oil bubble is ridiculous. The vast majority of the dot.com tech bubble was caused by unworkable or nonexistant business plans, outright lies and fraud by the so called tech analysts (and you know who they are) and stupidity. In a dot.com tech all the assets go home at night.
The housing bubble was caused by a symbiotic and illegal relationship between lenders and borrowers and our former esteemed Fed Chairman, Mr. Greenspan.
Oil on the other hand is a worldwide finite and consumable commodity which will be with us for decades to come in diminishing supply.
This temporary volatility in oil prices will eventually subside and will continue it's upward climb.
The Death of Natural Gas
Nat gas has been struggling to make the 10:1 ratio and I do believe it is because of the geopolitical premium in oil at this time. Accordingly I do believe the fair market price of oil should be $100-110 putting it right where it should be according to the 1967 CPI index.
Hedge fund activities and speculators have a short term,and as we see currently, an extreme effect on price volatility but over time they have no effect in the market because they never take delivery.
Want to Profit from Sky-High Oil? Avoid the Majors
Redbaron is on target with majors reserves heading south sooner or later (I think sooner) they will come a calling for names such as chk,dvn,apa,hk to name a few.
It is much more important for these majors to book reserves whether through the drill bit or by acquisition than what they pay for these reserves. When was the last time we heard of a major's large discovery other that Chevron? 5yrs ago, 10yrs ago?
Oil Price: $100 Before $150 - But $200 Before $50
Demand destruction will not back out more than 1% of consumption here as oil demand continues robust around the world.
You won't see $100 oil ever again.
Oil at $140/Barrel: Justified or a Bubble?
I do believe the poster meant 3mmbopd a day not a year.
In any event by the year 2020 the world will consume 120mmbopd with production much less irregardless of the Petrobas and Chevron discoveries. Matt Simmons, a brilliant oil analyst for nearly 30 years, states that the Saudi's are already stretched productionwise and cannot produce 1 more barrel of oil.
We either will find an alternative to back out some of the world's oil consumption or by 2025 armed conflicts will rearrange the ownership of the dwindling oil reserves.
Goodrich Petroleum: Gas in the Ground Doesn't Mean Cash in the Bank
I also own chk stock long term and we are in good company with CEO McClendon who owns 32.5million shares, most of the shares bought on the open market..
Chk is the creme de la creme of the nat gas producers and explorers.
Oil: If It Looks Like a Bubble...
Trying to micro-analyze the current runup of oil prices is an exercise in futility. The future is bleak for oil consuming nations, especially ours. There will be no viable alternative energy either commercially viable nor economically feasible except nuclear within the next 12 years. The "Three Mile Island" syndrome will prevent the building of nuclear facilities for many years to come.
Within the next 25 years there will be armed conflicts over dwindling oil reserves. I predict that the US, China, Russia and the EU will take over the middle east oil fields either peacefully or through armed conflicts. The middle eastern Opec nations have had a good run but they will not be able to control the destiny of the major economic and militarily powerful countries much longer.
3 Aspects to Pricing Oil
If speculators are at least partially responsible for the runup in oil prices why are the outer contract months almost always in backwardation and rarely in contango?
The speculators rarely if ever take delivery and over time that is proof that speculators play virtually no part in the pricing of oil.
The reason for oils runup is supply and demand and geopolitical risks.
By 2020 oil consumption will exceed 120mmbopd and I suspect production will be considerably less.
I would like to hear some dissenting arguements to this theory...
Thank you
Oil Price Implications of a Strike on Iran
Oil's Supply and Demand
There is no chance that production will ever exceed 100mmbopd within that time frame.
Oil will surge well past $200bo and in all probability create economic chaos and even armed conflicts to control the world's declining oil supplies.
I am not optimistic that our government, whether now or in the future, has a clue what lies in store for us. What we need is a Manhattan Project to develop viable alternative sources of energy.
Hayward and Butler Comment on Speculation in Oil Markets
There are somewhere between 400 and 500 million cars on the world's roads now with an expected 40 million cars added annually. Trying to micro analyze oil price directions is an exercise in futility. Over the next 25 years oil prices will well exceed $250bbl and the possibility if not the probability of armed conflicts will occur over oil.
Speculators have nothing to do with high oil prices. It is all about supply and demand. To further this arguement if speculators were somewhat responsible you would have futures contracts in contango and not in backwardation for the last several months of the runup.
Oil is the new international currency and will be for the foreseeable future.