Price collapse or 5 dollar gas…

[Justin Turcotte]

This seems pretty far off the "advanced weather discussion" theme, but there's no reputable source of information that states such a thing. The supply RATES might peak in 30-50 years, but we certainly aren't going to run out.

http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004/worldoilsupply/oilsupply04.html

Many oil experts believe oil flow rates have in fact peaked or are very close to peak. Oil production is falling in the US, Mexico, UK, Norway, Malaysia, among others. Further, demand continues to rise in Asia and the Middle East. We will not run out of oil but will run out of cheap oil. There will never be a shortage of $300/bbl because nobody could afford it. The economic mess is curbing oil use and is likely to make 2009 chasing costs on par with 2005... not bad, not great, but damn affordable compared to this summer.

I refer you to The Oil Drum for some entertaining oil discussion. An eclectic mix of experts, weenies, doomers, and cornucopians.
http://www.theoildrum.com

 

[Quintin Erdman]

From my understanding, for some time there has been more demand for oil than supply by about 2m bpd. The recession is going to really get going in the Spring/09 and that is going to crush the demand for oil at home and abroad (Europe/China are going to really get hammered!) Right now, we have a world surplus of about 2.5/m bpd, causing the the prices to plummet. I see this springs gas prices around $2.00/gal and even under in some states. The dollar is going to be worth a lot more in the near future because Europe and China are in a bad way. Example: China has been running at 10% growth for years, they are looking to slow way down to maybe %4 or less, and they need somewhere around %7 to support themselves.

Call me an optimist, but I have been telling my friends for about two years that in a few years the oil market is going to collapse. Things are going my way on this so far. Hopefully we can get the lawmakers to drill domestically so we can have a sustained oil collapse during the recovery in a year or two.

Look for $45/bbl this coming spring!

 

[Skip Talbot]

OPEC and the other cartels will just slow production to inflate prices when demand drops. Sure prices may go down, but don't expect them to stay excessively low in the long run.

 

[Robert Edmonds]

OPEC and the other cartels will just slow production to inflate prices when demand drops. Sure prices may go down, but don't expect them to stay excessively low in the long run.

I was wondering about this though. Many countries that export oil have set the government budgets based upon prices staying above $80 a barrel, some $90. It's already at ~$75. If supply is cut that means there are less barrels going out which means less government revenue, if the prices stays low that's still a problem. Thus, is the best option really to cut supply to drive up price? Surely these exporting countries' governments meddle with the oil industry.

 

[Skip Talbot]

I was wondering about this though. Many countries that export oil have set the government budgets based upon prices staying above $80 a barrel, some $90. It's already at ~$75. If supply is cut that means there are less barrels going out which means less government revenue, if the prices stays low that's still a problem. Thus, is the best option really to cut supply to drive up price? Surely these exporting countries' governments meddle with the oil industry.

That depends on how elastic oil is as a product. The rate at which the price of oil rises may negatively effect demand at a lesser rate. Thus their profits may go up despite having less output. I don't really know much about how oil actually works on the market, but I believe this has been the cartels' usual response in the past, especially during the gas crisis we had the '70's.

 

[Justin Turcotte]

Oil prices have fallen to the point where many new projects would not be profitable...

Peter Robertson, vice chairman of Chevron, recently told lawmakers that the cost of new production in the deep water Gulf of Mexico could exceed $95 a barrel.

Oil from Canada's tar sands, currently producing about 1.2 million barrels a day, is arguably the most expensive oil in world, and is getting even more expensive.

Last year analysts estimated it cost around $60 a barrel to produce light oil from here. The most recent estimate from the Canadian Association of Petroleum Producers (CAPP) now puts that number at $75 to $90. Comparatively, Saudi Arabian crude is said to cost around $1 a barrel.

Bottom line: drilling or mining oil in NA is expensive. OPEC still controls the deck but they will probably be pumping close to full tilt anyway since they know plug-in hybrids and straight up electric cars will be going mainstream in the next decade. Better to get $70 now than $30 later. Further, OPEC is served best by not triggering significant inflation with the fragile world economy.

 

[Niccolò Ubalducci]

what is the price of 1 gal on the Central State!?

 

[Dann Cianca]

Chasing in Eastern Colorado yesterday, we filled up in Burlington for $2.46/gallon!

 

[Eric Friedebach]

what is the price of 1 gal on the Central State!?

GasBuddy.com may be of help.

 

[Rob Satkus]

what is the price of 1 gal on the Central State!?

Down to a low of $2.22 that I saw in Norman...ranges from that to about $2.39 around town.

RS

 

[Scott Weberpal]

OPEC still controls the deck but they will probably be pumping close to full tilt anyway since they know plug-in hybrids and straight up electric cars will be going mainstream in the next decade.

OPEC is talking about cutting production by 2.5 million barrels/day by the end of the week to drive prices back over $100/barrel.

 

[Leah Robertson]

OPEC is talking about cutting production by 2.5 million barrels/day by the end of the week to drive prices back over $100/barrel.

I thought that as well until I saw on the news today how oil dropped more than $3.00 to around $64.00 a barrel. I love the irony in this since OPEC's plan essentially backfired on them.

Here in NM, gas prices are hovering around the $2.50 mark and it's nice to once again have the option of filling up a whole tank of gas without twitching upon receiving the total price numbers of DOOM on the receipt.

 

[William Reid]

Here in the L.A. area I saw my first sub-$3.00/gal gas sign this morning. I thought that was great until I saw those posts of $2.20/gal gas in OK! We sure do get reamed here in CA.

I figure that crude will bottom out around $50/barrel this winter, as oil demand remains on the low side world-wide due to recession. History suggests that OPEC is not quite disciplined enough to cause major, sustained increases in the oil price. Gas pump prices will probably edge up towards next May as they usually do during the spring. I think that $1.50 to $2.00/gallon gas is fairly likely on the Plains in spring 2009. The primary wild cards will be the unexpected refinery shutdowns/explosions, war and terrorist stuff, etc., which could cause price spikes. If a gallon of gas drops to under $2/gallon again, then watch out for additional federal taxes if Obama and company are running the show.

Who was it that said "the best remedy for solving high fuel prices is high fuel prices"??


Bill Reid

 

[Jason Foster]

Gas low....time to tax, the politicians ask.

Yeah...California is about as bad as taxachusettes.

I wonder, if the gas prices stay low long enough, if politicians will look at raising gas taxes to help fund many of the ailing state governments. I know the tax addicts here in Maryland politics have already brought the topic up.

 

[Scott Weberpal]

Don't feel too bad...Wisconsin has the highest gas tax in the nation