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Page added on October 20, 2018
$400 oil isn’t THAT crazy
Last weekend, after Saudi Arabia threatened to cut the world off from its vast oil supply and President Trump puffed his chest in response, one prominent exec from the Kingdom painted a particularly gloomy picture of our energy future.
“If U.S. sanctions are imposed on Saudi Arabia, we will be facing an economic disaster that would rock the entire world,” Al Arabiya GM Turki Aldakhil wrote. “If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure.”
He said such a move would throw the entire Muslim world “into the arms of Iran, which will become closer to Riyadh than Washington,” and “the truth is that if Washington imposes sanctions on Riyadh, it will stab its own economy to death, even though it thinks that it is stabbing only Riyadh.”
That $400 figure was used as MarketWatch’s “call of the day,” which drew all sorts of internet eye-rolling, including this tweet from our own D.C. bureau chief.
I am going to rule it out.
That’s me. Ruling it out. https://t.co/iea3hn8ubJ
— Steve Goldstein (@MKTWgoldstein) October 15, 2018
But not everybody thinks the $400 level is so far-fetched.
Jody Chudley of “The Daily Reckoning” blog swam upstream and said he wouldn’t necessarily rule out such a ridiculous move, considering what Saudi Crown Prince Mohammed bin Salman has proven capable of.
“For months now we have been keeping tabs on MBS, warning you that he is a risk to global stability,” he wrote. “But the reality of how dangerous this man is has never been more apparent. Make no mistake, this weapon is very real.”
Chudley says if you don’t believe the prince would use that weapon to destabilize the world and send oil through the roof, you haven’t been paying attention.
He went into MBS’s “impressive list of misdeeds,” including perhaps “the most epic personal shopping spree in the history of mankind.” A $300-million home, a $450-million da Vinci painting, a $500-million yacht, etc.
“On the surface these purchases are obscene,” he wrote. “Dig deeper and it gets even worse. He bought all of these things while putting already dirt poor Saudi citizens on an austerity program meant to offset the drop in global oil prices.”
MBS also bought all this stuff, he pointed out, while locking up other members of the Royal Family under the guise of a corruption shakedown and while creating a humanitarian crisis by launching thousands of airstrikes on Yemen.
“This man’s hypocrisy knows no bounds,” Chudley wrote. “Which leads me to believe there is no reason to believe that this man possesses a conscience that would stop him from unleashing the Saudi oil weapon of mass destruction.”
He says if it does, indeed, come to that, and oil does explode to such unfathomable levels, it would result in “a Mad Max film come to life.”
No sign of Mad Max yet. Oil CLZ8, +1.21% was down more than 1% late Thursday to $68.93 a barrel. It began the week near the $72 level.
16 Comments on "$400 oil isn’t THAT crazy"
onlooker on Sat, 20th Oct 2018 2:36 pm
If and when Oil were to reach $400, it would have ceased to be a principal global energy source and would be nothing more than a luxury item for the few affluent regions in a world of profound widespread destitution and impovershment
Chrome Mags on Sat, 20th Oct 2018 2:40 pm
Nothing will change. Oil price steady. No Mad Max.
Cloggie on Sat, 20th Oct 2018 3:03 pm
Wind and solar are competative with $70 oil (minus storage). Just saying.
Outcast_Searcher on Sat, 20th Oct 2018 3:30 pm
Let’s worry about even the remote possibility of $400 oil when we get sustained, say, $150 oil. And by the time that happens, the incentives to produce more will be huge AND the incentives to burn less will be huge (which will make even sustaining that price for very long unlikely).
Best thing for accelerating the timetable to move to EV’s of all classes though.
I AM THE MOB on Sat, 20th Oct 2018 4:08 pm
Outcast_Searcher
Considering you can’t take an EV out of the city, they are pretty much worthless to most common people..And try going up a hill during the winter in an EV..
LMFAO!
IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000
JuanP on Sat, 20th Oct 2018 7:29 pm
Prince MbS is a psychopath; he has no limits. He needs to be removed from power before he causes irreparable damage on a larger scale. Yemen will never recover from the atrocities under his orders. I expect the USA to play the fool and do nothing. Sanctioning Saudi Arabia while MbS is still in control is asking for trouble. The royal family should send him packing.
makati1 on Sat, 20th Oct 2018 7:43 pm
Does sanctioning his actions by Trump and the US Congress make them sane? Nope! Inanity is rampant in the world today. Just look at America. lol
Anonymouse1 on Sat, 20th Oct 2018 11:59 pm
Saudi Jewrabia threatened to stop selling its oil? Must have missed that one, it didn’t exactly get much press coverage here in the free-world order. Leaving aside the utter hollowness of such a threat, it does raise an interesting question, who such a dumbass movet hurt more. The world? Or Saudi Jewrabi?
asg70 on Sun, 21st Oct 2018 11:40 am
“Saudi Jewrabia”
WTF are you talking about? Talk about an oxymoron. This place is riddled with complete mental-cases.
Davy on Sun, 21st Oct 2018 1:10 pm
“WTF are you talking about? Talk about an oxymoron. This place is riddled with complete mental-cases.”
The two biggest mental cases are right above you in this feed…
Anonymouse1 on Sun, 21st Oct 2018 5:22 pm
Projecting again dumbass? You are suffering from multiple mental illnesses that you refuse to get treatment for. Likely due to a lack of funds, or even just general hostility and anger over your low social status. No doubt your isolation is also a contributing factor.
This aspect of your pathetic existence, has been amply demonstrated and documented(by you). I imagine projecting your own illness onto others is just one of your many coping mechanisms. In reality, it just emphasizes how dissociated you are from reality.
Exceptionaltard…..
boney joe on Sun, 21st Oct 2018 5:39 pm
“The two biggest mental cases are right above you in this feed…”
Careful DavyDonaldTurd. You’re outing yourself yet again.
DDT, your thoughts reflect and project perfectly like a mirror; the subconscious perceptions that are held about the Self. What you fail to comprehend is your incessant assaults and postings are a perfect reflection of your present state of mind and how you feel about yourself on the inside. Your resentment, anger and desire for revenge reveal anger and contempt of yourself
Antius on Mon, 22nd Oct 2018 10:08 am
It is important that we use the time remaining to develop physical solutions that can maintain workable systems during a period of collapse. As fossil fuel energy enters its decline phase, we face increasing probability of non-linear effects that result in sudden and dramatic shocks to the systems that we have built. Political changes, such as the collapse of Venezuela and sanctions against Iran; indicate that oil depletion is unlikely to manifest itself as a linear decline in fossil fuel availability for most people. What is worse; human economies have numerous interdependencies that raise the potential for cascade failure. An oil shock may disrupt coal mining for instance, undermining electricity supply; it may disrupt our ability to deliver materials and transport people in a way that undermines the maintenance of existing systems, thereby pushing us towards collapse.
Since such events can occur suddenly and unpredictably, I wonder if high-tech solutions, like electric vehicles, that depend upon global manufacturing and supply lines, along with reliable electricity supplies, are really the sort of things that we should be concentrating on.
Goat1001 on Mon, 22nd Oct 2018 3:30 pm
Mad Salman or 400 USD oil doesn’t bother the Yanomami people in the Amazon region. Industrialized societies are living way beyond their means, that is, the long term natural limits of Gaia. Low tech solutions are whats needed, however, they do require some serious adjustment for the ‘developed’ world peoples.
Cloggie on Mon, 22nd Oct 2018 4:40 pm
@Antius
“It is important that we use the time remaining to develop physical solutions that can maintain workable systems during a period of collapse.”
Perhaps a solution for England too:
https://www.deingenieur.nl/artikel/energy-storage-using-water-is-an-option-in-the-netherlands
PhD:
https://dspace.library.uu.nl/bitstream/handle/1874/355778/Master%20Thesis%20UPHS%5EJ%20L.J.%20Corbijn%5EJ%203719561.pdf?sequence=2&isAllowed=y
L.J. Corbijn, Benefits of Underground Pumped Hydro Storage (UPHS) in the Dutch power system
Antius on Mon, 22nd Oct 2018 6:15 pm
Underground hydropower. Interesting. From what I remember, the cost of excavating a deep hole is proportional to the square of its depth. So maybe this works best at a relatively small scale?
But even very low head pumped storage could be useful if it is providing high value stored power. At a head height of 5 metres between an upper and lower reservoir, one cubic metre of water would contain 50KJ of potential energy.
Many applications require high power intermittently. This lathe is a good example.
https://www.axminster.co.uk/axminster-engineer-series-runmaster-330-x-1000-lathe-ax642096
It is powered by a 2.2KW motor, so 1KW of stored energy will power it for 27 minutes. That may be more than enough time to complete the required cutting operation. A low head hydro storage system with an underground lower reservoir some 5m beneath the upper, would need a reservoir volume of 80m3 to store that energy assuming a 90% generation efficiency.
The recharge time of the reservoir would depend upon the wind conditions that day. So work would need to be planned to allow high energy tasks to be interspersed with low energy tasks, such that the reservoir has enough time to recharge itself between uses.