Posted: Wed May 21, 2008 11:58 pm Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
BigTex wrote:
I actually think that the U.S. auto industry is going to be booming in a couple of years when they roll out efficient vehicles and everyone rushes to buy them and give away their SUVs and trucks.
Too late for that now. The big three had their chance back in 2002 when they decided to continue with their big SUV policy. They would would have those efficient vehicles now if they were smarter. The whole idea behind PO is the single occupant car is doomed. The true shocker is going to come when Toyoda and Honda start calling for layoffs and closing factories.
Posted: Thu May 22, 2008 12:04 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
BigTex wrote:
Drifter wrote:
Hey Tex, I agree. I just wonder how much 'demand destruction' people can handle in their lives before everything falls apart. That's the big question.
We spend a lot of energy on entertainment. I see that being the first area people are likely to cut without it hurting immensely.
There is a lot of just aimless driving around that will be reduced.
It will probably be easier to reduce consumption in the U.S. than in Europe because we have so much more waste that can be eliminated.
This whole "summer driving season" business is not essential. People can just stay home.
In other words, I think there is a lot of demand destruction that WILL occur without it being the end of the world. The problem is going to be when even with that demand destruction prices remain high or even continue rising because of either declining production or continued increases in demand in other parts of the world.
Well said, Tex. There is a lot of wasteful fat that can be cut. But unfortunately that 'fat' is 80% of the total US economy- consumer spending. Once all that fat is cut out, then TSWHTF.
Joined: Feb 27, 2008 Posts: 57 Location: Washington State (US)
Posted: Thu May 22, 2008 12:30 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
BigTex wrote:
Frankly, this is exactly what we need. I have been watching wasteful uses of energy for years and will be happy to see a lot of it stop.
One example is big trucks idling at truck stops 24 hours a day. That's ridiculous.
Some of those may be refrigeration trucks so it isn't exactly the pinnacle of wastefulness.
On the other hand, I was strapping a few things to the back of my motorcycle outside home depot the other day, and all the while there was a car in the spot across from me just idling -- it was idling when I got to my bike and idling when I rode off. It was sort of a hot day for us -- maybe 75 or so -- but still -- to just sit in the car with the AC running is crazy wasteful and has to be CO risk as well.
A couple weeks ago I was in my car and stopped at Taco Hell -- drive through. I always turn off my engine while sitting there and waiting (good idea or not I don't know). Anyway, it took ten minutes for me to get through. There were 6 cars in line with me (ahead and behind) -- how much gas was burned just waiting to nudge forward six feet? Sidenote -- people seem to get real antsy behind you if you don't ride the bumper of the car ahead. Me, I'll kinda sit there till the ordering slot is open -- it isn't like nosing ahead every inch the second it comes available will make the process shorter.
Posted: Thu May 22, 2008 12:38 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
Quote:
I actually think that the U.S. auto industry is going to be booming in a couple of years when they roll out efficient vehicles and everyone rushes to buy them and give away their SUVs and trucks.
OK... and what about all these car makers in Japan and Europe which know much better making fuel efficient cars yet? I doubt that the big 3 have any chance against fiat renault daihatsu etc....
I really do think that the inventory up and down play a minor role in the current price race. It's more that some of the big prophets have announced prices of $150 or $ 200, and that PO goes mainstream.
And, that many countries have to admit that they can't pump more.
The US is not the center of the world and even if demand destruction is happening in the US, there is stil China and India with booming economies. Demand destruction happens when those economies stop to boom for whatever reason.
Joined: Aug 03, 2007 Posts: 3129 Location: Boston Suburbs
Posted: Thu May 22, 2008 2:50 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
They don't call it the long emergency for nothing. Demand destruction might buy some temporary relief only. It's going to require a continual adaptation (the powerdown).
Posted: Thu May 22, 2008 3:16 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
Oil is moving because your government increased its inflation forecast to 3.4%. _________________ People first, then things, then dollars.
There will be enslavement & cannibalism.
Posted: Thu May 22, 2008 3:20 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
Quote:
Oil prices surged past the $135 a barrel mark today, after a warning from the International Energy Agency that global supplies could fall short of demand over the next 20 years.
Light, sweet crude for July delivery reached $135.04, representing a 40 per cent increase so far this year.
Oil prices have set new records in 10 of the last 14 trading sessions.
Sharp increases like these have not been seen since the first Gulf War and followed unexpected drops in US crude and gasoline stocks.
British Airways shares fell below £2 for the first time in almost five years, on concerns over the soaring cost of jet fuel.
Bleak economic news from the Federal Reserve, which increased investors concerns about rising costs and a shaky employment picture, also encouraged investors to seek out oil.
Prices have been threatening to break through the $130 barrier for the past few days amid fears that oil producing cartel Opec is unwilling to increase production and help bring down prices.
Now it has emerged that the IEA, the Paris-based agency which was set up during the 1970s oil crisis to monitor the oil market,is preparing a sharp downward revision to its oil-supply forecast, after a comprehensive attempt to assess the condition of the world's top 400 oil fields.
The IEA’s findings will not be released until November but early findings suggest that future crude supplies could be far tighter than previously thought.
“The oil investments required may be much, much higher than what people assume,” Fatih Birol, the IEA’s chief economist and the leader of the study, said. “This is a dangerous situation, ” he added.
For several years, the IEA has predicted that supplies of crude and other liquid fuels will increase steadily to keep pace withrising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently.
Concerns over future availability of oil have been reflected elsewhere. Goldman Sachs, the investment banks, has said that there could be a major shortage of oil over the next 10 years, which could see the price soar to $200 a barrel.
Goldman is advising clients, including airlines and haulage firms to buy oil supplies now for delivery in eight years time, to insulate themselves from further increases.
Following a month of almost daily price rises, petrol in the UK currently costs on average £1.13 a litre.
British motorists will see the impact of the latest increase feed through to the forecourts in the next four to six weeks. They have already experienced the highest monthly leap in diesel prices this decade following oil’s steady rise, according to the AA.
The motoring organisation said that between mid-April and mid-May the average price of diesel rose 6.76p to 124.17p a litre. The previous record rise - of 5.6p a litre - occurred between October and November last year.
Since early last week, the price of petrol has risen 1.73p a litre while diesel has gone up 2.66p.
Edmund King, AA president, said: “With many UK families embarking on their holidays next week, the timing could hardly be worse.“
"What alarms us most is the stream of comments coming from the industry and producers saying that oil is over-priced - the finger of blame being pointed at market speculators," Mr King said.
He added: “Oil prices have doubled since last year and this is not just due to strong demand from China and other nations. While huge profits are made in the financial centres, an increasing number of car owners are becoming desperate and businesses suffer from the hit on consumer spending.”
Crude oil prices for longer-term delivery contracts have risen further amid the supply concerns. Contracts for delivery in December 2015 have risen to 139.48 dollars a barrel, signalling the long-term fears that demand will outweigh global production
Earlier this month the Ernst & Young Item Club said it was not unreasonable to assume prices would continue to rise over the coming years, because factors driving the increases are not going to disappear. Hetal Mehta, Item club economist, said: “There is a major mismatch between supply and demand. Opec members appear unwilling or unable to raise their output whilst the thirst for oil, particularly in developing countries, appears to be unquenchable.”
Posted: Thu May 22, 2008 3:44 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
Novus wrote:
Too late for that now. The big three had their chance back in 2002 when they decided to continue with their big SUV policy. They would would have those efficient vehicles now if they were smarter. The whole idea behind PO is the single occupant car is doomed. The true shocker is going to come when Toyoda and Honda start calling for layoffs and closing factories.
I can't wait for Toyoda to
layoff workers and close it's factories
Joined: Dec 07, 2005 Posts: 1741 Location: Australia
Posted: Thu May 22, 2008 4:00 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
Current July contracts;
US Light Sweet $134.73
Brent $134.84
What is interesting here is that Brent once again have caught up and surpassed US. Brent is generally considered less speculative and have more traders who actually take delivery.
Wonder if this is sending a sign that the price isn't so much based on speculation as many think (I don't mean here at PO). _________________ Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys
Last edited by Micki on Thu May 22, 2008 5:01 am; edited 2 times in total
Posted: Thu May 22, 2008 4:20 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
alokin wrote:
The US is not the center of the world and even if demand destruction is happening in the US, there is stil China and India with booming economies. Demand destruction happens when those economies stop to boom for whatever reason.
With stagnant global supply - a zero sum game -, only way for China and India to satisfy their growing demand is demand destruction elsewhere, especially in US. The number I've seen is 4% demand destruction in US. Sounds like Depression.
Posted: Thu May 22, 2008 4:22 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
DantesPeak wrote:
Refineries have stepped up production recently, thus using more oil. Imports are down 250,000 bpd this year.
Small changes in supply/demand can eventually push inventories below the minimum operational levels needed for the smooth functioning of the oil/oil product delivery/refining network.
Dantes,
I recall you and pup guessing at what the minimum operational levels might be to keep the pipes supplied and pumping across the U.S
Can you tell me what you thought they might be and were they gasoline or crude?
And also the circumstances that might drag us closer to those numbers over summer.
Joined: Dec 07, 2005 Posts: 1741 Location: Australia
Posted: Thu May 22, 2008 5:03 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
What happens then? Water injection in pipelines? _________________ Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys
Joined: Aug 03, 2006 Posts: 4070 Location: Graceland
Posted: Thu May 22, 2008 7:19 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
To expand on some of my earlier posts a little, in the short to medium term, I see high oil prices in the U.S. as sort of a "stupid sponge", soaking up dumb behaviors like idling, running the air conditioner whether anyone is home or not, and that sort of thing.
I also think that the high end heating and air conditioning companies like Carrier, Lennox and Trane will do great because I have to think that the sales of their ultra-efficient (and expensive) units will increase as electricity gets more expensive. _________________
Joined: Apr 06, 2006 Posts: 2955 Location: 3 miles NW of Champoeg, Republic of Cascadia
Posted: Thu May 22, 2008 8:40 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
From the National Petroleum Council. This is for crude oil. Gasoline is estimated to be around 170 mb. _________________ Cogito, ergo non satis bibivi
I'm just gonna find a cash machine.
Posted: Thu May 22, 2008 9:04 am Post subject: Re: Oil Rises Above $135 - Unexpected Drop in U.S. Inventori
TheDude said:
Quote:
Gasoline is estimated to be around 170 mb.
That number is 15 years old! It doesn’t take into consideration that LOI is not just a function of inline storage (amount to the fill pipe) but also the rate at which withdraw from that storage occurs. (Queuing Theory 101). Actual gasoline LOI is probably now about 187 mb.
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