# Oil how high will it go?



## Elphaba (22 May 2008)

It was inconceivable a few years ago that oil would reach $130 a barrel as it has done today. There is not enough oil to keep our world economy running. A small shortfall between demand and supply is enough to shatter oil dependent economies. Add to this market speculation, weak dollar, inflation, geopolitical tensions. As oil continues to rise, so will utilities, food etc. (which will have disastrous effects on poorer economies.) and our own economy with more job losses.  Governments will have to intervene IMMEDIATELY by reducing tax, vat on fuel and banning completely all plastics used in packaging that are not essential. Or is it all too little too late. During the 1970s oil shocks (I remember my Dad queuing for oil) the 5% shortfall in the production of oil caused price of oil to nearly quadruple.Those price shocks were only temporary.The coming oil shocks wont be so short lived, Its the onset of a new permanent condition. Quote Dick Cheney 1999 speech -2% ANNUAL GROWTH in oil demand, 3% natural decline in production, by 2010 we will need additional 50 million barrells a day.  So I wont be surprised if it hits 150 a barrel anytime soon. 
(unless there is serious profit taking) Were all doomed!


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## z109 (22 May 2008)

Elphaba, in what way will cheapening the price of petrol and diesel by removing tax and VAT help conserve it? 

Do you buy a coffee in the morning? How much does a cup cost? €3? How much is in it? 1/3 a litre? So when petrol is €9 a litre, maybe people will take seriously that there is a limited supply of it...

An alternative view to the one that says that we have reached peak oil is that there is another supply shock. OPEC are producing just enough to meet demand and keep prices high. Why would they let prices drop back to $20 a barrel? (Not that I don't think peak oil will happen, just that I don't think it's here yet).

The reason your dad had to queue for petrol in the seventies is that the dockers went on strike and so there were no deliveries. Same reason there wasn't a bag of coal to be had! I have fond memories of pushing the mini in the queue with my dad, coasting down hills, and pushing the car out of the driveway. I'm sure he doesn't remember it that fondly!

BY the way, research has shown that tin foil hats actually increase the intensity of the waves governments are firing at us.


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## z109 (22 May 2008)

PS. If you want doomed, read up on Credit Derivative Swaps (CDSs)...


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## Elphaba (22 May 2008)

In no way do I think that by cheapening price of petrol is going to conserve it.
I was indirectly referring to the high cost of transport, which affects my business since we export, and is a long term concern, not just for me.

We have reached PEAK OIL, it is a dirty word, in major financial companies,
as anyone loudly proclaiming PEAK OIL, would not be tolerated as it would be pretty tough to market other equity investments that rely on oil.
www.lifeaftertheoilcrash.net

Oil is at 130 a barrel, and you dont think we're on the downside of the curve?

Yes fond memories indeed of my Dads blue Cortina!

Don't get the joke about the tin foil hats?


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## z109 (22 May 2008)

Elphaba said:


> Don't get the joke about the tin foil hats?


[broken link removed]


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## room305 (22 May 2008)

Elphaba said:


> A small shortfall between demand and supply is enough to shatter oil dependent economies. Add to this market speculation, weak dollar, inflation, geopolitical tensions. As oil continues to rise, so will utilities, food etc. (which will have disastrous effects on poorer economies.) and our own economy with more job losses.


 
Demand cannot be perfectly elastic even for something as essential as oil. People will reduce their consumption in the face of rising prices. Already people in the US are driving less and demand for "gas guzzling" cars is collapsing across the Western world.

Also Europe and the US are entering a recession, with consequent effects for employment and demand for oil-based consumables.



Elphaba said:


> Governments will have to intervene IMMEDIATELY by reducing tax, vat on fuel and banning completely all plastics used in packaging that are not essential. Or is it all too little too late.


 
So the problem is that the world is rapidly running out of an increasingly precious resource. Prices are rising to reflect this increased scarcity and your brainwave is to use taxpayer money to subsidise further reckless consumption?

Isn't that the macro-economic equivalent of lending your recently unemployed and badly indebted mate some money for a holiday so he can cope with the stress of it all?



yoganmahew said:


> BY the way, research has shown that tin foil hats actually increase the intensity of the waves governments are firing at us.


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## z109 (22 May 2008)

I suppose I should also add to my perception of peak oil is that it involves a huge change in the baseline price for oil extraction. It's not that the oil, per se, is running out, but the cheap to extract, easy to refine stuff is not flowing either as fast as it used to or as fast as demand is currently rising.

[broken link removed], apparently, has tankers full of their heavy crude sitting in dock waiting for refining capacity to come available to take it. Everyone wants the light sweet stuff, not the heavy sour stuff. A bit like men and women, really...


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## sam h (22 May 2008)

> (I remember my Dad queuing for oil)


At least this will create some employment opportunities....remember those resourceful guys who used to relieve you of you cash in exchange for a ticket so you could get your petrol & then the garage would have no idea what you were talking about (well my mum....I'm way too young!)

I keep hoping the old "necessity being the mother of invention" will kick in & an alternative renewable sources of energy will be discovered or made more efficient - is that just wishful thinking?  

The reality is that as more & more Chinese and Indian workers want what the Western world have (& they are just as entitled), the resources will deplete even faster and the prices will go up rapidly.



> Everyone wants the light sweet stuff, not the heavy sour stuff. A bit like men and women, really...


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## Simeon (23 May 2008)

As high as the market will wear, one imagines!


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## shnaek (23 May 2008)

Panic! This post reminds me of some comedy where everyone in the room starts running about in circles throwing stuff into the air and shouting. 
The current high price of oil is driven by speculation, not supply and demand. hedge and investment funds have been piling money into oil because they know the markets (property and stock) are fecked for the next few years. 
As for peak oil - Iraq is sitting on an estimated 350billion barrels. We are not going to run out of oil for a long time yet. And the handy thing about this particular spike in oil prices is that it will force people to be more efficient with their oil use, and perhaps increase investment in nuclear energy (as is happening all over Europe) thus helping deal with the problem of global warming. 
So it isn't as bad as some would have us believe. Oil may remain at these high prices in the short term, but they will come down once the current recession ends.


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## ivuernis (23 May 2008)

Elphaba said:


> It was inconceivable a few years ago that oil would reach $130 a barrel as it has done today.



It wasn't inconceivable at all, certainly not to anyone who's been *P*eak *O*il aware. Been PO aware for several years now, devoured much literature on the topic, have had many a sleepless night. 

However, I'm still unsure as to whether the rise seen in the last 12 months is a result of all this cash washing around the financial markets looking for the next bubble to invest in or whether the price contango is the markets finally accepting PO as happening/near and hedging theirs bets accordingly, or maybe it's a bit of both. I think it's more the former and prices will drop back later in the year, but certainly the long-term is up, up and away with the odd down in between. 

I have no problem of conceiving of a day when a barrel is $/€ 1,000 and that when PO can been seen in the rearview window we will only then realise the full implications of the situation. 



Elphaba said:


> We're all doomed!



We are certainly heading for uncharted waters and everybody is going to get wet and many will fall overboard and drown. But this is not going to happen overnight but instead will be a long and difficult road. What comes out the other end I'm not sure but it will be very different from the world we know today.


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## ivuernis (23 May 2008)

yoganmahew said:


> Do you buy a coffee in the morning? How much does a cup cost? €3? How much is in it? 1/3 a litre? So when petrol is €9 a litre, maybe people will take seriously that there is a limited supply of it...



You're absolutely correct, when a litre of the black gold is roughly equivalent to a litre of fizzy coke or a cup of coffee then one of them is priced way out of kilter from its intrinsic value. Oil's been too cheap for too long, but unfortunately we've built a civilisation on top of the concept of it being at least affordable. That was our mistake and a heavy price is going to be paid.


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## ivuernis (23 May 2008)

shnaek said:


> As for peak oil - Iraq is sitting on an estimated 350billion barrels.



That figure is 200bbl more than even the more optimistic estimates of Iraq's reserves from bodies such as _Oil & Gas Journal_ and _BP Statistical Review_. It's a big leap to think that this amount of conventional ME oil has just been missed in Iraq or anywhere in the ME. Certainly there is scope for more discoveries in Iraq but anything like 200bbl more than is known about would be a very big surprise. 



shnaek said:


> We are not going to run out of oil for a long time yet.



It's nothing to do with running out per se, it's having less and less every year once decline sets in. 



shnaek said:


> and perhaps increase investment in nuclear energy



I'm with you on that one. We really need to get the finger out in this country especially have a serious nuclear debate.


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## joe sod (23 May 2008)

I think oil is long due a severe correction, there is enormous amount of speculation now, any small bit of news is having an exagerated effect on price, future contracts are mostly short term but they seem to be using the long term trends which have been there for decades and suddenly putting that into a short term futures contract prices. The supply/demand situation is not that much different from a year ago and wont be enormously different in a years time, yet the price of oil is 60% greater than a year ago, that does not make sense, an awful lot of money is going to be lost on the gamble that the price is just going to keep rising without regard to fundamental supply/demand situation,


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## Whiskey (23 May 2008)

There is a lot of doomsday comment about what will happen after peak oil happens. Famines, recessions, mass unemployment, economies crashing, the end of the world almost.

What people are forgetting is that there is capacity to produce enough Nuclear power for the human race for thousands of years.

The answer is Nuclear; in the future it'll indirectly power our cars, our tractors, our industry, our economy, our lives. 

Solar and Wind and alternative power sources will play it's part too, but nothing produces Megawatts as efficiently as Nuclear.

Our economies will have to adjust to prepare for the change, but it will happen, because there is no alternative.
It's amazing how quickly economies adjust when there is no choice.


The doomsday people are presenting a very unbalanced argument and forgetting that there is an excellent alternative to oil which will keep us going for several millenia.


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## room305 (23 May 2008)

joe sod said:


> I think oil is long due a severe correction, there is enormous amount of speculation now, any small bit of news is having an exagerated effect on price, future contracts are mostly short term but they seem to be using the long term trends which have been there for decades and suddenly putting that into a short term futures contract prices.


 
Actually longer term futures contracts are rising as well. 2016 delivery contracts are over $140 a barrel.


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## ivuernis (23 May 2008)

Whiskey said:


> What people are forgetting is that there is capacity to produce enough Nuclear power for the human race for at least the next Billion years. Don't ask me for a citation about this, but we have an almost inexhaustible potential to produce Nuclear power.



I would argue that there isn't enough capacity to produce nuclear power for the present population of 6.6 billion for a 100 year time period.


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## shnaek (23 May 2008)

ivuernis said:


> I would argue that there isn't enough capacity to produce nuclear power for the present population of 6.6 billion for a 100 year time period.


And what would you base this arguement on? Or were you just stating an anecdotal opinion?

Here's an article you might be interested in reading:
http://www.nea.fr/html/pub/newsletter/2002/20-2-Nuclear_fuel_resources.pdf
This suggests we have enough nuclear fuel resources to last for millenia.

According to a 2007 story broadcast on 60 Minutes, nuclear power gives France the cleanest air of any industrialized country, and the cheapest electricity in all of Europe.

What a shame we never built one.


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## ivuernis (23 May 2008)

shnaek said:


> And what would you base this arguement on? Or were you just stating an anecdotal opinion?



Well, there are currently 439 active reactors in the world producing 6% of global primary energy output. 86% of global primary energy output comes from fossil fuels, to replace this with nuclear energy would require over 6,000 new reactors to be built. Ok, this is a simple back-of-the-envelope calculation and with newer efficient reactors this number may not have to be so big. Lets assume with new modern reactors we would require 3,000~4,000 new reactors to replace the energy we get from fossil fuels. Considering the time and money involved in building reactors this would be both a mammoth engineering and financial commitment and I haven't even taken into account the effect this sort of nuclear expansion would have on uranium supplies, the fact that these reactors would have a limited lifespan and would have to be replaced again within 100 years or the waste issues, ergo I can't see nuclear (fission) energy powering civilization for 6.6+ billion people for longer than a 100 year time period.




shnaek said:


> Here's an article you might be interested in reading:
> [broken link removed]
> This suggests we have enough nuclear fuel resources to last for millenia.



I'm sorry, but if you breakdown some of these figures you will quickly see what pie-in-the-sky they really are for any practical purposes.

Estimated total uranium reserves: 	4,039,110tt [tt = 1000 tonnes]
Unconventional resources in seawater:	4,000,000tt

Granted, there is in total more uranium in the world's oceans than everywhere else, way way more, BUT, and it's a really BIG BUT, what is the abundance of uranium in seawater compared to what we currently mine? I'll tell you:

High grade ore contains 2% uranium, in other words 20,000 ppm (parts per million)
Low grade ore contains 0.1% uranium, in other words 1,000 ppm

Any guess as to the uranium content of seawater? 0.0000003% or just 0.003 ppm. 

That means the abundance of uranium in seawater is 6.7 million times LESS than in high grade ore! Think about that for a minute and try to imagine how it could be extracted from seawater in any manner that is remotely possible. Have you seen a picture of an open-pit uranium mine? That is what is required to mine uranium in the 20,000ppm ~ 1,000ppm range. How would this done in the oceans where the content is a mere 0.003 ppm (or 6.7 million ~ 0.34 million times LESS abundant!). 

It would be easier to mine uranium from GRANITE where the abundance of uranium in granite is 4 ppm. Still way below ore grade but massively better than 
seawater. 

Of the remaining known and estimated reserves of 39,110tt much of that also includes 22,000tt of unconventional reserves in phosphates and almost 10,000tt of speculative unproven reserves in conventional forms. 




shnaek said:


> According to a 2007 story broadcast on 60 Minutes, nuclear power gives France the cleanest air of any industrialized country, and the cheapest electricity in all of Europe. What a shame we never built one.



Yes, France does and it is a shame we have not built one (or four as was planned on the 70s). As I said earlier we need to get the finger out and have a nuclear debate in this country. Time is of the essence.


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## joe sod (23 May 2008)

room305 said:


> Actually longer term futures contracts are rising as well. 2016 delivery contracts are over $140 a barrel.


 
well 2016 is still 8 years away so anyone brave enough to forecast that far is still only prepared to bet to $140 not even $200, with the short term price being so high it has probably pushed up the long term price alot higher aswell because some of the speculators are actually believing their own hype, a wall of speculative money has pushed the price above $100 as soon as the first signs of a falter in the price there will be a rush for the exits, if the "prices can only keep going up is so convincing" then why are more speculators not piling into the long term market, surely $140 is a steal in 2016 if all is going to be so scarce


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## Elphaba (23 May 2008)

Price at $135 today, risen 20% in May alone. Price will be way over $200 by 2016! Could easily see $150 by end of summer, if not more. We have a big problem until a solution is found, as was pointed out on this thread, it would take a huge amount of nuclear power plants to fill the oil gap, with possible uranium shortages etc. Its clear Ireland needs at least one reactor, (in Enfield preferably.)

Maybe Ireland could be the first to build the 'Pod Car' - Solar powered electric vehicles on fixed guideways. It could go from Dublin to Enfield, first, since they'll have the nuclear reactor!


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## z109 (23 May 2008)

shnaek said:


> Here's an article you might be interested in reading:
> http://www.nea.fr/html/pub/newsletter/2002/20-2-Nuclear_fuel_resources.pdf
> This suggests we have enough nuclear fuel resources to last for millenia.


That's a great document there shnaek "speculative resources" "seawater extraction". Sounds fab. Except the speculative resources haven't been found and the seawater extraction has only been achieved in a test tube.

Here's another site:
http://www.opendemocracy.net/globalization-climate_change_debate/2587.jsp
that says that current known reserves will give current reactors 40-50 years more fuel. Reprocessing and MOX reactors will extend that. But try adding in the 80+% of world power that isn't nuclear. Then add in future expansion. Then add in all the other things that are liquid or gas fuel powered (other than electricity generation) and you end up with a lifespan of 10-20 years for known fuel reserves.

Wanna guess how expensive uranium will be when we hit peak uranium???


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## Whiskey (23 May 2008)

This whole thread has highlighted some interesting issues. My earlier post said that uranium would last for millions of years, clearly i was wrong, and have been corrected.

A couple of hundred years from now (give or take), there will no fossil fuels and no nuclear power. Our future descendents will have to do with Wind, solar, hydro and a few other weak energy sources. Definitely not enough to satisfy a population of probably 100 billion people by then. 
The world’s population has doubled in the last 25 years, and considering most of the underdeveloped world are multiplying rapidly, it will double again and again and again. Currently the population of the world is increasing by nearly 2 million a week. India alone is increasing by 17 million a year.

It points to a Malthusian catastrophe in the future as the production and delivery of food is totally dependent on cheap readily available energy.


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## ivuernis (23 May 2008)

Elphaba said:


> Price at $135 today, risen 20% in May alone. Price will be way over $200 by 2016! Could easily see $150 by end of summer, if not more. We have a big problem until a solution is found, as was pointed out on this thread, it would take a huge amount of nuclear power plants to fill the oil gap, with possible uranium shortages etc. Its clear Ireland needs at least one reactor, (in Enfield preferably.)


 
As has been the said the current price is more speculative than anything else at the moment, several factors causing it to rise higher :

the dollar's decreasing value due to the Fed's monetary policy, if you look at oil priced in euro then the rise is there but not nearly as dramatic, e.g. in the previous price spike in 2006 oil was priced $74.40 / €58.67, at the moment it's about $135 / €85, so in the two years since 2006 the dollar price has risen about 80% but in euros about 45%
speculation, lots of money floating around the financial markets looking for a safe home, right now it's piling into oil, until recently there was a big push into grain, etc. but they have since pulled back somewhat
the price has now diverged from fundamentals, with global markets experiencing reduced growth forecasts and new production due to come on-stream in 2008 expected to be more than the increase in global demand will cause the current spike to be pricked at some stage
In the short-term to medium-term I think it will fall back to about $100. If it continues on the recent upward trend then it will start to really hit the economy and drive down demand. The economy can adjust to a slow steady increase but not this type of price volatility. As for what happens in 2016, well as we have seen since 2000, a lot can happen in 8 years!


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## Elphaba (24 May 2008)

Ivuernis:
A very good rational analysis Ivuernis, there is no doubt that the weak dollar has impacted on the price of oil, I hope you are right, but as you say yourself a lot can happen in 8 years. So therefore a fall in oil price will depend on a stronger dollar, markets calming down, and reduced global demand? These are all contra indicators? Since a recovering dollar will improve U.S. demand? 

You left out one very important factor causing it to rise higher the massive demand from China / India etc. Its all just a witches brew ready to boil over.
I still dont believe it will fall back to $100 in short - medium term, we'll just have to wait and see.


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## thomsk (24 May 2008)

I ask the question : "what event has happened in the last few months, that may coincide with the price of oil rising so fast? "
Have millions of Indian and Chinese companies suddenly evolved?
Has the world's demand for cars/planes/lorries etc suddenly doubled?
or.....Has America been hit with something now commonly known as "sub-prime mortgages ? " ( thus causing a dollar that's in the fertiliser! )

http://www.cnbc.com/id/21541741/


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## dodo (24 May 2008)

over 200 Dollar by 2009


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## mickman (26 May 2008)

the price of oil is goign to have a very severe correction , maybe in the order of 50% and heres why

1. the oil futures contract have moved from backwardation to contango , this is a sign that the rally is in the final innings
2. oil stocks sold off last week even though oil was making new highs
3. funds are buying 2016 contracts - that happens where no one will sell a near contract, everyone is long. and we all know what happens when everyone is long i.e. dotcom crash etc, it reverses and people get burned veryvery badly
4. US demand is decreasing - they drove 11 billion  less highway miles in march that march of last year, the biggest drop EVER!
5. the asian economies have begun to remove price restrictions - this is the MOST important factor in the whole oil story. petrol and diesel are very heavily subsidised in these countries and demand is kepy artifically high. indonesis has had riots over the weekend cos petrol was hiked 33%. this will kill demand in poorer countries im afraid. this will spell troulbe for economic growth in these countries but it will beneift europe and in particualr the US

so to sumamrise we are at the very end of the oil market bull run (for now) - but the final stretch is when prices can move most violently so i wouldnt be surprised to see high have one last crazy jum up wards, but then i would advise take a short position on oil and watch the money roll in


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## ivuernis (26 May 2008)

Elphaba said:


> You left out one very important factor causing it to rise higher the massive demand from China / India etc. Its all just a witches brew ready to boil over.



I purposely left it out because demand from Chindia does not explain the recent run-up in the oil price. China and India have been gradually putting pressure on demand for the last decade and explains the gradual rise in the price of oil since the 90's and the advent of globalisation. It does not explain the spike we've been seeing in the last 12 months. 



Elphaba said:


> I still dont believe it will fall back to $100 in short - medium term, we'll just have to wait and see.



Let's see what happens over the course of the next 6-12 months. The price of oil is now entering territory where there will be a negative feedback in the global economy. I'm betting we'll see $100 oil again before we see $200 oil. $200+ will come eventually, just not yet.


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## shnaek (26 May 2008)

yoganmahew said:


> That's a great document there shnaek "speculative resources" "seawater extraction". Sounds fab. Except the speculative resources haven't been found and the seawater extraction has only been achieved in a test tube.
> 
> Here's another site:
> http://www.opendemocracy.net/globalization-climate_change_debate/2587.jsp
> ...




We are nowhere near peak uranium - and nor are we very near peak oil. Oil will be back around $100 next year, and some people are going to make a killing going short on it. 

From wiki:
Uranium is approximately as common as tin or germanium in Earth's crust, and is about 35 times as common as silver.

From this: http://www.oecdbookshop.org/oecd/display.asp?sf1=identifiers&st1=662006031P1
 we have enough economically recoverable uranium stocks to last 80years current consumption. That's at Uranium's current price. Uranium enrichment can be increased from what it is currently. Thorium can also be used as a fission fuel - and it is more common that uranium. Not to mention the potential of fusion to serve our energy needs indefinitely, once our scientists get a fist on it. 

So, in conclusion, there's no need to panic. And no possibility, despite the desires of some sectors of society, that we will go back to the dark ages.


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## mickman (26 May 2008)

if we ever do hit peak oil the oil wont just disappear. it will happen very gradually and slowly so while its happening we will turn more to coal, wind, solar, hydrogen etc. the stone age didnt end cos we ran out of stone, and the oil age wont end cos we run out of oil either. lots of oil will be left in the ground forever cos we wont need it . at present we only get 30-40% of oil out of each well, technology is now being brought on line to bring that figure up to 80%. thats adds a hug ammount to reserves. so long term no need to worry .short term, worry if ur long on oil


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## badabing (26 May 2008)

Whiskey said:


> This whole thread has highlighted some interesting issues. My earlier post said that uranium would last for millions of years, clearly i was wrong, and have been corrected.
> 
> A couple of hundred years from now (give or take), there will no fossil fuels and no nuclear power. Our future descendents will have to do with Wind, solar, hydro and a few other weak energy sources. Definitely not enough to satisfy a population of probably 100 billion people by then.
> The world’s population has doubled in the last 25 years, and considering most of the underdeveloped world are multiplying rapidly, it will double again and again and again. Currently the population of the world is increasing by nearly 2 million a week. India alone is increasing by 17 million a year.
> ...



The pop growth has been falling for some time now and is due to peak at under 10 billion. The earth has been colonised. Future expansion is unlikely unless we find a new planet. 
However in the meantime these people will be born into higher levels of energy demand.
Thankfully we only capture a tiny fraction of the suns energy, if only we could find an easy way to store it. Biomass is currently the best option but it tends to need harvesting etc and competes with land (apart from microseaweed which is 20 times as good as bioethanol)


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## Elphaba (30 Jun 2008)

....1 month later, and price now over $140, I feel glee at my prediction
but woe for the economy, Highly likely another month from now could be at $150? Was shocked at OPEC'S recent statement, saying it could reach 150 -170 by end of Summer, You'd think they'd keep this bit of news to themselves, thus avoiding recent hike to 142....


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## shnaek (1 Jul 2008)

It's a bubble, and it will collapse-just like property. It's the same cycle which happens over and over again. We have a boom, then we have a bust. The bust starts with Equity, then Property, and then Commodities. All of this has happened before, and all of this will happen again. Oil will be back around $100 by Christmas. You can come back here and kiss my feet then.


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## csirl (1 Jul 2008)

Can people use the Euro price for oil in this discussion. The dollar rate is irrelevant in a vacuum given its fluctuations. Oil reaching $200 or whatever per barrel means nothing unless we know what the exchange rate will be at that time.


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## redstar (1 Jul 2008)

shnaek said:


> It's a bubble, and it will collapse-just like property.



Agree. The steep rise in oil prices has all the signs of a speculative bubble, and will burst.


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## Elphaba (1 Jul 2008)

shnaek said:


> It's a bubble, and it will collapse-just like property. It's the same cycle which happens over and over again. We have a boom, then we have a bust. The bust starts with Equity, then Property, and then Commodities. All of this has happened before, and all of this will happen again. Oil will be back around $100 by Christmas. You can come back here and kiss my feet then.


 
I dont think so, if two of Saudi's top oil execs cant agree. A one Mr Husseini says we have to work harder to get oil, those that contend otherwise, he insists claim to have some magic potion that does not exist. The other guy, Saleri says the world has plenty of oil? Add OPEC predicting prices at $150-$170, this alone will fuel further speculation.
So, when top oil guys dont know for certain and have conflicting opinions,
just adds to uncertainty..If price goes down to $100, I wont be kissing any feet, but I will eat my socks.


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## shnaek (1 Jul 2008)

Elphaba said:


> So, when top oil guys dont know for certain and have conflicting opinions,
> just adds to uncertainty.



Look at all the economists and bankers were saying about the property market for the last few years. It's a bubble alright, all it will take is an event to prick it and let all the air out.

You want salt and vinegar on the socks?


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## Elphaba (1 Jul 2008)

No, it all doesn't add up. There is a queue of 'bad events' waiting to unfold...The only event to push price down, would be if they put an end to futures contracts, and this is unlikely, I'd say over 170 by December -
speaking of socks, I know someone who drank a pint of guinness through a smelly sock at a rugby do..


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## redstar (2 Jul 2008)

Elphaba said:


> No, it all doesn't add up. There is a queue of 'bad events' waiting to unfold...The only event to push price down, would be if they put an end to futures contracts, and this is unlikely, I'd say over 170 by December -



Maybe, but as oil goes higher and higher at a faster rate something has to snap. The bubble will burst, at what price I dunno - 170, 200, 220 ? Any commodity price which rises exponentially in price will eventually fall rapidly.
If western economies slip further into recession due to cost of oil, the demand for oil collapses resulting in a massive over-supply and therefore oil prices will have to fall significantly, especially when speculators pull out - just like property.

But lets comfort ourselves with an old FF saying: "don't talk doom and gloom, but boom and bloom"


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## room305 (2 Jul 2008)

Elphaba said:


> The only event to push price down, would be if they put an end to futures contracts


 
Explain to me how the existence of futures contracts pushes up the price of oil and how their removal would push down the price.


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## Elphaba (2 Jul 2008)

Sorry, did not mean put an end to futures contracts, but there should be trading limits. Since oil speculators have been blamed for increase, US Congress is on verge of introducing measures to limit specuation in oil futures, reason being without speculators, price would drop to $65-$70 a barrel.

U.S. Commodities future trading commision, has insisted speculation is not the cause...(they would wouldn't they!) Sovereign wealth funds buying up index futures via hedge funds. I think there should be trading limits to prevent excess speculation and should be addressed urgently.


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## shnaek (15 Aug 2008)

Elphaba said:


> No, it all doesn't add up. There is a queue of 'bad events' waiting to unfold...The only event to push price down, would be if they put an end to futures contracts, and this is unlikely, I'd say over 170 by December -
> speaking of socks, I know someone who drank a pint of guinness through a smelly sock at a rugby do..



Getting those socks ready, Elphaba? Oil is down to $113 today!


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## Elphaba (16 Aug 2008)

Yikes....you were right! Do you have a crystal ball or something? Do you mind if I eat a cream bun instead, since I regretfully had to sell my shares in Tullow oil, broke even. (I enjoyed watching shares rise to 12.50 a few weeks back.) Interesting how falling oil prices seem to be pulling technology stocks down with them, cant figure that one out? The war in Georgia had little or no effect on price of oil either, baffiling turn of events. All down to low demand I suppose...


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## diarmuidc (17 Aug 2008)

I'd recommend to everyone to read this book (the draft is online). It gives the numbers behind our energy consumption and the potential for switching to renewable. It's very enlightening. 

BTW Pages 166 - 187 cover nuclear. I liked this example (just to pick one) "A French citizen’s lifetime share of high-level waste is the size of a golfball. "


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## z109 (18 Aug 2008)

diarmuidc said:


> I'd recommend to everyone to read this book (the draft is online). It gives the numbers behind our energy consumption and the potential for switching to renewable. It's very enlightening.
> 
> BTW Pages 166 - 187 cover nuclear. I liked this example (just to pick one) "A French citizen’s lifetime share of high-level waste is the size of a golfball. "


Now try and imagine sixty million golf balls.


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## Pique318 (18 Aug 2008)

What's an Irishpersons lifetime carbon contribution ? 

(not that I'm at all convinced about the 'carbon footprint' muck as diesels spew worse stuff into the air but less carbon so they're "better for the environment". Worse for the people living in the environment though  )


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## diarmuidc (19 Aug 2008)

yoganmahew said:


> Now try and imagine sixty million golf balls.


Exactly, tiny amounts of waste.


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## The_Banker (2 Sep 2008)

Oil down to $105 dollars a barrel today. Maybe this thread should be renamed.

When oil peaked at $147 dollars the price at the pump in Cork was 136.9.
Now with oil at $105 dollars the price at the pump in Cork is (average) 128.9

I was in Athlone last weekend (before the international price falls yesterday and today) and the average price up the country was 122.9

With TESCO having no petrol stations in Cork I think we are suffering.


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## shnaek (2 Sep 2008)

The_Banker said:


> Oil down to $105 dollars a barrel today. Maybe this thread should be renamed.
> 
> When oil peaked at $147 dollars the price at the pump in Cork was 136.9.
> Now with oil at $105 dollars the price at the pump in Cork is (average) 128.9
> ...



Bad enough as that is, the ESB and Bord Gais price increases are also coming in, regardless of this price drop. Once prices go up there is never a hurry to bring them down again - particularly with monopolies.


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## LFC Murphy (3 Sep 2008)

Isn't there something regarding the slump in sterling still keeping the wholesale price of oil high. Hence why we are not seeing the efects of the large drops at the pumps.......

Can someone confirm or deny this?


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## RMCF (5 Sep 2008)

Something I noticed at my local garages recently.

We did have a price decrease in petrol/diesel about 3 or 4wks ago. They proceeded to put big signs outside ALL the petrol stations proclaiming "PETROL PRICES DOWN" or "LOWER FUEL PRICES HERE NOW".

But 3 days ago they put another 3c on a litre of both unleaded and diesel, but the signs are still there.

And I thought the price for a barrel had dropped recently to the lowest in a low time ($105 per barrel) ?


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## hjrdee (5 Sep 2008)

LFC Murphy said:


> Isn't there something regarding the slump in sterling still keeping the wholesale price of oil high. Hence why we are not seeing the efects of the large drops at the pumps.......
> 
> Can someone confirm or deny this?


 

Correct, 

As someone who works in the Oil industry, the value of the exchange rate between Euro/Dollar/Sterling has an effect.

For example:

In early July when the Euro was valued at about $1.57, then €1,000 would be worth about $1570.  At €140 a barrel, this equates to aboout 11.2 barrels.  (Ignoring things like Govt. Duty, NORA, etc)
However now that the Euro to Dollar is valued at about 1.45 then €1,000 is worth only $1450 dollar.  At 105 per barrell this gives just over 13 barrels.  So even tho the barrel value fell by about $35 we dont get the full impact.

Sorry, a messy example, but you get my drift.

Also, just a note on the price per litre of Petrol and Diesel:

In every litre of Petrol, the government takes 44.27 cent for Duty and also take approx. 21 cent vat.  Total of over 65 cent for the government.

The duty for Diesel is 36.81 per litre and again the vat would be 21% of the retail price.

They also charge 1 cent per litre for NORA(http://www.nora.ie/)


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## The_Banker (9 Sep 2008)

Oil down to $101 today and still the price at the pumps remain stubbornly high.

Oil has dropped by almost a thrid on International markets and yet the price at the pumps has dropped by a single digit percentage.

You can argue dollar rises or fall or blame Nora but the fact is, we are being totally RIPPED OFF.


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## RMCF (10 Sep 2008)

The_Banker said:


> Oil down to $101 today and still the price at the pumps remain stubbornly high.
> 
> Oil has dropped by almost a thrid on International markets and yet the price at the pumps has dropped by a single digit percentage.
> 
> You can argue dollar rises or fall or blame Nora but the fact is, we are being totally RIPPED OFF.


 
When crude goes down in price it takes a fair bit of time to be seen at the pumps/home heating oil.

When crude goes up, the forecourt prices are up before the end of the day.


And just check out this story:
http://news.bbc.co.uk/2/hi/business/7605584.stm

The price of crude is now nearly 50% lower than it was in April, so why is there little or no change in the price of home heating oil/petrol prices?


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## Simeon (10 Sep 2008)

How come the Mods have not changed this to ..... "Oil: how low will it go?"


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## ubiquitous (10 Sep 2008)

RMCF said:


> When crude goes up, the forecourt prices are up before the end of the day.



A very sweeping statement, imho.


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## RMCF (10 Sep 2008)

ubiquitous said:


> A very sweeping statement, imho.



Don't think so.

I live in a village with 3 stations within 50 yards of each other, and we were chatting about it in work recently. 

If there is an article on the news about price rising the prices at the pumps are up within 2 days guaranteed. Yet I was led to believe that it takes 6-8 weeks for crude price changes to filter through to the home heating oil and forecourt prices. We all know this is nonsense. 

Its simple and clear for all to see. If the price of a barrel falls then the reduction isn't passed on to consumers. If it rises, it definitely is.

If there has been a 50% decrease in the price of crude since July then why is there no big change in the price to me and you? And I appreciate that you may start talking about dollars, exchange rates, strong/weak currency, sterling etc, and these things will probably not allow the price reductions to match the reduction in a barrel, but surely we should be seeing reductions more than we are.


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## The_Banker (11 Sep 2008)

Oil down to $98 a barrel today. Still paying 126.9 cent a litre for petrol in Cork City. 

When oil was €147 a barrel I was paying 136.9 cent a litre in Cork City. 

Any forecourt owners on this site who can explain this?


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## hjrdee (11 Sep 2008)

The_Banker said:


> Oil down to $98 a barrel today. Still paying 126.9 cent a litre for petrol in Cork City.
> 
> When oil was €147 a barrel I was paying 136.9 cent a litre in Cork City.
> 
> Any forecourt owners on this site who can explain this?


 
Ok, not a forecourt owner, but here goes in trying to create a straightforward explanation.

When Oil was $147 a barrell, it was converting to about €91

Now $98 is converting to about €73.  So while the barrell dropped by €18 (19%) the price you paid has dropped by  10 cent per litre or 8%.  You also need to take into account that some of these stations may have purchased their fuel nearly a week ago, when the barrell was about $7-8 higher.

Not in any way defending the pricing of Petrol or Diesel, but just trying to explain how the different aspects of the world economy affect our buying prices!!


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## Sunny (11 Sep 2008)

hjrdee said:


> Ok, not a forecourt owner, but here goes in trying to create a straightforward explanation.
> 
> When Oil was $147 a barrell, it was converting to about €91
> 
> ...


 
I understand what you are saying but to be fair to the people complaining about it, when oil was going up in price, the dollar was getting weaker and yet the consumer was still hit with the full impact of oil price rises. 

There are economic factors at play but there is no doubt that retailers/ oil companies must be trying to have higher margins for as long as possible and I can't blame them. I would only have a problem if it was proven that garages/ oil companies were engaging in anti-competitive behaviour but there is no evidence of that as far as I know.


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## ubiquitous (11 Sep 2008)

Sunny said:


> I understand what you are saying but to be fair to the people complaining about it, when oil was going up in price, the dollar was getting weaker and yet the consumer was still hit with the full impact of oil price rises.



But as someone else pointed out previously, either on this or a similar thread, when oil rose in price by 50% in the first 6-7 months of this year, the price at the pumps did not go up by 50% or anything like it.



Sunny said:


> There are economic factors at play but there is no doubt that retailers/ oil companies must be trying to have higher margins for as long as possible and I can't blame them.



The odd thing is that if there are massive profits to be made in selling petrol & diesel, how does that explain the fact that large numbers of filling stations are being closed down on a regular basis? I mentioned elsewhere the example of Killeshandra Co Cavan where the two filling stations in the area have both closed down within the past 15 months and remain closed. If there were any significant profits to be made, these would have reopened by now. The nearest filling station from the town are in Ballyconnell in one direction, 8 miles away, and Cavan town in the other, 12 miles away.



Sunny said:


> I would only have a problem if it was proven that garages/ oil companies were engaging in anti-competitive behaviour but there is no evidence of that as far as I know.


The whole question of anti-competitive practices is imho a bit redundant given the fact that filling stations make practically all their profits from deli/confectionery/hot food/grocery sales on the forecourt, and there is no shortage of competition for that trade.


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## RMCF (11 Sep 2008)

Sunny said:


> I understand what you are saying but to be fair to the people complaining about it, when oil was going up in price, the dollar was getting weaker and yet the consumer was still hit with the full impact of oil price rises.
> 
> There are economic factors at play but there is no doubt that retailers/ oil companies must be trying to have higher margins for as long as possible and I can't blame them. *I would only have a problem if it was proven that garages/ oil companies were engaging in anti-competitive behaviour but there is no evidence of that as far as I know*.



I have lived in RoI for approx 7 years and have noticed that the 3 petrol stations in my locality have *ALWAYS* had the *EXACT* same price for unleaded and diesel. They are 3 different companies (Shell, Texaco, Top).

Why would the prices *NEVER* be different? Because, I believe, they operate price-fixing.


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## ubiquitous (11 Sep 2008)

RMCF said:


> I have lived in RoI for approx 7 years and have noticed that the 3 petrol stations in my locality have *ALWAYS* had the *EXACT* same price for unleaded and diesel. They are 3 different companies (Shell, Texaco, Top).
> 
> Why would the prices *NEVER* be different? Because, I believe, they operate price-fixing.



Do they happen to be owned by the same person/company? One guy owns 4 of the top 6 filling stations in Cavan town, each with different oil companies. He can hardly be accused of illegal price-fixing if he charges uniform prices across all 4 outlets.


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## Pique318 (11 Sep 2008)

ubiquitous said:


> Do they happen to be owned by the same person/company? One guy owns 4 of the top 6 filling stations in Cavan town, each with different oil companies. He can hardly be accused of illegal price-fixing if he charges uniform prices across all 4 outlets.


 Not 'he'...'they'. The oil companies would be the ones to look at,

On another note, a family member is involved in the oil industry and tells me that the fuel coming off the one ship pours into different oil companies bowsers...explain that one while paying more for Shell than Top !


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## RMCF (12 Sep 2008)

ubiquitous said:


> Do they happen to be owned by the same person/company? One guy owns 4 of the top 6 filling stations in Cavan town, each with different oil companies. He can hardly be accused of illegal price-fixing if he charges uniform prices across all 4 outlets.



No, 3 different owners, but it is a small town and I would say there is the odd phone call made late at night with the question, "so what are we charging tomorrow?".


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## ubiquitous (12 Sep 2008)

Pique318 said:


> Not 'he'...'they'. The oil companies would be the ones to look at,



Can the oil suppliers dictate to station owners how much to charge? I would have thought that this would be anti-competitive. After all, Diageo cannot dictate to a publican how much to charge for Guinness.




> On another note, a family member is involved in the oil industry and tells me that the fuel coming off the one ship pours into different oil companies bowsers...explain that one while paying more for Shell than Top !



Fwiw, the Top station in my neck of the woods is rarely cheaper than the others.



RMCF said:


> No, 3 different owners, but it is a small town and I would say there is the odd phone call made late at night with the question, "so what are we charging tomorrow?".


Quite possible, but also highly illegal and quite likely to get the owners into serious doo-doo if detected. Smarter and more legal for X to keep an eye on Y's price displays every day and adjust their own prices accordingly every time Y's prices change.


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## hjrdee (12 Sep 2008)

Pique318 said:


> Not 'he'...'they'. The oil companies would be the ones to look at,
> 
> On another note, a family member is involved in the oil industry and tells me that the fuel coming off the one ship pours into different oil companies bowsers...explain that one while paying more for Shell than Top !


 

Surely you can see that this is down to price negiotiations on the part of the purchasers...Top may have negiotiated a better purchasing deal than Shell and thus are better able to pass on the costs.  Did you think that every fuel distributor paid the same purchase price of fuel??  There are difference in purchasing power, obviously the bigger the distributor the better buying power they have, similar to a tesco buying situation.   This is no different to any other product sold, only people seem to get more excited about forecourt prices.  And, still the only product sold in a convenience store that must by law have its price displayed outside its shop....(other than Alcohol)


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## Pique318 (12 Sep 2008)

I was talking about the perception of Shell/Esso/Texaco being somehow 'better' fuels than Top/Go/etc...yet the fuel is exactly the same apart from a few litres of some additives thrown into a 30000 litre tanker. Thank you but I'd prefer the couple of pence/litre in my pocket and pay for a bottle of additive every year if necessary to clean the injectors (not that it's even necessary). I'd still save money.

Advertising obviously works  s'pose, that's why Shell spend so much on it. In fairness they probably need more positive publicity in Ireland than most !


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## ubiquitous (13 Sep 2008)

Pique318 said:


> Advertising obviously works  s'pose, that's why Shell spend so much on it. In fairness they probably need more positive publicity in Ireland than most !



They don't even trade in Ireland anymore. And their project in Mayo remains stalled. And we still have a national energy dependency problem...which you won't read about in indymedia...


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