Real World

Could we be looking at the beginning of a potential wave of inflation? I saw this discussed last night on CNBC (god those financial channels look amazing in HD). They spoke about how inventories are high, and demand low. That it's the tumbling dollar that is raising the cost of fuel so much. Understand as well, that oil, gasoline, and petroleum in general, has its hands in every aspect of an economy. From transportation, to operations, to product composition, to consumber cash, home heating, etc. It's everywhere.


Oil hits $82 per barrel as dollar plunges

A barrel of oil hits $82 as dollar falls to fresh low against the euro; pump prices rising

By Mark Williams, AP Energy Writer
On 4:02 pm EDT, Wednesday October 21, 2009

Oil prices hit new highs for the year Wednesday just as the dollar fell to new lows against the euro, showing how much the weak U.S. currency has come to dominate energy markets.

Benchmark crude for December delivery rose $2.25 to settle at $81.37 a barrel on the New York Mercantile Exchange. Prices hit $82 at one point.

Gasoline futures spiked and Brent crude rose $2.45 to settle at $79.69 on the ICE Futures exchange.

The run-up in prices came within minutes of a government report showing that crude supplies in the United States are growing and that refiners are producing very little gasoline because consumers aren't using as much.

Oil hits $82 per barrel as dollar plunges - Yahoo! Finance

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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him."
Leo Tolstoy, 1897

PatriotsReign

I don't think petroleum alone is enough to cause hyper-inflation if that's what you're saying RW. It can cause significant inflation, yes. But without high demand, it would be difficult for super-inflation to ocurr.

It's so complicated, even the best and brightest economists can't predict it. If the rest of the world's economies were booming, that would make it much worse. But the reality is, they're doing worse than the US.

My personal opinion is that we're going to see instability in the markets (including oil) along with unstable currency. Many economists feel that we'll drag on for years before any real & lasting recovery takes place.

If you look at indicators like the cost of shipping and shipping capacity, you'll see that their at less than 50% of capacity. No one is buying anything in most major industries. Very few homes, cars, trucks, airplanes, manufacturing equipment are being sold. Home furnishings are at 30 year lows...that's why you see Mr. Jordan trying to sell a queen sized memory foam mattress PLUS a 32 inch high-def flat-screen for $799....and STILL no one's biting!

PressCoverage

They are wrong. Supply is waning. The confirmation of this fact comes from all over the planet, and from all sectors.

This thread should more accurately be titled: "Dollar plunges as oil hits $82pb"

This is why global markets are panicking, in advance of undeniable decline rates... More confirmation from all parts of the globe (outside of the U.S., of course), just from the past couple of weeks...

Hess warns of 'devastating' crisis

John Hess, the chairman of the US independent producer of the same name, has fired a warning shot to the world, claiming a “devastating oil crisis” looms large on the horizon if global action is not taken.

In a speech delivered at the Money & Oil conference yesterday, Hess said "The reality is that an oil crisis is coming that could prove devastating to future economic growth. Given the long lead times of five to 10 years from oil discovery to production, we need to act now to avert this outcome.”

Hess concluded that the world must make concessions and put global interests first, so that everyone benefits.

Read the full speech here: Hess Corporation

Warning over global oil 'decline'

There is a "significant risk" that global production of conventional oil could "peak" and decline by 2020, a report has warned. The UK Energy Research Council study says there is a general consensus that the era of cheap oil is at an end, but it warns that most governments, including the UK's, exhibit little concern about oil depletion.

But the authors say the risk presented by global oil depletion deserves much more serious attention by the research and policy communities. "Much existing research focuses upon the economic and political threats to oil supply security and fails to either assess or to effectively integrate the risks presented by physical depletion," they argue.

Read more: BBC, The Telegraph, Science Daily, The Guardian

Download full report from here: UK Energy Research Centre

Credit Suisse: Big players face output struggle

Credit Suisse expects the major US and European integrated oil companies to struggle to boost output to 2020, saying the sector is unlikely to see any volume growth over the coming cycle. However, the brokerage said Chevron is the only one of the major players where it sees the potential for volume to stay flat or even increase slightly over the coming cycle to 2020.

Credit Suisse said net production growth will be very tough for this group of companies to deliver, given the ongoing problem of decline, and the pressures to sanction new growth projects before these declines set in. "Mature decline rates, project delivery timing, maintenance, and weaker demand (for natural gas mostly) have all played their part in this," analysts said.

http://www.upstreamonline.com/live/article189458.ece

Total warns of looming supply crunch

The world will face a supply crunch by the middle of the next decade, French oil giant Total said in its mid-year outlook. Total also said costs in the areas which account for most of its $18 billion investment budget, such as subsea equipment, onshore facilities construction and pipelines, would fall between 10% and 20% this year on last year's figures.

Total said cuts in oil sector investment since crude prices slid from last year's highs of more than $140 per barrel have have slashed 4 million barrels per day off its estimate of 2015 global oil production capacity.

http://www.upstreamonline.com/live/article188324.ece

This one is my favorite, because for years, CERA denied Peak Oil was coming. Now, they've changed the game, and while still (somehow) insisting it's not a supply problem but more of a demand problem, have conceded that Peak Oil has arrived:

CERA Global Oil Group Managing Director Jim Burkhard spoke at a CSIS session on “Transforming the Transportation Sector: Energy Security, Climate Change and Transportation”.

During his presentation, Mr. Burkhard explained that in acknowledging that peak oil is here, CERA’s interpretation is that US gasoline demand peaked in 2008 and is expected to decline in future years. He also stated that CERA maintains its position that the reasons for US liquid fuel demand having peaked are economic and geopolitical in their nature, rather than in any way driven by geologic factors. He repeatedly came back to the notion that "peak oil is here".

Real World

Did you read some of those links? The Hess guy is in no way saying that we're running out of oil. He's speaking about oil production capacity. Two separate issues entirely. In fact, he clearly states that "we are not running out of oil".

On page 3 of his speech, he says the following:

The CERA guy is mincing words as well. He doesn't sound like he's speaking about peak supply either. These people are talking about global production capacity, the coming increase in 3rd world consumption, and the need to plan ahead with respect to drilling new resources, since it takes time to harvest oil from new reserves. This is why I always try to read things on my own, and not rely soley on an article that has a bias, or a slant.

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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him."
Leo Tolstoy, 1897

Holy Diver

Unless the Earth is filled with an oil machine, we have been running out of oil since they day they started making lamps...

I love these morons who claim that there will be oil FOREVER, and not to worry about it....


why did we protect these oil fields in Iarq, if the supply is limitless.....why does the price keep going up if its all over the place? Why is there even a PRICE?

PatriotsReign

Hey, if they can put a price on water, they can do anything!

Real World

I don't think anyone on the planet believes the supply is endless. I certainly don't. However, your line of logic is flawed, and your range of reasoning far too simplistic. If you had a million apples, and you consumed an apple a day, it's true that on day 2, you would have fewer apples than you did on day 1, but you'd be hard pressed to convince someone that you were "running out" of apples. If we've indeed consumed a trillion barrels of oil to this day, and there are another 3 trillion available, I'd say we're good to go for some time. Again though, I'm not someone that believes the supply is endless. It's finite for sure.

We protected the oil fields in Iraq cuz it's the only resource the country has, and if they lost the capacity to produce it, their recovery, and the effect of it's loss to global markets, would have made matters far worse. Furthermore, in this instance, the price is going up because the dollar is in freefall. If you bothered to read the article linked, you'd have learned that supply is high, and demand is down. That usually causes a drop in price. Since oil is sold in dollars, it's weakness is being reflected accordingly, with respect to oil.

There's a price cuz nothing is free.

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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him."
Leo Tolstoy, 1897

Holy Diver

Ha!...I know, huh?

I wonder if there is more oil or water left on the planet?

Holy Diver

Oh what fun to fight my supposid flawed agument with another.... we can grow more apples from apples, we can't grow oil from oil...If there was someone called "Johnny OILseed" maybe you'd have a case....


but you are comparing Apples to Oil......





All I'm saying is that we ARE running out, have been since the day we started mass consumptions of the substance. NOw, what you need to be asking is what are those who have the power (Literally and Figuratively) doing to prepare us for a world with none-to-less oil resouces?

not much....and thats what is scary.

Wildo7

In fairness to RW, I think his point is that it doesn't matter that we are running out but how fast we are running out. This is something that I am personably unable to put into perspective since the industry is less than transparent and the experts in the field are likely to be tight-lipped or biased in answering (or just don't know). I'd love for Obama or someone to put some kind of bipartisan commission together to answer that question. The results would likely be tainted but far more accurate than what we have IMO. And I know PC is huge on the peak oil topic and far more knowledgeable than I am, but I haven't seen enough info to personally believe that the world's supply of oil is anywhere near running out.

Assuming for a moment that there was a near infinite supply of oil, and our production capacity didn't grow to meet the booming population and massively expanding Chinese et. al economies, then you would have the same result you are having now; with oil prices going up and economies suffering because of it. In other words, I haven't seen anything occur that wouldn't have occurred unless there was a looming oil crisis. The fact that refining capacity was seemingly capped before demand grew such a huge amount is far to large of a mitigating factor to decisively say that there's solid indications of oil running out in the near future.