Posted on 01/27/2006 5:23:10 PM PST by LouAvul
DAVOS, Switzerland (FORTUNE) - Be afraid. Be very afraid.
That's the message from two of the world's most successful investors on the topic of high oil prices. One of them, Hermitage Capital's Bill Browder, has outlined six scenarios that could take oil up to a downright terrifying $262 a barrel.
The other, billionaire investor George Soros, wouldn't make any specific predictions about prices. But as a legendary commodities player, it's worth paying heed to the words of the man who once took on the Bank of England -- and won. "I'm very worried about the supply-demand balance, which is very tight," Soros says.
"U.S. power and influence has declined precipitously because of Iraq and the war on terror and that creates an incentive for anyone who wants to make trouble to go ahead and make it." As an example, Soros pointed to the regime in Iran, which is heading towards a confrontation with the West over its nuclear power program and doesn't show any signs of compromising. "Iran is on a collision course and I have a difficulty seeing how such a collision can be avoided," he says.
Another emboldened troublemaker is Russian president Vladimir Putin, Soros said, citing Putin's recent decision to briefly shut the supply of natural gas to Ukraine. The only bit of optimism Soros could offer was that the next 12 months would be most dangerous in terms of any price shocks, because beginning in 2007 he predicts new oil supplies will come online.
(Excerpt) Read more at money.cnn.com ...
That's the message from two of the world's most successful investors on the topic of high oil prices. One of them, Hermitage Capital's Bill Browder, has outlined six scenarios that could take oil up to a downright terrifying $262 a barrel.
The other, billionaire investor George Soros, wouldn't make any specific predictions about prices
Hmmmm....Davos...Davos....now just WHY is this obscure City so familiar to me now...
Kerry, Kennedy press for filibuster
...Some Republicans poked fun at Kerry — the 2004 Democratic presidential nominee who may make another White House bid — for allowing others to announce the filibuster plan earlier in the day while he was attending an economic conference in Davos, Switzerland.
Hmmmm.....and again, this little City makes some news...
The Education of Alexandra Polier
...I met John Kerry for the first time in January 2001, in Davos, Switzerland.
(SNIP!)
To me, politicians were the ultimate celebrities, so in January 2001, when I cadged a ticket to the World Economic Forum in Davos, I was intrigued by the proximity to the powerful.
Sounds to me like we have some evidence here that certain "Leaders" are making deals and controlling America's future from a small Swiss Country
Yeah. I just hope that will change. Already is with Bush's plan to reporcess nuclear waste into plutonium but he will only have two years to do it.
Even now the cost of oil is not what we pay directly for oil. Indirect cost would include military action to keep oil fields and transportation available. If Iraq is not such a good example since Iraq is not producing much oil, consider Saudi oil, which was a target of Saddam. Consider the Navy presence in and around the Persian Gulf that keeps the nasties from blockading the routes at will. Commerce has overhead costs that are carried by the country as a whole besides ships and pipelines. It's very complex.
If we decide we need the oil, a way can probably be found. If the doomsayers are right, there's no way we won't get to that point.
ping
That is an interesting suggestion. The oil shale and sands are within the boundaries of the country and would not have the military overhead that the ME does. I don't have a number for the total real cost of oil counting everything, but the extra cost of producing from oil shale and sand would be compensated some by less military cost.
as direct result of my funding every conceivable cause and candidate that could possibly weaken the U.S., said Soros proudly.
This is naive. Not only is the Earth old, but what used to be desert was once jungle and sometimes vice-versa. Quite a lot of things were different back in the Cretaceous. Antartica wasn't always at the South Pole. Plate tectonics and all that.
"but the extra cost of producing from oil shale and sand would be compensated some by less military cost."
And transportation costs. Oil sands production totalling 500,000 barrels a day are moving into the American market through existing secure pipelines. The infrastructure is already in place for a resource that is larger than Saudi Oil reserves.
Plus Oil Sands reserves are calculated and publically available. SA does not allow independent auditing of it's reserves. Saudi reserves are a matter of guess work by Western oil analysts.
Now if we can get the Canuck bashers to fall in love with Steven Harper we can make some serious progress on Continental Oil security.
"These good ole rich boys would not be trying to scare the little people because of politics now would they?"
My guess is they are doing it for the MONEY ... they already have their oil futures SELL orders in as they run it up with their talk.
Reminds me of the internet bubble, when absurd prices were thrown around, an analyst would make a comment, stock would jump ... and the borkerage would be dumping the stock on the lemmings.
This is known as a "PUMP AND DUMP".
The bio theory is interesting and there might be something to it, but it is slow. It is possible there are some deep pools, but generally some kind of impermeable cap would be needed to trap and collect the oil and gas, so goes the oilman's theory, and that is probably more likely near the surface where geological layers form by sedimentation than deep. Besides that, we are certainly producing oil much faster than it formed.
"There are an estimated one trillion barrels of oil recoverable at today's prices from the oil sands of Alberta. The number one customer for that oil is the USA. If the Arabs want to sit on their oil, embargo their oil, eat their oil or rub it on their camels' heinies, I say let them."
Long-term that's fine, but for right now the oil sands production rate is 1 million barrels a day and our consumption is 20 million barrels a day.
OTOH, we *could* have North American oil independence, if we drilled ANWR and off our coasts, reduced oil via conservation, and starting using our shale oil resources plus the tar sands.
It comes down to resource cost. Oil shale and oil sands cost more in terms of how much of the resource is needed to extract a given amount of resource.
Exactly! Screw the carbou.
And where's the energy going to come from to create all this hydrogen?
nuclear power plants.
Well I think the concern, or at least a fundamental concern amongst peak oilers or "Hubbertians" (and under the policy of full disclosure, I am one) is the time it will take to implement alternatives in a massive way.
The SAIC report commissioned by the DOE (aka "The Hirsch report") explores the problem. Its available at the link below, all 91 pages of it. A good, no make that interesting read.
http://www.hilltoplancers.org/stories/hirsch0502.pdf
The upshot is that in order to avoid severe economic problems and social dislocation mitigation strategies need to be implemented some 20 years prior to peak. That is assuming a 2% decline rate. Experts suggest actual decline rates might range from 2% to 8% or perhaps even more.
Looking at the global production of 84 million barrels a day let us see what production would be at 20 years post peak given average annual decline rates of 2%, 5% and 8%.
2% decline: production after 20 years is at 56 million barrels a day
5% decline: production after 20 years is at 30 million barrels a day
8% decline: production after 20 years is at 16 million barrels a day
So the problem is in large part the speed at which decline could occur post peak. And given the US dependence on imports, we are especially vulnerable.
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