I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Joined: Feb 20, 2005 Posts: 2880 Location: Uppsala, Sweden
Posted: Sun Oct 12, 2008 10:49 am Post subject: Re: Another Record ($147.27)
Gentlemen, some perspective please.
In the summer of 2007 the price peaked at $78.40 IIRC, which afterwards was seen as far too high. That's where we are now. _________________ Peak oil is not an energy crisis. It is a liquid fuel crisis.
I think he may be right about the demand going down, but that's just because the financial system has collapsed.
Oil could cost $2 a barrel, but with nobody able to borrow money nobody's going to buy it.
It's getting interesting, that's for sure.
This could easily happen. The other possibility is that so many small and medium sized producers, distributers, etc... go out of business, that supply falls more sharply than demand. Prices could head back up, marginally, even in a deflationary blow off, and then shoot through the roof, in the inflationary long term. A lot depends on the strength of the dollar, too.
Cheap energy may turn out to be the biggest short term head fake out there. But 200.00 per barrel oil is highly unlikely, too, barring a true hyperinflation, where the cost of commodities triple or quadruple.
Joined: Feb 20, 2005 Posts: 2880 Location: Uppsala, Sweden
Posted: Mon Oct 13, 2008 9:07 am Post subject: Re: Another Record ($147.27)
Consider this: if oil prices are higher during a financial meltdown than they were one year earlier when all was hunkey dorey, is this not an extremely strong sign that the supply situations is extremely tight? _________________ Peak oil is not an energy crisis. It is a liquid fuel crisis.
Joined: Jun 29, 2008 Posts: 88 Location: Great Britan
Posted: Tue Oct 14, 2008 3:25 am Post subject: Re: Another Record ($147.27)
I am calling a bottom at $77.50. $110 before the end of the year... you heard it here first. _________________ The history book on the shelf, is always repeating itself.
Posted: Tue Oct 14, 2008 9:24 am Post subject: Re: Another Record ($147.27)
Starvid wrote:
Consider this: if oil prices are higher during a financial meltdown than they were one year earlier when all was hunkey dorey, is this not an extremely strong sign that the supply situations is extremely tight?
Aye, and at such a time as year-over-year demand has fallen more rapidly than anyone but bird-flu-doomers were predicting. _________________ At 1% annual growth, human bodies will incorporate every gram in the observable universe in approximately 10,170 years.
Posted: Tue Oct 14, 2008 11:47 am Post subject: Re: Another Record ($147.27)
I don't think we'll see over a hundred by the end of the year, but we may see over $150 next year if the recession isn't too bad. All those people getting Tatas will need to fill them. _________________ Deep in the mud and slime of things, even there, something sings.
Joined: Feb 20, 2005 Posts: 2880 Location: Uppsala, Sweden
Posted: Tue Oct 14, 2008 1:33 pm Post subject: Re: Another Record ($147.27)
Revi wrote:
I don't think we'll see over a hundred by the end of the year, but we may see over $150 next year if the recession isn't too bad. All those people getting Tatas will need to fill them.
I have this very rough model describing how I see the future price of oil, which I didn't invent. It's called the crocodile jaw graph.
You have two straight lines, both starting at x=0, y=something in the middle of the graph (representing 85-86 mbpd).
One, the demand line, slope upwards and the other, the supply line, slope downwards. Go a decade or two along the x-axis and the jaw is big enough to swallow half a dozen Saudi Arabias.
This is the worst, or best, case, depending on your perspective.
Now, demand might flatten because of a recession. This is what is happening. The upper part of the jaw becomes horizontal. The upward push on the price of oil is weakened, but it sure as Hell is still there.
Then, we might get lucky with supply. We might not peak for another 10 years and we might even increase production by 5 mbpd, or by almost 10 mbpd. Then the lower jaw closes, but the upper jaw is still open and the pressure remains.
The one thing that could ease the pressure on oil, maybe even drive it down a lot, is if both jaws close at the same time, for a prolonged time.
But given the Asian growth story and the oil supply issues we're facing, I really don't see this as a probable, though a possible, outcome.
This is a very rough prediction, but as Nicholas Nasim Taleb tells us, it's really freaking hard to predict the future with any kind of certainty. And when we look back at those who have tried previously, even the smartest have failed horribly and repeatedly, Hubbert excluded. Maybe because he didn't try to predict dynamic social processes (the economy) but something *relatively* straightforward, the strictly physical behaviour of oil in the ground (something which ROCKMAN reminds us is in itself an extremely hard and unpredictable business). _________________ Peak oil is not an energy crisis. It is a liquid fuel crisis.
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