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Oil hits $82 per barrel as dollar plunges

Discussion in 'Political Discussion' started by Real World, Oct 21, 2009.

  1. Real World

    Real World Moderator Staff Member

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    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
  2. PatriotsReign

    PatriotsReign On the Roster

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    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!
    Last edited: Oct 21, 2009
  3. PressCoverage

    PressCoverage Banned

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    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".
    Last edited: Oct 21, 2009
  4. Real World

    Real World Moderator Staff Member

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    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.
    Last edited: Oct 21, 2009
  5. Holy Diver

    Holy Diver Rookie

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    #80 Jersey

    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?
  6. PatriotsReign

    PatriotsReign On the Roster

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    Hey, if they can put a price on water, they can do anything!
  7. Real World

    Real World Moderator Staff Member

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    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.
  8. Holy Diver

    Holy Diver Rookie

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    #80 Jersey

    Ha!...I know, huh?

    I wonder if there is more oil or water left on the planet?
  9. Holy Diver

    Holy Diver Rookie

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    #80 Jersey

    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.
  10. Wildo7

    Wildo7 Totally Full of It

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    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.
  11. wistahpatsfan

    wistahpatsfan Rookie

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    #75 Jersey

    Is air free? Words? Nevahmind....

    But I disagree with your reasoning on why we "protect" the oil fields in Iraq. Infact, the reason we trashed Iraq is so we could destroy the political system, corrupt as it was, so we would have a vacuum to enter and become permanently entrenched to...say it with me...CONTROL THE OIL! There was never another legitimate reason. We also needed a base to control the production of Saudi oil and any other oil we need. The alternative was to allow the Russians or Chinese grab it while we develop our own energy sources. That was a bad idea because that would have forced us to wean ourselves from foreign energy. That's bad. Just ask any oil company executive.
  12. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    Congrats RW you get the reading prize, Production is very different than reserves. Some can't acknowledge. We are getting peak because we are not developing our resources.
  13. Real World

    Real World Moderator Staff Member

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    Sheesh, obviously I meant if apples were a finite resource.
  14. Real World

    Real World Moderator Staff Member

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    Bingo. We're on the same page in this discussion.
  15. Holy Diver

    Holy Diver Rookie

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    #80 Jersey

    Wait....apples AREN'T a finite resource...?

    Strudel is gunna be ppi$$ed!

    I thought it was a funny comparason, thats all......

    In all honesty, it IS a real tough comparason, we really don't know much about the Earth's tank and how dry it is or isn't. There are a small number of people who DO know, and unfortunately, they have us all by the ballz if we don't decide to take that power back.

    Bonita Applebum.....you gotta put me on.
  16. PressCoverage

    PressCoverage Banned

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    RW, I've told you this before, but there's no need to ever ask if I've read the links I present. I've read every word, just as I always have. We'll just assume it from this point forward, thanks.

    Have you read them? Do you even understand what you're reading or skimming?

    What in God's name is the difference? Running out, can't get to it, heavy oil that won't refine -- the point is they're all pointing to an impending OIL CRISIS that will shock (and is shocking) global financial markets! What matters is what oil is recoverable, not what a computer model suggests might be present.

    If you've read and absorbed ANY of my posts the past 3-4 years, you'd know I said oil wouldn't run dry completely, just that the low hanging fruit had all been picked and harvested. The easy stuff that's yielded a 100:1 return on investment. From peak oil onward, the globe has to realize that the remaining oil will be increasingly harder to get to, extract and refine, and thus, incredibly expensive. For all intents and purposes, it is running out. The cheap, easy to extract stuff most certainly has passed peak. Meanwhile, population continues to skyrocket. Population explosion MADE POSSIBLE by cheap energy, make no mistake about it. This is basic Malthusian Theory coming to fruition here.

    If you're giddy about "3 trillion" barrels remaining (as Hess alludes to), you're probably unaware that most of it is (a) unproven, and (b) heavy oil shale. Oil shale refines to kerogen, a synthetic. Modern vehicles will not run on kerogen. Further, it returns something around 3:1 to 5:1 on energy invested. Now compare that to 100:1 of light sweet crude, and tell me how investors are going to be able to pull that off and maintain "growth?" The planet has enjoyed "growth" because it assumed limitless cheap energy supply. A 100:1 ROI made for quite a bit of growth.

    Never mind that oil shale is essentially strip mining of the most disgusting and damaging kind, and pollutes the ground water table for miles around. Are you prepared to turn the Rocky Mountains into a gravel pit for 5:1 ROI? Are you prepared to scrap 800 million vehicles for a new kind of car that runs on this heavy, dirty stuff? Where is the capital going to come from? It'll take 30 years. Meanwhile, collapse is beginning now.

    You didn't read my entry before the CERA link, did you? I clearly said that CERA, long holding out on Peak Oil theory for years, is finally conceding that Peak is here. They stubbornly maintain that it's a demand problem still, not a supply problem. They're only partly correct, as it is both.

    Leave it to you to try and assert that you're smarter than the forum, and no one is objective like you. I presented the links for you to read them on your own, so why are you pretending anyone's trying to dupe you? If you were truly objective, you would have commented on all the links, not cherry picked the ones that seem to support what you hope to be true.

    For all that, I don't think I understand your overall point here. What are you complaining about? Do you deny that mankind is facing an energy crisis at all? Are you saying it's all just China and India's fault for wanting to drive more? Or do you acknowledge the energy crisis, yet merely blame it all on a lack of will to finance our way out of it?

    Oil production rates are declining. And not because of the recession. The global recession is a RESULT of global oil depletion. Period, end of story.

    I can provide dozens more links that support that case. Hopefully you don't view the International Energy Agency or the UK Energy Research Council as "slant."
    Last edited: Oct 21, 2009
  17. Harry Boy

    Harry Boy Look Up, It's Amazing PatsFans.com Supporter

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    I never thought about it that way but of course we could always find another one if the bastards didn't want to let us use theirs.
  18. alvinnf

    alvinnf Rookie

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    This dude will help us find the oil!!!!
    [​IMG]
    So gas up the Hummer?
  19. Wolfpack

    Wolfpack Banned

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    Well, there is a limitless supply of water coming from most kitchen faucets but some people pay even more for water than they do for oil...
  20. Run DMC

    Run DMC Rookie

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    #24 Jersey

    This article explains it all quite clearly. The gubmint is depreciating our dollars and our standard of living in the process. The chief symptom of this disease is rising oil prices. It has zero to do with "peak oil" which is a phenomenon coming down the pike 20-50 years from now. I advise all people to get tangible assets. This game cannot go on forever.
    The Game - Part I: Queen of Hearts - Eric Janszen - iTulip.com

    "Deflationist’s do not understand that even if the all other policies fail to raise inflation expectations, for a net debtor, the fourth tool—currency depreciation—is foolproof. Paradoxically, currency depreciation is also the one tool that U.S. policy makers can never explicitly admit is being pursued.

    The U.S. monetary system is not on a gold standard in 2009 as it was in 1933. Instead the U.S. and the rest of the world monetary regime employ a de-facto global oil standard.

    To prevent a liqudity trap via currency depreciation, instead of depreciating against gold the U.S. government depreciates the dollar against oil.

    The result? Rather than oil prices falling to $16 a barrel as in 2001 after the economic contraction that followed the 2000 stock market crash, after the credit market crash of 2008 oil prices briefly fell to $36 and were back to $66 by June 2009. Oil prices averaged $100 in 2008 despite the worst financial and economic crisis since The Great Depression."

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