There is not a shortage of oil!

[whyverne]

Scream it from the rooftops!
There is no oil shortage.
There are no lines at the gas stations.
There are no gas stations without gas.
The Repukes are convincing people that the Dems have blocked drilling and that's why the price of gas is is so high. And many Americans are so ignorant of how capitalism works that they are believing it. This is the unfettered free market. This is supply and demand. A barrel of oil from the Middle East is worth $140+ and a barrel of oil drilled in America is $140+. That's the going rate.
Supply does not determine price. Whatever the market will bear determines price. The only way that supply influences price is if there is a glut on the market. America, with only 3% of the world's known oil reserves is not about to glut the market.
Demand determines price. The only way to bring the price down is to stop buying it.
So repeat this as often as you can. Oil drilled in Alaska will cost $140 a barrel. Oil drilled off-shore will sell for $140 a barrel. Oil pumped out of your Grandma's petunia garden will still be worth $140 a barrel.
It's such a Repuke canard. They're mad about not drilling in ANWR because they could be selling it for $140+ per barrel. That's what they're mad about.
I wish someone would just ask McCain; "Why will drilling off-shore bring the price down?" Oh,that's right, he doesn't know much about economics. His likely answer, "Well, my friend, the American people think it would."

[ThatsMyBarack]

1. Well put!

:kick:

[Mz Pip]

2. Why didn't the Repugs

try to drill in ANWAR, lift offshore drilling bands and expand drilling in the US when they controlled the House, Senate and Presidency?
Seems they had their chance or really didn't want to do it in the first place.

[oldtime dfl_er]

3. You speak the truth!

Thank you!

[elocs]

4. Well, there are millions of Peak Oil types that do not agree with that assessment.

Either way, it will be interesting when the billions in India and China demand their fair share of the world's oil compared to our 300 million in the U.S. That kind of demand should do unpleasant things to the price of oil.

It's too bad that one of our domestic carmakers did not have some vision and foresight when it came to making economical vehicles. No, like sheep they all went after the same market that lusted after the big SUVs and trucks. Can you imagine if in at least the last decade that GM had said "Screw it! We're going to make small, fuel efficient cars and develop hybrids and electric". They would be sitting in control now, but no, they went down the garden path with the rest of them. Even Toyota started making a big truck.

[nadinbrzezinski]

7. Problem is that peak oil and market manipulation are not mutually exclusive

[havocmom]

58. BINGO!

Oil IS a finite resource. We are fresh out of dinosaurs and getting damned low on loads of vegetation rotting under extreme high pressure.

[Joe Fields]

45. don't confuse Peak oil to mean that we already have shortages.

[Subdivisions]

78. THERE ARE SHORTAGES! GOSH!

If you would just look beyond the borders of the West, you'll find PLENTY of shortages of both food and fuel. You'll find resources wars. You'll find pestilence. You'll find death. You'll find famine. You'll find your worst fucking nightmares.

And guess what? When oil becomes too expensive for US to afford, those nightmares WILL BE VISITED ON US! Get a fucking clue.

[Leopolds Ghost]

100. How many people on DU have watched _Darwin's Nightmare?_

http://en.wikipedia.org/wiki/Darwin%27s_Nightmare

[99th_Monkey]

5. Corporate monopoly price-fixing is nothing new.

it's just new that people are so brainwashed into tolerating it from the oil companies now.
http://www.washingtonpost.com/wp-dyn/articles/A28456-2004Oct12.html

[havocmom]

59. And while we are wringing our hands over oil, same corporate criminals are securing water and food.

We CAN live without our cars. Food and water? not so much.

[Speck Tater]

6. Poor countries are having LOADS of gas and diesel shortages

But in typical American fashion, "if it's not happening in my neighborhood, it's not happening at all."

"Just you wait, Henry Higgins. Just you wait."

Time will tell.

[whyverne]

10. But that's not an oil shortage, that's a cash shortage

much like I couldn't afford to fill my tank this week.

[nadinbrzezinski]

12. Look at PEAK OIL charts

just google it

Yes, we are running out of CHEAP OIL and it is GETTING MORE EXPENSIVE to take it out of the ground

There is also quite a bit of market manipulation, but peak oil, just like global warning ARE REAL

And you will soon suffer those effects in the good ol' US of A

Hold it, you already are

[thecrow]

22. Don't forget the fact that the dollar is worth about HALF of what it was

[tama]

32. Wrong

It's physical shortage. E.g., there is no shortage of cash in China and demand is rising for heavily subsidized oil. Demand is not being met by supply -> shortages. Same story from many places with subsidiced prices. Whole northern Pakistan currently without gas. Closest place to you where physical shortages are now happening: US/Mexico border as US drivers buy loads of cheaper gas on the other side of the border.

Where no subsidies but market prices - or higher with tax on top - demand destruction taking place, as in your case. Also many gas stations in US getting out of the business, as they cannot afford to fill their tanks.

Global net exports of oil dropping since 2005:
http://netoilexports.blogspot.com/

[Extend a Hand]

8. WRONG!

There is a shortage of oil
There ARE serious shortages of diesel and cooking fuel all over the world

We haven't experienced gas lines and shortages because the world oil supply is being rationed by price...rich countries like the US are driving at the expense of poor countries who now can't afford cooking and heating fuel.

You are correct that Repukes will try and use high gas prices to allow further destruction of wilderness and coastlines but We can't drill our way out this...oil discoveries have been declining since 1964!


Please read this paper and comment.
http://www.theoildrum.com/node/3726

[whyverne]

15. I'm just trying to address the myth

that more drilling will equal lower prices. Again, I'm a working man who can't afford to fill up my tank. That doesn't mean there's a shortage. Of course we will all run out of oil eventually. More drilling will just make it run out faster.

[nadinbrzezinski]

16. In your and my lifetime

that is when it will run out, with horrific consequences for our world, civilization and economy if we don't get cracking with alternatives

And even if we do... the green revolution has no equivalents

[tama]

35. Never totally run out (of the physical stuff)

The question that can be asked, how soon will the production level drop to half of current, and that depends on the rate of decline; estimates vary from 2% to 8%. But that is not all: exporting countries are using more of their stuff domestically than others, and increasing number is starting to think about saving their juice for their own citizens instead of selling to world market, which means that many importing countries will get cold turkey treatment pretty soon unless they have good bilateral relations with an allied producing country, as the global market will be dead. And no, those going cold turkey treatment for their addiction will not survive it. Cuba did go cold turkey during the special period and survived because of socialism, but capitalistic countries based on short term greed -economics will have very poor chances of repeanting Cuba's example - even if taking the road of socialist revolution.

This is how those giving this a lot of though and study see things, and sorry, I don't know how to soften the blow but can only tell it like it is.

PS: Learning permaculture gardening is never a bad idea.

[cliss]

27. But, that isn't why gas prices have spiked.

It's because of speculators who want to make money off the next rising commodity. This one will turn out to be a bubble, just like the housing market.

[Extend a Hand]

29. for every long futures contract

there has to be a short. I don't really see how speculators that never take delivery for a barrel of oil are 'causing' the price of oil to rise. Speculators are a symptom not the problem.

[safeinOhio]

34. If speculators don't run up the price

Can you explain, to me, why gold and silver prices go up and down? Over the last 2 days the price of gold went up $50.00. I didn't see much change in supply. Speculators did change demand.

[Hannah Bell]

85. As I understand it, & I may be wrong, but in your example, a "short"

just = a seller, e.g.:

"So, a futures contract is an agreement between two parties: a short position - the party who agrees to deliver a commodity - and a long position - the party who agrees to receive a commodity. In the above scenario, the farmer would be the holder of the short position (agreeing to sell) while the bread maker would be the holder of the long (agreeing to buy). ...for now it's important to know that every contract involves both positions."

http://www.investopedia.com/university/futures/futures2.asp

One of the problems with the "ICE" market where 1/3 of oil futures are traded (again, according to my reading) is it's lightly regulated, which makes it easy for players to collude by selling back & forth to drive prices.

According to the link, "almost ALL futures contracts end without the actual physical delivery of the commodity." The seller doesn't actually deliver the commodity to the buyer; both seller & buyer go to the cash (spot) market or a pool:

"after the settlement of the futures contract, the bread maker still needs wheat to make bread, so he will in actuality buy his wheat in the cash market (or from a wheat pool)...

The farmer, after also closing out the contract, can sell his wheat on the cash market...

Now that you see that a futures contract is really more like a financial position, you can also see that the two parties in the wheat futures contract discussed above could be two speculators rather than a farmer and a bread maker..."


This is the clearest explanation I've found so far, & it's made me more confident that big speculators can drive prices if they have enough $.

[Hannah Bell]

84. rich countries like the US are driving at the expense of poor countries who now can't afford"

Consumption is up in the 3rd world, down in the first, overall.

http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2007/STAGING/local_assets/downloads/pdf/statistical_review_of_world_energy_full_report_2007.pdf


Poor PEOPLE are SOL everywhere, but poor countries, not necessarily.

[AndyTiedye]

9. There Will Be When the Mad Cowboys Start another War

:scared: :nuke:

[Initech]

11. Carter was able to put a cap on gas prices. Why cant this stupid fucking Congress do it?

[nadinbrzezinski]

13. cause of blue dogs... and other members of the imperial party

[Amimnoch]

31. He did, of course that's when the lines at the fuel pumps, and shortages were real.

Yes, President Carter did put a cap on prices. Were you around at that time? If so you recall gas stations having nothing to sell, and the few that did had lines that were miles long with rationing about how many gallons you could pump when you did get to the pump.

Fact: We do not produce enough to support our own needs.

Fact: If we cap prices by law, yes the stations will sell at that capped price. We can even legislate that domestic oil companies ONLY sell in the US, but domestically produced oil/gas will be just about all we get.

Fact: OPEC, and other oil/gas producing countries will just stop selling in the US. We aren't the only people on the block that will buy gas and petroleum products at current market value. If we stop buying, China, India and a the rest of the global economy will be more than happy to take what we won't at market value.

Legislation on fuel economy vehicles, that are producible. Legislation that will require people and companies who NEED trucks, and other low fuel economy vehicles to prove that they have a business need for the vehicles (like lumber, transportation, hauling industries). With a limited resource like oil/gas it should be illegal for someone to purchase a gas guzzler just because they like the "look" of it. I know in my part of the country, there are a lot of people in F-250's F-350's, doolies.. and many other vehicles that get in the low teens for gas mileage/gal, and just looking at the vehicle I can tell it's never been used to haul a single thing since it's purchase.

Or we can do like many countries in Europe have done.. impose high luxury taxes on low efficiency vehicles.

-Outlaw all cars/SUV's that have V8 engines. There is NO need at all for these vehicles other than as "status" vehicles.. period. Sports cars, large luxury sedans with powerful, gas wasting engines, SUV's with the same. 4 and 6 cylinder cars/suv's only, and implement miles/gallon requirements on all of them.

- Institute legislation that for someone to purchase a pickup truck, they must submit documentation about the work they have "Need" of such a vehicle for. There's so many people that only own a pickup for the "status appeal" of the vehicle, and legislate that all pickups should be designed ONLY for functionality in mind.. no more "harley edition" F-150's.. no ground effects, no "luxurious" interior's.. they should be for working function, and working function only.

These should have been implemented decades ago, but not enough people cared about it while prices were so low.

[tama]

36. Which one do you prefer?

Demand destruction through higher and higher prices or physical shortages and lines at the station with subsidized cap on prices? Red pill or the blue pill? Given that if you ever do wake up from the Matrix, you are likely to hope you didn't and wish you could get back into Matrix. :)

[neverforget]

14. For another perspective, here's a link

http://www.commondreams.org/archive/2008/06/28/9943/

--snip--
How do we know that the Petroleum Age is drawing to a close? Two key indicators tell us that this is so. First, many of the giant fields that have satisfied our massive thirst over so many years are experiencing diminished output. Second, although the major oil producers are spending more money each year to discover new reserves, they are finding less and less oil. Either of these factors by itself is cause for significant worry; the combination is deadly.

Dangerous Reliance

Few people understand how reliant we have become on a relatively small number of mammoth fields for the lion’s share of our daily petroleum intake. Though the world possesses tens of thousands of operating fields, a mere 116 of them - each producing more than 100,000 barrels per day - together account for nearly one-half of total global output. Of these, all but a handful were discovered more than a quarter of a century ago, and most are showing signs of diminished capacity. Indeed, some of the world’s largest fields - including Ghawar in Saudi Arabia, Burgan in Kuwait, Cantarell in Mexico, and Samotlor in Russia - appear to be now in decline or about to become so. The decline of these giant fields matters greatly. Compensating for their lost output will take increased yield at thousands of smaller fields, and there is no evidence that this is even remotely possible.

Signs of decline at the major fields began accumulating this spring when Mexico announced that Cantarell’s output had fallen by 416,000 barrels per day, a 25% reduction over its 2007 output. Though state-owned Pemex was able to boost output at a number of other fields, the decline at Cantarell was so significant that Mexico reported a 9% drop in net oil output for the first quarter of 2008 as against 2007. This is an ominous sign from a country that a year ago was America’s second leading supplier of crude petroleum. A similar sign of alarm came this spring from Russia, until recently the rising star of the oil world. Since last October, output there has fallen about 2%, with no hint of a recovery in sight.

The biggest mystery is the status of Ghawar. This Saudi Arabian field, the world’s biggest by far, accounts for about 7% of global supply. Saudi Arabian officials insist that the field is in good shape and fully capable of sustaining daily output of nearly 5 million barrels for years to come. But many skeptical analysts, including noted Houston investor Matthew Simmons, believe that Ghawar is on its last legs and will soon go into decline. In his 2005 book Twilight in the Desert, Simmons cited technical papers to show that field pressure at Ghawar was being artificially maintained through the heavy use of water injection - a technique that cannot be sustained indefinitely and is usually followed by a rapid plunge in output.
--snip--

[whyverne]

19. Yep, do you think we have a Mexican immigrant problem now,

wait till they run out of oil.

[tama]

37. Campesinos

are subsistence farmers that know how to live with the land, unlike most USAns. They have been driven from their land by NAFTA and big oil addicted business, many becoming immigrants.

Yeas, Cantarell has peaked and production is dropping fast, meaning that soon there will be no oil coming from Mexico to US consumers, and Mexico will become a failed state - it is allready showing many of the signs. But the thing is, also US will become a failed state. The main difference being that poor mexicans still know how to farm for subsistence, USAns don't.

[Subdivisions]

79. You're wasting your time. Slobberin', knuckle-draggin' idiots here

here who scream like the OP don't want to know. It assaults their sense of entitlement.

[neverforget]

81. It doesn't hurt to try. It doesn't help that our crack media

won't do their job with investigative reporting.

[Hannah Bell]

86. Your good manners are sure to convince them.

*Slobberin', knuckle-draggin' idiots* *sense of entitlement*

[SammyWinstonJack]

133. .

:thumbsup:

[unblock]

17. more accurately, it's COMPETITION among suppliers that brings prices down

we have no "shortage" of oil at the moment in the sense that anyone willing to pay $140/bbl. can get a barrel of oil.
but we do have a shortage of oil suppliers. if we had real competition among suppliers, we'd likely find someone willing to SELL oil for $130 or $120 or $110 in order to undercut the competition.

but the existing suppliers don't, because they know that no one can just set up shop as an oil supplier and compete with them. add to that the implicit and often explicit collusion in price-setting and voila, record prices. opec leads the way, and exxonmobil and other american oil suppliers are happy to play along and their puppet in the white house knows not to mess with the goose who laid the black golden egg.

[whistle]

18. It is cartelization of oil and world commodities right under our noses

[Hannah Bell]

20. yep.

[tama]

39. Still in the dreamland, Hannah?

OPEC is producing at full throttle and cannot increase production, at least in any meaningfull way. Plus the fact that increasing portion of their product is going to domestic use:
http://netoilexports.blogspot.com/

Time to wake up, Hannah? Next stage from denial is anger...

[Hannah Bell]

43. and you know this personally - because they told you so.

[tama]

47. This is not about me

and my lack of personality. It's about trying to understand with open mind the best information available about the reality on ground and beneath the ground.

[Hannah Bell]

48. just saying, you have no first-hand knowledge. you rely on information given to you by others,

just like most of us. and most of those information purveyors have agendas & interests, & have been known to lie in the past.

so better not to be disparaging others, who are also using their open minds to understand the reality on the ground.

[tama]

52. Colin Campbell

I believe I can spot a honest, objective scientist with no strings attached, so if you are accusing Colin Campbell of being a lier you better back that up. After reading and participating in endless critical in-depth discussions about PO with other wise people online that have come to the same conclusion with scientist of APPO and others, we are not on par here. I've been studying the real issue for years, thousands and thousand of hours of reading and discussing, and to counter the information and understanding I have gathered all you have to offer is an inane conspiracy theory, based on God knows what.

[Hannah Bell]

53. based on looking at the numbers, the markets, & history.

colin campbell isn't god. very simply, you've chosen to accept his message. you may be right, you may be wrong, but you're no more expert than I. You don't KNOW, so don't come on like you have the inside line to heaven.

[tama]

57. Of course

he's not god. I've chosen to accept the most accurate theory after thousands and thousands of hours critical discussions with other intelligent and well informed people, which you have not done. So of course I'm better informed and have better understanding than you. If you had dedicated thousands times more time and energy on studying subject than I then no doubt, you would be better expert than I.

[Hannah Bell]

61. yes, all-seeing wizard of oz. you know all about what i've seen &

discussed. since you know all & see all, i see it's no use talking with you. you don't need to talk to anyone, since you can read minds & see into the future.

[tama]

63. Saw that coming

"after denial, anger" ;)

[Hannah Bell]

67. you think i'm angry? i'm enjoying this.

i'd be more inclined to think someone who opens a discussion by attacking someone who posted only "yep" - & to someone else - is the angry person.

now, tell me that bedtime story again - the one where oil prices have risen "exponentially" (i.e. doubled) every year since 2000.

[Hannah Bell]

68. also, the one where you have superior understanding because

you've studied the matter for eons.

why don't you know the price history, then?

[tama]

70. Exponentially

as in not in a straight line but rising curve. Exponentially does not mean "doubled every year".

[Hannah Bell]

71. exponential growth = 1, 2, 4, 8, 16, 32. arithmetic growth = 1, 2, 2, 3, 5, 7, 8, 13, 24...

They're neither straight lines, both "rising" curves, but only 1 is exponential.

the "year" time frame was specified by you.

if i can't trust your supernatural knowledge on these simple matters, tama...how can i trust your x-ray vision on oil stores?

[tama]

75. Exponential:

http://www.youtube.com/watch?v=hM1x4RljmnE

http://en.wikipedia.org/wiki/Exponential_growth

[Hannah Bell]

83. "Exponential growth (or geometric growth) occurs when the growth rate of a mathematical function is

proportional to the function's current value."

If you do the math, it works out to doubling, tripling, or more: the only variable is the time frame. You said "since 2000" & I made an assumption about what you meant.

"The phrase exponential growth is often used in nontechnical contexts to mean merely surprisingly fast growth. In a strictly mathematical sense, though, exponential growth has a precise meaning...the general principle behind exponential growth is that the larger a number gets, the faster it grows."


http://tfc-charts.w2d.com/chart/CO/M


It's obvious just looking at the chart: there's no possible year to year exponential growth before 2004: prices are up & down & flat on average.


From 2004 on. Using the yearly averages here:

http://bom.intnet.mu/pdf/Research_and_Publications/Monthly_Statistical_Bulletin/jan2008/Table33d.pdf

I calculate:

36%, 2%, & 29% growth for the periods 2005-06, 2006-07, 07-08.

Not exponential growth.



This conversation stated because I posted one word, to another person who said "We're witnessing cartelization."

My post was "Yep."

You jumped in to tell me i was dreaming, wearing a tinfoil hat, a conspiracy theorist, didn't know as much as you, was in denial & getting angry.

I repeatedly told you there was no need for the personalism.

Maybe you should think twice next time you attack someone. You aren't making any converts.

[tama]

88. Here

This should give us a better idea. There is some "noisy" fluctuation as real life exponential curves are not mathematically smooth but also other variables involved creating noise, but I know an exponential curve when I see one. If we take the bottom of 10/barrel of 1999 as the starting point, at 160/barrel the price will have exponentially doubled allready four times. Next, fifth generation doubling would be 320/barrel. Because of noise we can't predict any exact date for reaching 320, but that seems to be the general tendency, with doubling time about two and a half years. How does 640/barrel in 2013 sound like? Incredible? Not to me. These are not meant as really serious calculations, only to roughly get the general idea.

As for the rest of your post, pot and kettle. I admit getting frustrated and impatient with your style of just debating just for debate's sake, with not much else to offer than misconseptions and misinformation. Just like when you kept insisting that there are no shortages anywhere.

Why I keep bothering to correct false information and misguided simplifications? Because we are in this shit together, and without good understanding of the underlying reasons we keep just repeating horrible mistakes that lead us here and inventing even more horrible mistakes. Sadly, as for conclusions that good understanding of the underlying reasons leads to and the most plausible scenarios based on those conclusions are of such nature, that denial of reality - even if for few more days, weeks, months, is in many ways individually better option than accepting that reality.

[Hannah Bell]

90. Oh, now you want to start in '99? and eliminate the "noise"?

Well. gee.

1. Your graph is in nominal dollars.
2. 2000-2004, prices up & down between around $20 & $30/bb, i.e. no "exponential growth," in fact, no growth. If you adjust for inflation, even some shrinkage.
3. What happened in 2004? For one thing, the Fed started to tighten money, & that's part of the picture in the housing downturn & move to commodities, even though you think it "just happened".

I won't even address the personal attacks this time. It's a lost cause.

[tama]

91. again

"I admit getting frustrated and impatient with your style of just debating just for debate's sake, with not much else to offer than misconseptions and misinformation."

[Hannah Bell]

92. tama: "Oil prices have been rising since 2000 on an exponential curve"

oil price, from tama's chart:

2000: ~$30
2001: ~$28
2002: ~$18
2003: ~$30
2004: ~$30


But that's just "noise" - 5 years of noise.

& when called on it, you decide you want to use 1999 as your start point instead, because it supports your case slightly better (since 1999 oil prices were the LOWEST in more than 20 years, even in non-inflation adjusted dollars - inexplicable in terms of the peak oil scenario).

But you still have those 5 years of flat prices 2000-2004, i.e. no growth, exponential or otherwise.

The data doesn't seem to matter to you. Regardless, reality is, the sharp price rises started after 2004.

And again with the personal attack.

[Hannah Bell]

94. So, let's see. in 2004 the Fed starts tightening.

"Home purchases in the United States are typically financed by mortgage loans. Home mortgages are indexed to the prime rate, that is, the interest rate commercial banks charge their most creditworthy customers."

And how is the prime rate set? Basically, by the money policy of the Fed.

"The prime rate...is among the most widely used benchmark in setting home equity lines of credit and credit card rates. It is in turn based on the fed funds rate, which is set by the Federal Reserve. The COFI (11th District cost of funds index) is a widely used benchmark for adjustable-rate mortgages."

The cost of money affects every financial activity, including mortgage banking, the amount of lending done, the kinds of mortgage products offered, etc. It also affects what "investors" do.


What happened in 2005?

"In 2005, the number of homeowners defaulting on their subprime mortgages began to soar."



What also happened in 2005?

The price of oil & other commodities began to rise sharply, & trading volume increased.



This is a simplified outline of a financial mess that's in fact global. Nevertheless, it's not tinfoil hat. According to you, I contribute nothing & just argue for the sake of arguing. According to you, my propensity to argue justifies your personal attacks.

You know more, have studied more, blah, blah. According to you the rise in oil prices can be due to only one thing: peak oil. But you don't mind distorting the data to fit your belief, & when you're called on it, you won't admit it. Instead, you change your data points & call names.

[tama]

95. What also happened in 2005

Peak oil happened, or to be more precise, peak net exports. Since 2005 world's net exports of oil, ie. the supply available for the open market bidders, has been dropping.
http://netoilexports.blogspot.com/

This was written in 2006:
"As I have been relentlessly pointing out, I think that we are looking at a series of bidding cycles for declining net oil export capacity, with the oil going to the high bidders and with the losers having to reduce consumption. Leanan, on The Oil Drum, has documented several case histories of poorer countries having to reduce consumption. Soon, the developed and rapidly developing countries will be bidding against each other, instead of bidding against regions like Africa."
http://www.energybulletin.net/node/19420

Two years later with oil at 140, bidding cycles indeed...

More about the "export land model", showing zero exports in 2030:
http://www.energybulletin.net/node/38948

[Hannah Bell]

98. By the chart at your link, mid-2004. Also declined in 1990, 1998, & 2000.

http:// bp3.blogger.com/ _kdcZbozWthI/Rw51NNHfsEI/AAAAAAAAAWE/z9XyoX-XTKk/s1600-h/Yearly.gif


The 2000 decline went on for 2 years, -~2% mid-2000 to mid 2002. Oil prices declined.

2000: ~$30 46% net exports (mid-year)
2001: ~$28 45%
2002: ~$18 44%


Then net exports rose again, for 2 years, +~3%. Prices stayed flat.

2003: ~$30 46%
2004: ~$30 47%


But according to you, the ~1% decline in % net exports since mid-2004 is responsible for the 200%+ price hike over the same period. This decline in net exports is different from the one in 2000. Why? Because this one is peak oil, the one in 2000 wasn't.

Can you see how circular this is?

[Hannah Bell]

101. and then there's this: from 2006: contango

"Since early 2005, the crude-oil market is in what traders call contango, meaning futures contracts for a given product are priced higher than that same good for near-term delivery. The price of oil to be delivered four months from now is about $3 more than oil to be delivered next month.

In short, it pays for refiners and other oil-market players to buy and hold oil now to sell it down the road. Making that trading opportunity possible, says Colorado-based oil analyst Philip K. Verleger, is the huge volume of new buyers on the other side: investors who he estimates have put more than $60 billion into U.S. crude-oil futures since 2004."

did you know the increase in speculative $ is about equal to the increase in chinese demand? enough to move markets.

http://www.econbrowser.com/archives/2006/04/contango_specul.html

[tama]

111. From your link:

"I do not share the view that speculation should be thought of as a separate force from supply and demand contributing to the price of oil. An investment fund that today buys a September 2006 futures contract for $75 ($3 above the current spot price of $72) will only make a profit if the spot price of oil in September turns out to be above $75 a barrel. If such speculators prove to be correct and the spot price does rise from its current $72 to, say, $80 a barrel by September, that price hike would be a further factor depressing September demand and potentially increasing September supply. Why would the September spot price be even higher than the current spot price, if users of oil in September will be buying less oil than they are now? According to the speculation theory, we'd have to see even more investment dollars flowing into the market in September than we are currently, causing an even bigger addition to stockpiles (that is, the rate at which oil is added to storage must itself go up at an ever-increasing rate) in order to compensate for the lost demand that $80 oil would choke off as well as to justify an even higher price than at present. And that additional money, in turn, would supposedly be going into February 2007 contracts for $83 oil, in hopes that the February 2007 spot price would be even higher, say $85. All this only makes sense if one believes that investment funds will continue to pour ever-increasing sums into oil futures and an ever-increasing volume of oil gets added to inventory each month. Since the total investment funds and physical facilities for storage are inherently finite, someone in this chain is going to find that they have irrationally thrown their money away. I would argue that this someone is in fact the joker at square 1 who thought you could make money with a September 2006 futures contract betting against the fundamentals.

To me, a much more natural way to try to interpret this phenomenon is that the investment funds are betting not on a bigger fool to bail them out in September, but rather are trying to evaluate the September fundamentals for supply and demand. First, let's look at the upside. There is currently very little spare capacity in global oil production, meaning that a supply disruption of just a few million barrels a day could easily result in a pretty impressive spike up in the spot price of oil in September. Where might such a supply disruption come from? Oh, maybe Nigeria, or Iran, or Iraq, or Saudi Arabia, or Venezuela, or Russia, to name a few. Even if the probability of such an event is low, the large payoff if it occurs could give an attractive expected rate of return-- play such a gamble over a long enough time period, and you could make out quite well, even if everything remains calm over this particular coming six months"

There you go, speculation on futures is based on fundamentals of gap between supply and demand. Oil beingy extremely inelastic (industrial society collapses and people go hungry without it) there is no upper limit to how far up the price can go, there is allways a spot on buyer as long as there is money. How much would you pay for the last drop of water thirsting in desert? You would pay all you got and as much debt you could negotiate.

[Hannah Bell]

112. "speculation on futures is based on fundamentals of gap between supply and demand"

sure, but the generalization omits the mass of detail underlying it.

"based on" isn't 1 to 1 correllation. the price run-up has gone on for a couple of years w/o significant interruption in supply. the context is geo-political instability & financial turmoil. Here's where I see the situation a bit differently than the writer:

"Since the total investment funds and physical facilities for storage are inherently finite"

most futures contracts are executed w/o the buyer taking possession of any oil; it goes into the cash market. Thus, no special storage facilities needed, just the already extant commercial/pool ones.


"someone in this chain is going to find that they have irrationally thrown their money away."

but "someone" isn't "everyone".

[tama]

110. Yep, seems that now the wolf came

Not 1% but about 4,5% decline in net exports from 2005 peak to latest data for the top 20 exporters, as shown by this graph:



What is different this time?
Supply is not responding to increasing demand represented by the exponentially rising oil prices. World production has stayed flat since 2005:



What is different this time?
Non-OPEC, that has been responsible for growth in production in late years, is producing full throttle and cannot increase production any more, as North Sea and Mexico have recently peaked and in fast decline and Russia just announcing having peaked, putting the final nail on the coffin. If OPEC really has serious extra capacity, why is it not brought to production in response to growing demand and high prices? A conspiracy to ruin world economy? Or just not able to increase production to extent that would make a real difference?

[Hannah Bell]

113. "Not 1% but about 4,5% decline in net exports"

this chart is labeled world production, not net exports.

and the 2000 downturn in net exports was steeper than the 2005 downturn in net exports. so if 2005 = -4.5% (or -10% or whatever), then the 2000 number is bigger, but there was still no rise in prices.

Look at the chart. I'm sure you can pick out other periods where "production stayed flat". Or declined. During the 70s/80s oil shocks & early Reagan admin, for one. But it was deliberate.

[tama]

114. The upper chart

is labelled "Net oil exports".

You asked what is different this time and that was answered. Russia reaching peak is the nail on the coffer.

If the decline is not too deep elsewhere and SA can increase production to 12.5 mbd in the coming years as they claim, the peak plateau may extend few more years before the global production starts to seriously decline. The decline in net exports is going to continue.

And yes of course, speculation based on the fundamental of supply demand gap (aka capitalism 101) is part of the picture. What is important to realize that speculation is a symptom, not the cause of the disease.

[Hannah Bell]

115. Hmm, the upper chart doesn't show for me, just the little red x.

Regardless, the 2000 drop was steeper.

You take the peak oil story as gospel first, & interpret all data in accordance with it, even if you have to distort it to make it fit. This may be peak oil, that may be why net exports are going down current - but the net exports % doesn't have much correlation with prices, looking at the historical relationship.


"speculation is a symptom, not the cause of the disease."

as in the case of enron, for example. "fuck gramma, we're taking it offline." or the 70/80 oil shocks . or the 1907 panic. or even the great depression.

financial shenanigans affect a lot more than we might think from reading the papers. if we understood HOW much, we wouldn't tolerate it. there weren't any shortages during the Depression - except of money & liquidity.

The US, 5% of the world population, uses 25% of its oil. In real sense, it SHOULD use less, & COULD use less with little hardship. The hand-wringing & doomsaying is annoying & paralyzing.

[tama]

116. Peak oil is fact

Oil is limited resourse so no matter what peak oil happens at some point, there is no argument about that. Only argument is about when it happens. So far, evidence keeps strongly pointing at peak oil happening now. More reading on why prices are not about to drop (lot's of charts): http://europe.theoildrum.com/node/4224#more

"The US, 5% of the world population, uses 25% of its oil. In real sense, it SHOULD use less, & COULD use less with little hardship. The hand-wringing & doomsaying is annoying & paralyzing."

Yes, peak oil and its most likely implications for the future (or rather, lack of future) for industrial society are psychologically very difficult to endure, to say the least. It's not about just "little hardship". US averadge ecological footpring is six planets, meaning that if everyone lived the American dream, that would require the carrying capacity of six planets - and we have just one. The problem goes even deeper, as current carrying capacity is merely a fantom one, based on non-renewable one time injection of fossile fuel energy, the use of which pollutes, creates climate change, depletes top soil of arable land, etc., ie. destroys the real carrying capacity of the planet at a horrible pace.

[Hannah Bell]

117. everything is limited. that doesn't prove your thesis, nor your vision of the future,

nor your explanation of the cost of oil.

[tama]

118. Yada yada

What is proven by your denial and attitude is that civilization has no hope. Even if "my vision of the future" was wrong (alas, it's not) according to precautionary principle it would be prudent to act according to it: http://en.wikipedia.org/wiki/Precautionary_principle

[Hannah Bell]

119. I think conservation, more fuel-efficient & alternative technology

would be a great idea. I think the gov't should throw its weight behind it & industy should get on board.

But you'll notice that since Reagan, they haven't. Instead, their policies effectively promoted increased consumption.

you might ask why that is, since hubbert did his work in the 50s.

& why even now, on the supposed eve of world crisis, they're not doing anything.

[provis99]

23. absolutely right

The price of production of oil has not risen, yet the supply price of oil has. Oil has quadrupled in price, yet demand has not quadrupled; most recently, it is in fact falling. Also, we are not pumping nearly as much oil currently as we could, thus keeping the supply artificially low.

Taken together, these things are all evidence that what is happening is because of illegal, conspiratorial collaboration among the oil companies, not a shortage of oil. There is no shortage of oil, and it is NOT becoming more expensive to produce.

[tama]

40. The price of production

has also risen, as abundant sweet light crude is now just a distant memory and the last reserves are very costly to pump and refine, deep sea etc. E.g. extra heavy from Orinico belt of Venezuala is not economically feasible below $50-70 /barrel.

[Hannah Bell]

44. Data direct from the same folks telling you if they drilled in awr, the price would come down.

[tama]

50. Not from the same folks

so you can put your tinfoil hat away. Those who want to drill awr claiming that would have any effect of prices are criminally stupid or criminally greedy. Anyone familiar with PO and science behind it knows the numbers and how they scale, and knows a greedy lying bastard when someone talks like McCain and the drill more gang do.

[Hannah Bell]

56. oil industry folks. campbell = petroleum geologist. They work for oil companies.

Hubbert: ditto. They may be right, they may be wrong, but nasty comments about tinfoil hats are always impolitic.

There was a "peak oil" scare in the 1920s, post-ww2, the 1970s, & once again. This time for sure.

But you have no first-hand knowledge, you've just decided to accept a certain storyline, like everybody else.

[tama]

62. To accept?

What is unescapable, yes: limits of growth and inevitable end of growth based society.
A certain storyline, no: probabilities about future storylines can be changed and new ones invented, within limits.

[Hannah Bell]

65. resources are finite, yes. they always have been. "accept" means, without first-hand knowledge,

to buy into some particular storyline about that fact, including the part about the cause of today's oil prices.

[Mojorabbit]

93. I was around in the 70's

and I don't remember a peak oil scare. I know that the US peaked around that time but that the world then had plenty to make up our deficit.

[Hannah Bell]

122. the us peak was one of the supposed reasons we were at the mercy

of opec.

go to the nyt achives & search "oil shortage". long history. we've been running out of oil since it was discovered.

which is not to say we're not, but it's not the main cause of current prices.

[Mojorabbit]

123. The IEA

Who are pretty conservative about such things disagrees with you.
http://www.abc.net.au/news/stories/2008/07/02/2291692.htm?section=business

[Hannah Bell]

125. Oh, let's see what the nwo agency responsible for coordinating world energy policy,

run by a guy from meti & the US nafta negotiator, has to say:

http://www.iea.org/Textbase/press/pressdetail.asp?PRESS_REL_ID=267

'Nobuo Tanaka, Executive Director of the International Energy Agency said:

“OPEC production is at record highs and non-OPEC producers are working at full throttle, but stocks show no unusual build. These factors demonstrate that it is mainly fundamentals pushing up the price,” he added.'


Let's cross-check with bp's 2008 review of world energy:

http://www.bp.com/sectiongenericarticle.do?categoryId=9023770&contentId=7044467

OPEC = iran, iraq, kuwait, qatar, saudi, uae, libya, algeria, nigeria, angola, venezuela, ecquador.

opec 2005 production: 34774
opec 2006 production: 35088
opec 2007 production: 34757

2007 opec production was lower than 2005 & 2006. Not only that, non-opec production was down as well. That's 84% of world production. The only grouping up was the FSU, 16% of world production.


Now let's look at consumption:

Down in the OECD (57% of world demand, includes most of EU & US):

2005: 49497
2006: 49319
2007: 48934

Down in the FSU .4%. Up in emerging markets by 4.4% (39% of world demand). Total world demand increase = 1.1%, or 990,000 barrels per day.

China: up by 4.1% in 2007, but they also increased their domestic production. They used 7,855,000 bpd, but produced 47% of that in China. So excluding their own oil, they accounted for about 4.5% of world market demand. India: even less: < 3.3%.


Where's this supposed sharp global market demand spike coming from?

Look at where consumption IS up: the middle east (don't they know it's peak oil?) & other surprising places. But only enough to increase global demand by 1.1%.


I think it's unlikely global demand is growing any faster in 2008 than it did in 2007. In fact, since prices are so high, I'd expect it's growing slower.

So why would OPEC be producing more in 2008 than 2007 in the face of slowdown? And why would non-OPEC be "working at full throttle"?

Gee, I think Mr. Tanaka is lying.



Now, check this out:

http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/downloads/pdf/oil_section_2008.pdf

2004-2007 (roughly the period of the price run-up), US imports increased fractionally, but US exports increased by double digit percents:

US oil exports:

2001: +2.2%
2002: -.6
2003: +1.8%
2004: +8.6%
2005: +13.9%
2006: +16.7%
2007: +9.3%

isn't that strange. & where are they exporting to? mexico & latin america, among others. Now, look at the big oil exporters in latin america. mexico, exports down. venezuela, down. ecuador, down.

The US, supposedly past peak oil, with consumers pissed off & Bush telling us drilling in anwr is the only solution - is exporting more oil than usual, & to major oil producers.

Exporting 122,000 barrels per day: 12.3% of total 2007 world demand increase of 990,000 bpd.

Then there's the 891,000 bpd in "unidentified" oil movements. It might be interesting to compare those with past years too.


If you study the reports, there's lots of interesting stuff, which is why I cross-check rather than listen to press releases.

[Leopolds Ghost]

127. Supposed?

I "suppose" that "welfare cheats and corrpt unions" are why the US
manufacturing economy collapsed after the US oil peak, too. That's
what Reagan and his Presidential successors would have us believe.

[Hannah Bell]

130. It is supposed to be peak, isn't it? Comment on the lie of Mr. Tanaka?

Comment on the rise in US exports?

Comment on the fact that China is only 4.5% of world consumption if you exclude their own production?

Comment on any of this DATA?

[Hannah Bell]

131. 2007 OPEC production: down from 2005 & 2006. Not "record highs".

[Leopolds Ghost]

104. "petroleum geologist. they work for oil companies... who lie" what a sad comment.

Petroleum geology by definition is a scientific profession, hard sciences.
NOT like economists or stockbrokers. I should know, I'm related to them.
This attitude on your part is simultaneously anti-intellectual and cornucopian.

Cornucopianism is a defect of all rising-economy ideologies, be it
capitalism or socialism that depend on materialism and exponential
growth in population and/or resource consumption.

And speaking of exponential, a curve does not have to double to be
exponential. As you said, the only thing variable is the time frame
over which it will eventually double. Look at inflation over the last
100 years. If oil goes the same route it will render paper worthless.

[Hannah Bell]

121. i believe the "they lie" is your addition. it's not in my post.

i said; "they may be right, they may be wrong."

but since you brought it up, oil corps lie regularly, ever since the days of the standard oil trusts.


<<And speaking of exponential, a curve does not have to double to be
exponential. As you said, the only thing variable is the time frame
over which it will eventually double>>

yes; it inevitably goes on doubling, faster & faster. the variable is the time frame, as i said.

i'm not a "cornucopian," but that's a convenient label.

[Kokonoe]

21. Its supply and demand,

The higher price means its more valuable, so more people want it, driving up the price.

Oh, wait... I guess expensive gas would reduce driving and make a surplus. Up is Down.

[Leopolds Ghost]

105. Unless demand is inflexible = people drive 4 blocks to eat out

Like most well-meaning urbanites.

[Hannah Bell]

24. i read that exxon pumps in some places at a cost of $1/bb,

thanks to long-term contracts.

[high density]

25. Naturally this thread brought out some of the peak oilers

Who seem to fail to realize that the speculation would probably be 10x worse than it currently is if we had indeed hit peak oil. If ExxonMobil thought pumping more oil would increase their bottom line, they'd do everything to facilitate that. Even the Saudis have said this is crazy shit, and they're getting concerned about this house of cards collapsing.

People can buy all they can afford. The affordable amount is less and less, but that's a function of speculation, not supply issues. Every Tom, Dick, & Harry thinks they can get rich off of oil now, and this is the perfect time for the bubble to pop. They thought the same thing back in 2003 with real estate.

[depakid]

33. Actually, most of the peak oil folks are interested in production data

which we can see in hindsight.

Other matters, like market manipulation, contango in futures or minor perturbations causing historically exagerrategd effects are all expected to occur from that bottom line.

[tama]

41. No

the prices are rising at the speed that peak oilers have been predicting (600% rise in few years). It's peak plateau production now for all liquid fuels, peak net exports was in 2005.

But as more people realize that PO is indeed happening now and not in distant future, you don't need to worry, you will get the 10x worse.

[Hannah Bell]

46. hubbert's data is from the 50's, but the oil folks in the know just

discovered it this year, apparently.

hint: if it's real, it was already priced in.

[tama]

49. Huh?

You are not making any sense. Hubbert predicted US Peak Oil Production correctly in 1956 based on Peak Oil Discoveries happening earlier: http://en.wikipedia.org/wiki/Hubbert_peak_theory

Geologists like Colin Campbell (who founded ASPO in 2000) and other scientists and oil industry experts like Matthew Simmons have predicted Global Peak Oil Production happening these years based on global Peak Oil Discoveries taking place in 1960's.

I first heard abbout Hubberts Peak and the global PO predictions by ASPO and others, now proving to be correct, when the Iraq war was about to happen and have been following the debate since, like I have been aware of Club of Rome predictions about limits of growth since 1980's.

There is nobody "in the know", as OPEC reserves are well kept state secrets, but there are very strong reasons to believe that the public announcements on which OPEC quotas are based on were bloated couple decades ago on purpose when cartell members wanted to expand their export quotas.

The other side of the PO debate has been economists and those believing in the standard economical theory that demand will allways create enough supply to meet the demand, ignoring the geological reality of a physically limited supply. Official institutions like IEA are only now, after oil prices rising by 600%, starting to question the appropriateness of the demand-side economical model they have been using in their predictions.

[Hannah Bell]

51. Known data is priced in. there's nothing different about this year

as opposed to last year, or 2000, or 1997 or 95 - except the credit crunch.

[tama]

54. Nothing different?

You are in SERIOUS denial and just embarrassing yourself. Oil prices have been rising since 2000 on an exponential curve because of supply lagging demand, global net oil exports peaking in 2005. Housing bubble bursted only last year.

[Hannah Bell]

60. They have? On an exponential basis since 2000?

That's not what I see. & gosh, what was going on 1990-1999? Guess the peak oil news hadn't hit yet.

The superior, scolding tone is unnecessary. It's possible to discuss things without it.

[tama]

64. Yes n/t

[Hannah Bell]

66. gosh, you'll have to explain that one to me. the chart doesn't show

exponential price growth on a year-to-year basis in either spot prices or futures. If it were true, the spot price in 2001 should have been around $70, & the futures price ~$40. Instead, they were both around $20.

If I can't trust your supernatural knowledge on this documented factual matter, tama, how can i trust it on the state of future oil resources?

[Leopolds Ghost]

106. But Exponential does NOT equal year over year.

An exponential curve is exponential, has nothing to do with the doubling
time or what point you caught it at.

I suppose you could argue it has been growing at a GEOMETRIC, not exponential rate!

[Hannah Bell]

126. they're the same thing.

Exponential growth - Exponential growth (or geometric growth) occurs when the growth rate of a mathematical function is proportional to the function's current value. ...


the math for exponential growth = predictable doubling time, & faster & faster doubling.

[Leopolds Ghost]

99. The peak oil news HADN'T hit yet. Clinton et al. was expecting a Central Asian Saudi Arabia

Hence the intense interest in Afghanistan.

Bullish investors expected SA to double its known reserves.
"Nobody could have anticipated" mega-fields in decline
without new mega-fields coming on line to replace them
(and US military adventurism to guard the new finds).

Which is why they pussyfooted Bin Laden and let him hang out in
Afghanistan (and the only attempt to take him out was an el-cheapo,
all-electronic affair that resulted in the collapse of our
human intelligence inside Al Qaeda, according to Harper's magazine).

They were playing footsie with the Taliban trying to get
military and commercial ownership of ex-Soviet oil in nearby
Turkmenistan that turned out to be a mirage. Extradition of
Bin Laden was just another bargaining chip (which the US turned
down, as it happens -- we were more interested in the pipeline).

[neverforget]

76. The difference since 2000 is the amount of oil used.

Let's say on average the world used 80 million barrels of oil per day every year since 2000. (Right now I believe it is 85 mbd.) That would be 80,000,000 mbd x 365days = 29,200,000,000 barrels of oil used in 1 year. In 7 years that would be 204,400,000,000 billion barrels of oil used since 2000. The thing is we have not found that much oil in a long time. The easy to extract fields have already been found and are in production. All that is left are the harder to extract fields that are smaller and more expensive to tap.

[Posteritatis]

26. There's a longage of cars instead (nt)

[taterguy]

38. How dare you interject rationality in here? :)

[paparush]

132. Longage! LMAO!

[progressoid]

28. Blah blah blah. Hannity told me that drilling in ANWR would solve everything.

So there. Nya nya nya. :silly:

[TexasObserver]

30. "Whatever the market will bear determines price." is correct!!

Oil interests are going to run the prices up as high as they can the next couple of months, to get all the profits they can, then cut back energy costs to us come September, in anticipation of the election.

They'll push drilling rights as the panacea, in spite of its obvious lack of impact.

[tama]

96. Which oil interests?

The increasing number US gas stations closing down, outbidded by other bidders? US demand is in decrease (-> outbidded by demand in other places), so exactly what US election related conspiracy is running up the prices and how?

US is not the whole world, it's a global market.

[dmosh42]

42. I completely agree....

The commodity hearings recently held by the Senate explained why, but received very little exposure from our Repuke media. One big item was the requirement that a transaction only requires 5% of the money to be put up. If they had a larger amount requirement, like 20%, the speculators would back off. Morgan Stanley, a brokerage house, controls huge amount of the futures market. The other thing, was to repeal the Phil Gramm Enron rule from 2000, which as I understand it, allows futures transactions without regulation, and keeps the buyers in secret.

[amandabeech]

69. Those things might help a bit,

but many of the speculators would merely move offshore, and the Nymex would see a smaller amount of the action.

The Iranians have been threatening to open their own version of Nymex. If the U.S. upped the margin requirements, it would be an added incentive for them to get it going.

[L0oniX]

55. "I ‘Don’t See How It Matters’ That I Don’t Know The Price Of Gas" --John McCain

[Occam Bandage]

72. "Supply does not determine price." You're half right.

[bhikkhu]

80. I was going to say that...

[Vinca]

73. He says more drilling will have a psychological impact on the price of oil.

????? Guess that means we'll be twice as depressed when we fill up at the gas station. Still paying artificially inflated prices and ruining more of the environment, too. If there was a shortage, there would be lines.

[aint_no_life_nowhere]

74. I don't think there's a single factor responsible

It's a complex problem. Demand is one part of it. The Iraq War has constituted a significant demand. But the fact that the U.S. dollar buys only half of what it used to buy compared to the Euro is another factor. Also, the fact that the stock market isn't doing well, with the exception of commodities like oil is also a major factor. There's a supply and demand issue in the world of investment. The financial sector has been ravaged, as well as real estate. Investors are pulling money out of most stocks and putting it into oil. There's a rising demand for safer investments and oil futures are one of them, taking on a value independent of the actual underlying commodity because the other types of investments are simply not paying off. If the economy were booming and the stock market doing well, I don't think you'd see the flooding of money into oil futures. The war, the terrible economy, and the Bush policy of keeping the dollar low are all contributing factors, in my opinion to the high price of oil.

[Subdivisions]

77. Oh, really? In a Season of Discontent, Many Protests Sweep India

http://www.nytimes.com/2008/06/29/world/asia/29india.html?_r=1&ref=world&oref=slogin">New York Times
Discontent is sweeping through India in the form of widespread protests over land use, food, fuel and jobs.

Crowds shouting slogans took to the streets of Srinagar, Kashmir, on Saturday in protests over land use, food, fuel and jobs. Indian citizens have long embraced their constitutional right to assemble, and they have done so with fervor this month in large protests over a wide range of issues.

Some speculate that India’s weak central government, which is run by an uneasy coalition between the Congress Party and the Left Front, could be contributing to the unrest. Others attribute the upheaval to rapid changes in Indian society.

On Saturday, the Muslim-majority state of Jammu and Kashmir in the north was roiled for a sixth consecutive day by demonstrations, the region’s largest in nearly 20 years. The protest was over what demonstrators say is a plan to build a settlement for Hindu pilgrims on forest land.

Three people have been killed and more than two dozen injured, local officials said. On Saturday the police used tear gas and fired live ammunition into the air, trying to disperse the crowds, The Associated Press reported.

-snip-

YOU ARE WRONG!

Just because the effects of a dis-engaged supply and demand equation hasn't reached our fuel pumps doesn't mean it's not happening. It only means that WE CAN STILL PAY FOR OIL! But then, I guess if you are so clueless as to what is really going on with oil and food the world over, you probably didn't even realize that those places that cannot afford $142 oil could be feeling the effects.

Oh and, by the way, how much have groceries gone up in your local grocery store? Think we're not feeling the effects of 12% higher world demand than available supply to meet said demand? You are dreaming.

[defendandprotect]

82. It's a replay of the 1970's .... but with the ENRONNED program .. . !!!

[MadHound]

87. And you know this how, exactly?

Sorry, but you offer up no sources, experts, only your own opinion, which flies in the face of many other experts, and frankly in the face of both physical and economic reality.

The physical reality is that we haven't found a major new oil strike in decades. Meanwhile, over at the Ghawar oil field in Saudi Arabia, they are having to pump in twice the volume of seawater to get out half the volume of oil. This is a sure sign of a field in decline, in this case, it is the largest oil field in the world, and we have nothing to replace it. This scenario is being played out across the Middle East. The supply of light, sweet, easy to drill crude worldwide is disappearing at a rapid rate. It's already gone here in the US(that was the oil shocks of the '70s), now it is disappearing worldwide.

Meanwhile, the economic reality of the matter is the demand for oil is increasing. China now imports 8.3 million barrels of oil daily(as opposed to the US 20 million barrels daily), making it the second largest oil user in the world. And while the US demand for oil has been shrinking lately, the Chinese demand is steadily rising at an annual rate of 10-13% annually.

Nor do the Chinese have to worry about their currency. The yuan is steady as a rock right now, while the US dollar is continuing to lose value, adding even more inflationary pressure to our economy. Oh, and while we're at it, I suggest that you go do some research on the negative effects that we will experience as more and more oil countries and oil bourses do their dealings in some other currency than the dollar. The petro-dollar was a major prop in our economy for years and years, but now that prop is going away, and we're left with nothing.

Also, there is India to consider, that nation, much like China, that we've enriched via outsourcing. They're growing their economy, and importing almost three million barrels of oil daily in order to do so. Don't forget the rest of Asia either, which unlike the US is actually growing, and with that growth and modernization comes an increased demand for both oil and gas.

So as you see, it does come down to a simple matter of supply and demand. The supply of oil is dwindling, especially that easy to obtain, light sweet crude. Meanwhile, the demand for oil is increasing daily. Thus, the price for oil is going up, up, up.

This is why it is imperative for the US to get out of the oil equation and develop the clean, renewable alternative energy sources that we have ready at hand. If we don't, we will continue to have the clamps squeezed increasingly tighter, and eventually our country will collapse. Scream that from the rooftops.

[Hannah Bell]

128. China doesn't import 8.3 billion bpd, according to BP's energy review.

& the US doesn't import 20 billion.

http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/downloads/pdf/oil_section_2008.pdf

US = 13,632,000 China = 4,111,000


China: consumption up by 4.1% in 2007, but they also increased their domestic production.

They used 7,855,000 bpd, but produced 47% of that in China.

So excluding their own oil, they accounted for about 4.5% of world market demand.

India: even less: < 3.3%.



2007 Global Consumption:

Down in the OECD (57% of world demand, includes most of EU & US):

2005: 49,497,000
2006: 49,319,000
2007: 48,934,000


Down in the FSU .4%.

Up in emerging markets by 4.4% (39% of world demand).

Total world demand increase = 1.1%, or 990,000 barrels per day.



Now check out trade movements:

2004-2007 (roughly the period of the oil price run-up), US imports increased fractionally, but US export % went into double digits:

US oil exports:

2001: +2.2%
2002: -.6
2003: +1.8%
2004: +8.6%
2005: +13.9%
2006: +16.7%
2007: +9.3%

Exporting 122,000 barrels per day: 12.3% of total 2007 world demand increase of 990,000 bpd.

Then there's the 891,000 bpd in "unidentified" oil movements, mostly to the us & europe. It might be interesting to compare those with past years too.

[B Calm]

89. Why do oil companies drill new wells and cap them? We have oil wells

capped all over the United States!

[Leopolds Ghost]

107. DRAYYNAGE!!! You can bid on those wells if you like

If you think they're such a good investment. Millions of americans get royalty checks for pennies on the dollar from sunken investment wells in played-out fields. It's not worth it to build a new well if the obtainable oil underneath is only a couple million dollars worth.

[Leopolds Ghost]

97. It's not how capitalism works, it's how MARKET ECONOMICS works. Econ 101

When supply production capacity is exceeded by demand,
the price must go up until it kills demand.

The price of a commodity is set by the supply-demand equilibrium.
Gas is only worth what someone is willing to pay for it.

Americans are willing to pay FAR MORE (than even Europeans, I'd bet)
to continue their car-centric lifestyles,

So we will not see shortages here unless you had an industry embargo
designed by the oil cartel to raise prices here at home, an embargo
which is no longer necessary, because the oil peak is no longer
domestic-only. Global production capacity has peaked for years now.
Which means they can afford to jack up prices everywhere and we can
afford to displace shortages to other countries and pay the new price.

Of course it could be argued that the cartel is powerful enough to
hoard oil, like gold, on a world scale, like DeBeers with diamonds.
But they do that precisely because flooding the market with diamonds
when there are no more left in the ground would halt all diamond
production worldwide.

You will only see shortages in other countries where oil is subsidized
or demand is more flexible (i.e. people are poor and demand is driven by
the wealthy few, like drug dealers who jack up the price of Fubu jackets).

Hence driving up the price for us, who can afford it (hence our
continued piss-poor driving habits) because if we don't pay more for it,
the richest 1% in China will. So we pay more and shortages get
moved elsewhere. Just like shortages of food (see Darwin's Nightmare.)

We are privileged by our insistence that our quality of life is
"non-negotiable" we'll pay anything for it, like heroin addicts
who pay $1000 for a fix in the middle of the fall of Saigon.

so in a non-artificially limited market (unlike the fake OPEC embargo)
where latent demand permanently exceeds supply (the definition of peak oil),
the price will be set at whatever most consumers somewhere in the world
are willing to pay for.

If 50 gallons get exported and one person in country A is willing to buy
all 50 gallons at $250, and five people in country B can only afford to pay
$200 for gas, the five people in country B will use LESS OIL and pay the
new, higher price.

If the oil company is asked to "artificially" reduce prices
to help people afford it, or practice just business and make less
unearned profits, if the fundamentals that led to the price boom
are unchanged and an oil supplier unexpectedly underbids everyone else,
well ONLY then do supply problems (distribution and black market oil
for the super-rich) become an issue. Because people then use MORE oil
not less. They snap it up and possibly even hoard it in anticipation
of shortages that never even have to occur.

No shortages unless demand is completely inflexible (like food)
or artificially undervalued (increasing demsand while limiting
incentive of the for-profit producers to contribute to supply).

Instead a gradual contraction in the size of the market, just like
the market for horses. Today, only the rich own horses, for the
most part.

[Leopolds Ghost]

102. Capitalism is the speculation part, or the De Beers example.

Which is driven by futures analysts making bets that
commodities (real wealth, like gold after the fall of Rome)
will outperform virtual wealth (stocks, like labor in Rome)
in a food & fuel shortage crisis. So they try to lock in
stock gains (like Rome feudalized its serfs) by investing in
commodities and sitting on them (gold, oil).

Meanwhile the gold / oil producers reduce supply because
they know they're running out and it's more profitable
for a monopoly resource producer to sell fewer items at
an inflated price out of a vault than spend more looking
for diminishing returns that only lower the value of their
existing sales incrementally. Plus they know the value
of the dollars they'd get in exchange is worth less over
time than the commodity itself. Like DeBeers.

[screembloodymurder]

103. The shortage is real, but

conservation is the only answer that makes short term sense.

[Recursion]

108. In a very technical sense there is

ie, the volume of oil transactions has skyrocketed in the past year or so (not to put too fine a point on it: a group of people who saw the housing collapse coming wanted something else to do with their money and put it in long options on oil).

There's been no increase in demand for use of oil (in fact there's been a drop) but there's been a pretty big increase in demand for the technical ownership of oil.

[conspirator]

109. No shit! It's pure speculation. The RICH FUCKING the "MIDDLE CLASS" in the ass n/t

[Terry in Austin]

120. No shortage! Repeat until true.

... and if you believe really, really hard, Tinkerbell will come back.

[earth mom]

124. Sing it! Most of us around here know we're being bullsh*tted!

Wish I could give this thread a rec!

:thumbsup:

[mdmc]

129. I disagree

prices tell me that I am right