Oil's tipping point: Where is it?

Houston Chronicle ^ | April 22, 2008, 9:56PM | KRISTEN HAYS

[thackney]

Sorry, but understanding the industry is greatly different from being able to predict the pricing market.

I do believe Natural Gas has more possibilities in short term growth of supply, but I wouldn’t make any promises about which would rise faster.

[thackney]

Reserves 1/5 the size of the US (not counting places like ANWR and Florida Coasts) is not going to flood the market. It will help, but this a expected to be less than half the size ANWR.

[ConservativeDude]

Well, it also doesn’t help that OPEC has initiated much of this “falling dollar” scenario by deciding to ditch the dollar for the euro. “

Is that official OPEC policy? I did not know that, but that sure makes sense now.

[thackney]

No.

[Gvl_M3]

One thing I would like to see added to the futures market, is that you have to be able to take delivery of the oil you purchased.

With Rolf’s example, you can buy food, store it yourself, and sell it a year latter.

How can I buy 1000 barrels of oil and store it in my .25 acre back yard?

If this was a requirement, it would greatly slow down the speculation.

[wardaddy]

it will start when demand goes down due to intolerable price.

and that has started...give it time

just like the early 70s and 1980

problem now is when are we gonna decide that Enviro-Weenie gas prices are too damn high

[Sgt_Schultze]

At this point, it's not even a supply issue. US refinery utilization is running at only (about) 82% of capacity. There's still residual capacity but slowing delivery allows for a larger profit.

[ROLF of the HILL COUNTRY]

How?

[Sgt_Schultze]

how what?

[7mmMag@LeftCoast]

Not to burst your bubble, but the DOE document seems to indicate consumption will out pace prouction by 2030, except for only the most optimistic estimates - which rarely comes to pass.

As a matter of fact they indicate historical trends of consumption greater than production for 1990 through 2005, though it is harder to gauge due to the fact that DOE omits the 2004 and 2005 consumption data, but includes it for the prouction data, makes it harder to compare apples to apples.

Was that intentional?

[ksen]

So, when do the developed nations of the world tell OPEC no more food shipments until oil production goes up?

[trumandogz]

Thank God that the Chinese and Cubans are drilling off of the coast of Florida. The US certainly can’t.

I was not aware that the Chinese and Cubans were drilling off of Florida. Do you know if they are actually drilling in U.S. territorial waters?

[trumandogz]

Bush Would Use Power of Persuasion to Raise Oil Supply (2000)

WAYNE, Mich., June 27 — Gov. George W. Bush of Texas said today that if he was president, he would bring down gasoline prices through sheer force of personality, by creating enough political good will with oil-producing nations that they would increase their supply of crude.

http://www.nytimes.com/library/politics/camp/062800wh-bush.html

[7mmMag@LeftCoast]

Would not matter, you still need refining capacity to handle the increased production.

Despite the misleading % utilization number in a previous post pertaining to refining capacity, the utilization rate is due to the high maintenance needs and down time of 50 to 90 year old refinery equipment, not because someone wants to artificially stimulate profits.

These people need to learn something about maintenance and production equipment. Pumps, compressor, motors, reformers, etc. do not magically run forever.

The older refineries will never increase production and utilization rates without a major investment that includes restructure and/or replacement of their current refining equipment/systems, which could potentially cause a refinery to shut down for 2 or 3 years - then the libs would really scream.

We need to build MORE REFINERIES, but the lib goofballs won't let us do that either. Then again if my premise that the oil may run out in about 80 years is correct, then none of it matters that much in the long term. We need to build more nuclear power plants, a lot more and soon.

[thackney]

If this was a requirement, it would greatly slow down the speculation push all futures trading to overseas markets.

[thackney]

it will start when demand goes down due to intolerable price.

and that has started...

Not yet, Global demand for oil continues to rise, although at a slower rate.

[Eva]

Reducing oil consumption in the US will do nothing to lower the price. The slack will be picked up by China and other countries. If the demand does eventually decrease, the producers will cut output.

[thackney]

As a matter of fact they indicate historical trends of consumption greater than production for 1990 through 2005, though it is harder to gauge due to the fact that DOE omits the 2004 and 2005 consumption data, but includes it for the prouction data, makes it harder to compare apples to apples.

Was that intentional?

The sources for each are from different EIA documents.

I tried looking at a common source like their International Energy Outlook, but it is nearly a year old, to be updated in May. And some of those historical dates are based upon 2004 data.

http://www.eia.doe.gov/oiaf/ieo/oil.html

It is almost impossible for any organization to accurately predict out to 2030. As an example, look at what their price projects were from just last year.

In spite of their wide band, we were outside it rather quickly.

Higher prices than predicted "should" decrease demand and increase supply. On the other hand, the fact we are already outside their band of anticipated pricing means conditions are already beyond what they considered.

[tatown]

“Are you putting your own money on that claim in the futures market? If US gasoline consumption fell by 20%, that is only a 2% decline in the world oil consumption.”

If US consumption represents 25% of global consumption, how does reducing the US consumption by 20% only reduce global consumption by 2%?

You might want to check your math but:

20% of 25% = 5% (not 2%)

[thackney]

US consumption consist of a lot more than gasoline. Gasoline is less than half our petroleum consumption.

The US consumes about 9 MMBPD of gasoline. The World consumes about 85 MMBPD of crude oil.

20% of 9 = 1.8

1.8 = 2.11% of 85