[sparky]

Peter Voser, the chief executive of Royal Dutch Shell, told the Financial Times: “We will have a lot of volatility ahead of us that we cannot avoid
... for energy prices in general.”
He added: “We most probably will see a tightening of the supply-demand balance
and hence rising energy prices for the long term. I think we should just get used to that.”

[Cloud9]

No doubt. My wife just informed me that the single largest purchase we have every month is gasoline.

[Unconventional Ideas]

We closed down the carpet cleaning business, and sold our vehicle at the end of June. We feel fortunate not to have to purchase gasoline anymore.

Now we get around by walking, cycling, and public transit. It's a good thing we live in a city that has good public transit infrastructure.

[nobodypanic]

.
Peter Voser, the chief executive of Royal Dutch Shell, told the Financial Times:
“We will have a lot of volatility ahead of us that we cannot avoid
... for energy prices in general.”
He added:
“We most probably will see a tightening of the supply-demand balance
and hence rising energy prices for the long term.
I think we should just get used to that.”

what's he going to say, 'well i think oil prices are going to tumble, so think twice before investing in us'?

[AgentR11]

Well, while it is good , as a producer, for the retail price of your product to rise; it introduces some tough decisions.

If you have a field that you can bring to market, but its amortized cost comes in at $55 / bbl; do you produce it? What about at $75? That could get scary right, price dips a little, and all of a sudden, your two billion a year profit turns into a two billion a year loss.

The tone of the message, seems to me, is that he's telling investors that he is interested in producing those expensive fields, and that they should be prepared to see occasional large, downside risk, as well as irate regulators on the upside when things occasionally pop very high.

In general though, the fact that such a decision might be made should be more than enough evidence that this is what the peak oil plateau looks like; and we best learn to like it, because the alternative isn't $1/gal gasoline.

[The Practician]

I Think it comes down to the new reality that oil below $80 just isn't going to be possible, not if you want increasing or even flat production that can be counted on for the foreseeable future. The industry just can't afford to sell oil at lower prices and continue to invest in crap like tarsands and superdeep.

The scary thing is, that at this point, this is the "best case" scenario for future oil production. It hinges on the economy adapting relatively smoothly to expensive oil that has severe constraints on increases in the rate of production, and decreasing Net EROEI/ROC over time as conventional sources deplete and are replaced by "unconventional" oil. That's not going to happen, at least not starting now.

Personally, I've come to the view that the financial/debt crisis is the bigger, more pressing concern, and that it is going to have to be "resolved" before we really have start worrying about Oil. I don't t Believe we can "extend and pretend" our way to a new energy paradigm, not when the best thing world leaders can come up with is an earnest letter writing campaign to Nicolas Sarkozy, begging him to "pwease fwix da Euopeean ekonomee.". Seriously, if this is the best idea world leaders can come up with, they must have him confused with that other Nicolas...you know, the one that's a Saint. . This does not inspire confidence in things getting better before they get worse.

Only after this major, disruptive realignment, which could play out over a number of years and manifest itself is as yet unpredictable ways, will the world be in any sort position to build an economy around "expensive" oil and other less convenient or concentrated sources of energy.

[Cloud9]

I suspect the two are interconnected. Declining cheap energy ends economic expansion. The resulting economic contraction makes existing debt impossible to sustain. Default will happen. I think the Fed will explode the currency thinking that they can manage the inflation. It is possible that the Tea Party could force austerity on us and save the currency but that is a long shot. My bet is that somebody is going to drop an acorn in this snow drift and their will be an avalanche.

[sparky]

.
don't forget the worst scenario , crude at 20 $/Brl because nobody can afford it anymore
that's a full on , bigger than the thirties depression

[evilgenius]

.
don't forget the worst scenario , crude at 20 $/Brl because nobody can afford it anymore
that's a full on , bigger than the thirties depression

+1

For the life of me I can't see why people, especially here, don't see this. For example I'll cite again my own personal experience. I drive my car for a living. I deliver stuff. I drive a lot of miles. Way back at the beginning of this $5+ a gallon gasoline was becoming onerous. It was to me and to everybody else too. I used to run a thought game wondering how all of those construction workers driving extremely low gas mileage F-250's could make it driving their 'work vehicle' around to do everything other than work. I used to slow down to 68 mph in a posted 75 to save gas. Everybody else was as well. The testosterone behind the wheel of the F-250's was coming undone. The back of that broke on one day, though, and two days later the same station that had been charging $5+ per gallon was charging something like $1.28. The F-250's must have stopped coming. Gas hadn't been that cheap since I was in high school.

[AgentR11]

The problem with comparisons to the depression era, deflation, and prices, is that the currency was on the gold standard, so the thing that moved in the economic equation was the price of goods, based upon how much people have to spend. In our current depression, the currency is fiat, and what the fed is attempting to do is to keep the price of goods stable in the face of what would normally be a reduction in the money available to spend. You see this in unemployment, and the amount of cash reserves that companies feel they need to hold in order to survive what is coming. Without the fed playing with the amount of money available to spend, we'd have long since been in the position of $1 gasoline, but that $1 gasoline being a MUCH larger portion of people's household budgets. And, at this particular job, the fiat currencies have so far performed spectacularly well.

The problem I see with it, is that in a normal depression, its easy to see the total economy brutally contract, know there is a problem, and respond with real determination, whichever solution one might wish to choose. With this fiat mask and tuning, everyone with a fully employed wage earner in their family knows something is afoot, but can blissfully believe that most of the suffering belongs to others, and their own suffering is limited to some odd price changes in food and fuel. There is no way to not notice the distress though, when you head to the grocery store, especially if you choose the "non-trendy" variety of store. [(insert name of a certain high-end 'organic' store) remains an oblivious island of the upper middle class and lesser nobility, for example] Kinda wrenching to wander around the store buying whatever strikes you as interesting while a mom,dad, and baby unit are carefully trying to get as much food as they can for the $8 in their pocket. I prefer the Latino markets and a certain Texas chain that is well subscribed by those on the bottom of the economic ladder, because the produce really does move and is always stuff that is fresh off the truck, so I get a pretty full plate load of this on a regular basis. How else can an upper middle class person or member of the lower nobility respond to this observation, other than "there but by the grace of God go I", and "I need to save more, spend less, because something is f****** up." That is a depression era response... and yet we have low overall inflation, and modest inflation on food and fuel.

Bernanke (ridicule him or not) has performed a miracle of unmatched scale and bravado; but its concerned with a subject so grim that none dare acknowledge the truth of what he has achieved.

And yes, I'm still a right wing extremist, but praise is due where praise is due.

[Outcast_Searcher]

We closed down the carpet cleaning business, and sold our vehicle at the end of June. We feel fortunate not to have to purchase gasoline anymore.

Now we get around by walking, cycling, and public transit. It's a good thing we live in a city that has good public transit infrastructure.

This to me is an interesting issue.

Generally (in my experience and from what I've read) -- the more rural you are, the more your gasoline needs tend to increase. This makes sense.

However, many rural areas have VERY low housing/rent costs. OTOH, if you live in a U.S. city with a great public transportation infrastructure, owning a car may be financially stupid and a hassle. OTOH, your housing costs will tend to be ASTRONOMICAL compared to rural costs.

Am I missing something here?

(Now that good hybrids are starting to appear realistic (I cite Toyota's recent and near term planned offerings), it would seem to me that a modest community with modest housing costs, moderate climate, but a "decent" level of businesses/services in town might be the most economical AND quality of living choice for many people).

[nobodypanic]

"I need to save more, spend less, because something is f****** up."

that exacerbates the problem. insufficient demand to provide an adequate rate of capital expansion can NOT be solved by pulling back on demand even more - a feedback loop is established and it becomes a race to the bottom.

[Fishman]

that exacerbates the problem. insufficient demand to provide an adequate rate of capital expansion can NOT be solved by pulling back on demand even more - a feedback loop is established and it becomes a race to the bottom

and thus the business response to the present administration. Only confidence in an economy will bring about the change in the loop. We've seen Keynesian doesn't instill this confidence. November 2012 will bring about another model, which may or may not work with peak oil.

[evilgenius]

And yes, I'm still a right wing extremist, but praise is due where praise is due.

I didn't realize you considered yourself a right wing extremist. A realist, sure, but.... Are you really or are you trying to make a point about how you can be liberal (in the true sense of what that word is supposed to mean) and still not like Obama?

[AgentR11]

I didn't realize you considered yourself a right wing extremist. A realist, sure, but.... Are you really or are you trying to make a point about how you can be liberal (in the true sense of what that word is supposed to mean) and still not like Obama?

Why be wishy-washy? Besides I like Obama as a person, I just think his policy preferences are ridiculous and very harmful to the future prosperity of the country.

Extremism gets a bad rap. I see little good in only sorta believing in the positions one holds.