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Ready for $262/barrel oil?
yahoo ^ | 1-27-06

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 ...


TOPICS: Business/Economy
KEYWORDS: arabs; bric; china; cis; coldwar2; communism; davos; energy; gasprices; gulfwariii; india; iraq; islamofascism; israel; kgb; libya; norigs; oil; oilembargo; opec; plentyoil; putinoil; russia; russianoil; saudiarabia; sco; soros; sovietunion; syria; terrorism; ussr; venezuela; waronterror; wot
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To: oust the louse

"CanWest Petroleum (cwpc) is about $4.45 per share right now as a leader in the infancy stages right now in the oil sands....probably not a bad play to get in right now before it shoots to about $50."

Good call if you think the maginal price can hold above $29 with all that supply.

I like XOM as a simple hedge.


221 posted on 01/27/2006 9:16:36 PM PST by Sunnyflorida
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To: Paul_Denton
And you could probably end up producing some electricity through co-generation.
222 posted on 01/27/2006 9:18:02 PM PST by fallujah-nuker (America needs more SAC and less empty sacs.)
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To: fallujah-nuker

Exactly.


223 posted on 01/27/2006 9:20:20 PM PST by Paul_Denton (Stom ta jora Ahmadinejad)
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To: MilspecRob

"Its best to think of hydrogen as a battery"

Brilliant; for those of us that know what a battery is!


224 posted on 01/27/2006 9:21:39 PM PST by Sunnyflorida
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To: WOSG

>>"A: CERA's "undulating plateau" will be characterized by
>>escalating prices (a dramatic rise in prices) "

>>Misinterpretation IMHO. They never said that.


Listen to the audio- Esser does and Esser spoke for CERA at the Congressional hearing- the precise point is 01:46:27 and it goes for about 2 minutes to 01:48:05 or so

just listen to the audio

And rather than having to wait for it to load just download this and fast foward http://media.globalpublicmedia.com/RM/2005/12/HouseEnergyCommitee.20051207.mp3


225 posted on 01/27/2006 9:22:16 PM PST by NYorkerInHouston
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To: R W Reactionairy

"This brings me back to your belief that there is 3 trillion barrels in still to be produced oil."

It's not a controversial statement to say that we have 3 trillion barrels of oil available. This is from the IEA. Actually, one of the resource charts I've seen shows *7 trillion* barrels,
including various unconventional. Warning this is a PDF:

http://www.iea.org/textbase/nptable/Oil%20cost%20curve,%20including%20technological%20progress,%20availability%20of%20oil%20resources%20as%20a%20function%20of%20economic%20price.pdf


What that chart shows is effectively 5.5 trillion recoverable barrels of oil at a price point of $70/barrel or less... oil shale, tar sands/bitumen, deepwater, artic, and then the conventional OPEC and nonOPEC resources. If you notice, the total conventional resources is about 3 trillion barrels.


See also:

http://www.iea.org/Textbase/npsum/oil_gasSUM.pdf

Key statement:
"Proven reserves amount to 2.2 trillion BOE."

Proven reserves are very cautious, sure to be exceeded estimates.


226 posted on 01/27/2006 9:24:14 PM PST by WOSG
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To: Argus

Its obvious that Russia and Canada will be the kingpins of oil by 2020. The mid-east has alot of issues, and it'd be best to drop them from the buyers market.


227 posted on 01/27/2006 9:26:47 PM PST by pepsionice
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To: Mulder

"Shell says they have in situ technology that can extract oil shale for about $30 a barrel. See: Promises, promises. When oil hit $40 a couple of years ago, I saw similar posts here. Then people said the same thing when it hit $50. And $60. "

Huh?!? The post I linked to was an article about 4 companies doing in-situ experimentation. Shell is moving towards commericalization by 2010.
Meanwhile, tar sands production in Canada is hitting new highs.

"These new "technologies" appear to be as Matt Simmons says, simply bigger straws to get the existing oil out."

Well that's a silly comment since shale oil and tar sands are quite different from conventional oil, economically and geologically. Apples v oranges. Yet the vast reserves make these very secure sources if they can be extracted economically. So far, tar sands are a "yes". Jury is out on oil shale, but your comment is misplaced. These things dont happen overnight.


228 posted on 01/27/2006 9:27:33 PM PST by WOSG
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To: R W Reactionairy

Indeed. Seems like we've outsourced common sense right along with all the engineers we don't "need" anymore. This is what happens when the nation is led in the political arena by lawyers, and by financial types in the business arena.

Yeah, let's just make some laws and move some money around - and presto - we'll have all these shale oil and alternative energy infrastructures all in place in time for next Monday's Chicago commodity exchange opening. These MASSIVE infrastructural changes take a decade or two to get in place - all the while that "here and now" oil prices are the reality.


229 posted on 01/27/2006 9:28:16 PM PST by guitfiddlist (When the 'Rats break out switchblades, it's no time to invoke Robert's Rules.)
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To: RightWhale; Paul_Denton; neutronsgalore
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.

Excellent point. I recall reading somewhere (prior to 9-11) that we spent about sixty billion dollars a year to secure the flow of oil from the Mideast. That amount to a taxpayer subsidy for oil imports, right now we import about four billion barrel bbl per year, that works out to a subsidy of $15 per bbl.

What goes unmentioned is the role that free trade has had in getting the US dependent upon the free flow of Mideast oil, even if we ourselves get most of our imports elsewhere. Knowing that OPEC can drop the price once there is a glut to wipe out synthetic oil keeps the industry from developing. Free trade and energy independence are mutually incompatible.
230 posted on 01/27/2006 9:34:00 PM PST by fallujah-nuker (America needs more SAC and less empty sacs.)
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To: Sunnyflorida

"This is the first thread where a few people actually understand economics. Refreshing."

Yeah it's frustrating isn't it? It's not like the oil business is rocket science. All you have to do is read the news.

Being able to think outside the box doesn't hurt either.


231 posted on 01/27/2006 9:36:22 PM PST by beaver fever
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To: WOSG
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.

Congratulations, you're the first one on this thread to use the correct acronym, ANWR!
232 posted on 01/27/2006 9:36:32 PM PST by fallujah-nuker (America needs more SAC and less empty sacs.)
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To: LouAvul
LOL

What a load of B.S.!

There are a ton of other energy sources that become economical far below even $100/bbl.

233 posted on 01/27/2006 9:36:34 PM PST by B Knotts
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To: Jack of all Trades
I'm getting 3 cords of oak, maple and ash tomorrow at $75/cord

Good grief, that is cheap. I used to cut wood in high school, and sold juniper for 70 a cord and oak for 90. That was about 1980. Sounds like wood cutting is even worse a job now than it was then.

Are those full cords or face cords? (i.e. 4x4x8' versus 4x8x2'). I only sold full cords, so if you're buying face cords then maybe it's not so bad.

-ccm

234 posted on 01/27/2006 9:38:19 PM PST by ccmay (Too much Law; not enough Order)
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To: LouAvul

How do they get to $262? Not $261 or $263? I'm not going to bother reading the article b/c they have to resort to BS tactics to make it look like the "guess" is something other than speculation.


235 posted on 01/27/2006 9:39:58 PM PST by bluefish (Holding out for worthy tagline...)
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To: Mulder

"The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years"

Hmmm. 30 to 40 years?!?
Also "The engineers determined that the higher rate of production was causing pressure drops, water intrusion, and other formation damage to the underground reservoirs. Thus, according to KOC, 1.7 million barrels per day is considered to be the optimum rate."


... so this is not about running out of oil, this is about making sure their golden goose keeps laying eggs, for another 40 years.

Proven reserves are always underestimates. The Saudi are wrong to estimate about 250 billion barrels ... it is certainly a lot MORE than that.


236 posted on 01/27/2006 9:41:17 PM PST by WOSG
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To: Paul_Denton

it CAN be done. not on a scale large enough at this time, but efficiency is increasing. Its a simple law.. you can never generate more energy that you input. But, if the source is free or dirt cheap (fission heat, wind power, solar, etc), it is extremely viable conversion.


237 posted on 01/27/2006 9:42:44 PM PST by FunkyZero
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To: R W Reactionairy

"BTW, I am still wondering where is is that you believe that 3 trillion barrels of yet to be produced oil is hiding."

Posted a reply already ... Check the IEA publications.


238 posted on 01/27/2006 9:43:39 PM PST by WOSG
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To: FunkyZero

Yep that is true. Super conducting wires would help a lot in splitting water. Right now gold and platinum is too expensive but some say carbon buckyballs or nanotubes could do it.


239 posted on 01/27/2006 9:44:33 PM PST by Paul_Denton (Stom ta jora Ahmadinejad)
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To: WOSG
http://energy.cr.usgs.gov/WEcont/world/woutsum.pdf

Per the USGS it looks like three billion barrels of liquids including:
already produced circa 500 billion!!!
NGL not yet discovered and reserve growth circa 250 billion.
Oil undiscovered oil 650 billion and
Oil reserve Growth 600

Sorry, nothing even vaguely conservative about these estimates or the very similar 3 billion barrel number you have been citing.

BTW, yes the Canadian tars sands, the Orinoco tar sands and some of the oil shales can / will be produced. However, the peak oilers who you are trying to debunk are for the most part drawing conclusions about oil not hydrocarbons that can be converted into oil.

240 posted on 01/27/2006 9:57:15 PM PST by R W Reactionairy ("Everyone is entitled to their own opinion ... but not to their own facts" Daniel Patrick Monihan)
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