For Big Oil, a Day of Reckoning

Oh God we are going to die!

Fellow Americans (who actually pay taxes and work hard for a living), the more the Wall Street and oil mafia try to pump prices up, the more you should cut back. It's time to use our power as consumer, since our vote doesn't count anymore. Let's bring all this mafia to their knees. Stop investing in the rigged stock market and cut back a lot in fuel consumption. The recent Israeli/Hamas conflict is nothing but a cheap attempt to raise oil prices. The shady group buy puts and then creates a conflict to cash in. Every company that got a bailout should be boycotted by you. You have the power in your wallet, since our government doesn't work for us any longer.

Nowhere to hide with 'mark to market' valuation rules whether in derivatives or in commodities like oil.

If that is how the cookie crumbles so be it.

It’s not that simple. The short term never portrays the long term in good light. On the one hand, provided there are no new conflicts in the world’s trade routes from 2009 thru 2011, the recession, the end of the Bush term and the Iraq war will reduce the risk premium and price of petroleum. Conversely, we still love our gas guzzlers! This month, the sale of SUVs exceeded the sale of small cars for the first time since February 2008. In 2008, high oil price reduced the demand for petroleum product. Demand shifts led to a downward spiral in price. In 2009 and 2010, low prices will reduce supply and increase demand. Increased demand in the face of reduced supply will eventually lead to higher prices. In the long term, the recession is not here to stay - it will bottom out someday. Have you seen the global population forecasts? Have you heard of the burgeoning consumerist culture in Asia and South America? Oil is a depleting resource with ever increasing utility and demand. For now, conservation is the exception, rather than the norm. I would love to predict oil prices for 2009 or 2010, but I’d rather keep my oily fingers crossed.

The run up on oil was a farce. A few months ago, there were ecologists, and oil "experts" showing charts and graphs on every news channel explaining how the world's oil supply had peaked, and we were just going to have to live with $4+ a gallon gas FOREVER. Now, it seems there is plenty of oil, oversupply in fact, and the experts are nowhere to be seen. Here's my prediction. What happened over the past two years will happen again. When you have any non-renewable commodity that the entire world thrives on, SOMEONE will figure out how to scare the world into thinking it's running out, and make a financial gain on that information. Wall Street commodity traders that made these dire forecasts on oil supply were also the ones trading oil...
Now is the time to pull this oil needle out of our arm, and move forward into alternative power sources. If we don't, the big oil companies, and oil producers will again figure out a way to jack up the price of oil yet again.

As Azeez suggests, there are signs here are there of a springing back of the demand rubber band, and I wonder when we will see more. We know now that $4-a-gallon gasoline was the inflection point at which motorists seriously cut back driving. So what is the other-end inflection point -- at what price on the low end do motorists return to their serious gas guzzling? For those like me who witnessed the gas lines and frenzy of the 1970s oil crisis, one can be forgiven for skepticism as to whether Americans have learned their lesson and cut consumption permanently.

If big oil, and speculators, hadn't pushed prices so artifically high, they wouldn't be crying now. They cut their own throat, and think we should feel sorry for them now. What a joke.

It appears folks are not paying attention. It is pretty clear that the significant cutback on usage (demand) drove the prices of oil (and its refined products) down. However, with the drop in prices, observation indicates that conservation is no longer the most important item. Witness the increased speeds at which a larger and larger majority of drivers are driving.

Folks are also not reading some of the significant comments made by oil company higher-ups. More than one indicated that one of the primary selection criteria for choosing a project to develop is the price of oil at which the project will be profitable. The projects deemed profitable at oil prices in excess of $100 per barrel were taken out of consideration becaue oil companies were more concerned about LOW oil prices, not high oil prices.

If one does their homework, and takes the financials apart, one can see that the profit per barrel of oil, or per gallon of gasoline, when expressed as a percentage of the underlying futures price, was better when the oil price was LOW (circa 2001), rather than when it was high (circa July 2008).

Alternative energy is a nice idea, but using the analogy of building a house, you can't build the second floor of a house without a solid foundation, and a solid first floor. Some simple examples make this clear:

1 - A sizeable majority of the vehicles sold in the US are not flex-fuel capable, and there is no requirement, or pending requirement, for automakers to produce such vehicles.
2 - Plug-in hybrids are nice, but the power grid in the US may very well not be capable of handling 250,000 plug-in hybrids during a 14-day heat wave. If you work for me, you better charge your plug-in hybrid rather than your air conditioner during that heat wave.
3 - The distribution infrastructure for alternative fuel (liquid-ethanol or gas-hydrogen), is not in place nation-wide. To that end, E85 gasoline is simply not available in large areas of the country, even if one could purchase a vehicle that could use it.
4 - Solar power is a nice idea, but if one has to cut down trees to have solar power, the 'green-ness' of the solar power is partially, or completely, offset. The cost of reasonably simple home solar power generation is out of reach to the average American.
5 - Until you can take coal/natural gas/oil fired power plants off line PERMANENTLY, alternative generation methods are a footnote to overall power demand.

If you want to make a difference, drive like gasoline was still $4+ per gallon. Use lights like power costs four times what it costs today, and use heating resources like they too costs four times what they cost today.

There's a natural tendency toward equilibrium: if apparent reserve replacement goes down, then prices will rise. This will increase apparent reserve replacement next year. And so it goes.

Another rash of hype from the media, whose job it is to invent stories.

I think the key statement in the article is that "Russia, Venezuela, Iran and most of the rest of the oil producing states simply cannot balance their budgets."

Like politicians everywhere they tend to spend much more than they make in revenue. When the froecast looks good for continued $147 a barell oil, they spent like it was a given thing. Now they can't seem to balance their budgets. As a result, cuting back their production will not help because the need the money now. therefore they will stab each other in the back and cheat on production (like the saudi's alwys do) in order to sell more to get the revenue they need.

What disturbs me is the fact that SUV sales have increased now that the price of gas has gone down. How soon we foreget. If anything contributes to rising gas prices it will be increased demand by morons driving tanks around the block to pick up a loaf of bread or a six pack of beer. EDNews is right--we need to conserve like we did last summer and whenever the price starts to go up we need to cut back even more. consumers control our own destiny--except for government imposed taxes.

"Stop investing in the rigged stock market"

Rigged is RIGHT! The stock market is out of control. The government is conspiring with big businesses to rob you blind. There are no more controls or safeguards in the market anymore. Look what has been happening. Greed is runnning out of control and if you invest in this market you will lose. Pay attention people. The facts are there. Wake up! How does one man walk away with $50 billion of investors hard earned money? He didn't do it alone. He will get a slap on the wrists and be able to keep the money. Wake UP!

Don't worry, these big oil companies stashed away a lot of cash during those high prices of oil. Even @ $40 per barrel now, these oil titans still make profits-- if not $20 billions per quarter but might be around $5-$7 billions.

I've been riding a motorcycle for about two thirds of all my road miles for the past 31 years. All this hysteria about the price of oil and gas could be ended permanently if only about 15% of Americans chose the joy of motorcycling instead of the dreariness of commuting in a tin can.

Article is waste of typing, hosting and reading - in sum, the writer estimates - based on the Big Oil estimates - that the banks may or may not loan Big Oil money? Does anybody think Big Oil is in trouble? Really. Still looking for news that means something and conserving.

Dear Friends,

Although you will not read/hear about it for some years in the media, the top story of the year is that global crude oil production peaked in 2008.

The media, governments, world leaders, and public should focus on this issue.

Global crude oil production had been rising briskly until 2004, then plateaued for four years. Because oil producers were extracting at maximum effort to profit from high oil prices, this plateau is a clear indication of Peak Oil.

Then in July and August of 2008 while oil prices were still very high, global crude oil production fell nearly one million barrels per day, clear evidence of Peak Oil (See Rembrandt Koppelaar, Editor of "Oil Watch Monthly," December 2008, page 1) http://www.peakoil.nl/wp-content/uploads/2008/12/2008_december_oilwatch_monthly.pdf. Peak Oil is now.

Credit for accurate Peak Oil predictions (within a few years) goes to the following (projected year for peak given in parentheses):

* Association for the Study of Peak Oil (2007)

* Rembrandt Koppelaar, Editor of “Oil Watch Monthly” (2008)

* Tony Eriksen, Oil stock analyst and Samuel Foucher, oil analyst (2008)

* Matthew Simmons, Energy investment banker, (2007)

* T. Boone Pickens, Oil and gas investor (2007)

* U.S. Army Corps of Engineers (2005)

* Kenneth S. Deffeyes, Princeton professor and retired shell geologist (2005)

* Sam Sam Bakhtiari, Retired Iranian National Oil Company geologist (2005)

* Chris Skrebowski, Editor of “Petroleum Review” (2010)

* Sadad Al Husseini, former head of production and exploration, Saudi Aramco (2008)

* Energy Watch Group in Germany (2006)

Oil production will now begin to decline terminally.

Within a year or two, it is likely that oil prices will skyrocket as supply falls below demand. OPEC cuts could exacerbate the gap between supply and demand and drive prices even higher.

Independent studies indicate that global crude oil production will now decline from 74 million barrels per day to 60 million barrels per day by 2015. During the same time, demand will increase. Oil supplies will be even tighter for the U.S. As oil producing nations consume more and more oil domestically they will export less and less. Because demand is high in China, India, the Middle East, and other oil producing nations, once global oil production begins to decline, demand will always be higher than supply. And since the U.S. represents one fourth of global oil demand, whatever oil we conserve will be consumed elsewhere. Thus, conservation in the U.S. will not slow oil depletion rates significantly.

Alternatives will not even begin to fill the gap. There is no plan nor capital for a so-called electric economy. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment. The independent scientists of the Energy Watch Group conclude in a 2007 report titled: “Peak Oil Could Trigger Meltdown of Society:”

"By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame."

With increasing costs for gasoline and diesel, along with declining taxes and declining gasoline tax revenues, states and local governments will eventually have to cut staff and curtail highway maintenance. Eventually, gasoline stations will close, and state and local highway workers won’t be able to get to work. We are facing the collapse of the highways that depend on diesel and gasoline powered trucks for bridge maintenance, culvert cleaning to avoid road washouts, snow plowing, and roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, large transformers, steel for pylons, and high tension cables from great distances. With the highways out, there will be no food coming from far away, and without the power grid virtually nothing modern works, including home heating, pumping of gasoline and diesel, airports, communications, and automated building systems.

It is time to focus on Peak Oil preparation and surviving Peak Oil.
http://survivingpeakoil.blogspot.com/
http://www.peakoilassociates.com/POAnalysis.html

Wildly fluctuating oil prices are real but artificial at the same time. The price will oscillate around its production value.
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Easy housing credit led to melt down and tight credit. This will loosen soon.
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A US trade deficit means getting somthing for nothing - until the value of the dollar drops. Then, really hang on to your pants.