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 ...
It is also an example of how nearly every oil field in the world operates. They all produce water, they all separate the oil, water and gas, they all inject the water back down hole, and as the field ages the ratio of oil to water goes down.
Reality aside ('not enough'), I believe where there's a will there's a way. Look at the increased production during WW2. "Never" doesn't allow for human inventiveness.
People were saying that about $40 oil. Then $50 oil. Then $60 oil. And $70 oil. So where are our alternative technologies?
The problem is not the price of oil today but the long term price. When oil fluctuated from $11 per barrel in 98' to $70 in 05' few people invested the billions of dollars in alternatives like oil shale, bio fuels, etc. unless they knew for certain prices won't crash again a year or two down the road. If oil stays at $70+ these technologies will come on line but not until. Oil Sands is the first to come on line because the profit margin kicks in around $25-30+ per barrel. Shell Oil has already done 'in situ' tests with oil shale in Colorado that works.
High voltage lines, megavolts, can carry electricity farther. Ordinary high tension lines lose 50% in 300 miles.
Maybe so. My grad studies were in business management.
Or more darkly, is their a cabal with big oil and the leaders of this once great nation to continue to restrict drilling to keep the supply down and the prices up so big oil can squeeze more $'s profit out of the same barrel of oil? Or why sell the same barrel for $30 if you can get $70 for it in a rigged game?
Being here in Central Tx. and having a fairly mild if dry winter (at least it rained today), I don't need as much wood as you do. But we have heated our house this year with the stove and has worked out well as in no huge electric bills. I have a cheap source of wood in northeast Tx. an area I have to drive to frequently anyway. Cost for me is $50 a rick (what you or someone else called a face cord). My point in posting this here is that you, I and probably many others are already exploring alternatives.
I think I've been trumped!
Which proves my point.
Coal can be used locally to generate electricity which can be transmitted great distances.
All we lack is the political freedom to use our energy resources to prevent '$262 oil'.
"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."
In other words, Browder is engaged in the pump, prior to engaging in the dump.
The same could be done with North Slope oil/gas, and also the ME and Russian sources. Hooking up nuclear plants to the grid once it is built would practically eliminate the need to pollute. What would it cost to install a multi-megavolt trunk system worldwide?
Just a quibble. Hydrogen works as a battery. It stores electrical energy in a chemical form for later use. And that's OK and may have real economic potential. For example, today, there is no way to use the output of nuclear power plants to power cars. So if we would build nukes and use the electricity to split water into Hydrogen, that could be a real alternative to imported oil--albeit, probably more expensive than imported oil.
What frosts me is the green campaign on hydrogen is that they try to pawn it off as an energy source. (A lot of gullible conservatives have been taken in by the campaign.)
A conversion to a 'hydrogen economy' without also developing alternative energy sources (like nukes or coal) would leave us in the worst possible energy world. We would have to produce our hydrogen for our cars with imported oil and it would be a lot less efficient than using the oil directly. So we would end up even more dependent on imported oil than we are now. All in the name of being more green.
The same could be done with North Slope oil/gas, and also the ME and Russian sources. Hooking up nuclear plants to the grid once it is built would practically eliminate the need to pollute.
RightWhale
At #95, you were saying that coals 'resource cost' [transportation] makes it uncompetitive in the energy market. That 'cost' is political, imo, not factual.
What would it cost to install a multi-megavolt trunk system worldwide?
A lot less than a world war over $262 oil.
Check post #270!!! LOL.
Why don't these people realize that if "big oil" "chooses" to sell $30 oil for $70, why $70? Why not $7000? People are friggen amazing. But it is a good thing and I should not complain, I make a darn nice living trading against the stupidity.
FR People everywhere anyone paying more than they have to for any product or service and anybody anywhere charges less than they can get.
There's no question that there have been a lot of wrong predictions. Not knowing what data went into Campbell's 1998 prediction, I cannot identify what was overlooked in his assessment. Obviously something was.
The biggest issue at this time is the OPEC data, or the lack thereof of verifiable data from thos countries, especially but not limited to Saudi Arabia. Most peak oilers would give a peak date ranging from 2005 to 2015, though the earlier dates seem to involve just light sweet crude and the later ones light, heavy (but not tar sands/shale), polar, deep sea and gas to liquids.
If Saudi Arabia can keep it going and increase production to 12 million barrels a day as CERA predicts than we just might make it to 2015, but if Ghawar starts declining before 2015 and with it Saudi Arabia (outside of CERA's predictions) then its difficult to come up sufficient additional oil production to avoid a peak.
As I mentioned earlier in this thread, time to mitigation is a significant issue, and per the Hirsch report to avoid substantial economic hardship and social dislocation due to demand destruction, intensive mitigation strategies should be implemented 20 years prior to peak.
http://www.hilltoplancers.org/stories/hirsch0502.pdf
Here it's less of a question of Reuters accuracy than it is a question of Petroleum Intelligence Weekly's accuracy.
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