$this->bbcode_second_pass_quote('JohnDenver', 'H')i to all the old-timers. It's JD from Peak Oil Debunked.
Long time no see. Hope you guys are all doing well.
This writer from Bloomberg thinks oil is going to hit $10-20, and he seems to have a pretty good handle on things. What say ye?
http://business.financialpost.com/news/ ... y-shilling
PeakOil is You
Crude to hit $10-20?
Re: Crude to hit $10-20?
by dashster » Sat 22 Aug 2015, 22:15:18
Nice to see you don't have to hide now that oil isn't plateauing at $100.
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Re: Crude to hit $10-20?
by Sixstrings » Sat 22 Aug 2015, 22:22:43
Last article I saw was something like, "oil crashes to $40"
How is the peak oil story changing.. with all the tar sands and shale and fracking and then growing alt energy..
Could it possibly be, that oil just gets cheaper in the future? The more we don't even need it?
Another perspective:
$this->bbcode_second_pass_quote('', '[')b]The Peak Oil Crisis: A $4 Trillion Hole
Last week reporters at the Wall Street Journal sat down and did some arithmetic. They looked at how much oil was selling for in the spring of 2014 (over $100 a barrel); looked at what it is selling for today (under $50); and concluded that if prices stay low for the next three years, the global oil industry and the countries it finances will be out $4.4 trillion in revenues. As these oil companies, nationalized and publically traded, will be producing roughly the same amount of oil in the next few years, the $4 trillion will have to come mostly out of profits or capital expenditures.
This is where the problem for the future of the world’s oil supply comes in. The big oil companies, especially those that export much of their production, have been doing quite well in recent years. National oil companies have earned vast profits for their political masters. Publically traded ones have developed a tradition of paying out good dividends which they are loathe to cut.
This leaves mostly capital expenditures on exploring for and producing more oil in coming years to take a dive as part of the $4 trillion revenue hit. Even if oil prices of $50 a barrel or less do not continue for the next three years, this still works out to a revenue drop of $1.5 trillion a year or about three times the planned capital expenditures of some 500 oil companies recently surveyed.
The International Energy Agency just came out with a new forecast saying that while current oil prices have the demand for oil products increasing rapidly, there is still so much over-production that the oil glut is expected to last for another year or more before supply/demand comes back into balance. The return of Iran to unfettered production would not help matters.
In looking at the next five years there are several trends or major issues that are likely to impact the supply and demand for oil. First is the recent price collapse that no longer makes it profitable to start projects to produce new oil, most of which now comes from deepwater, tar sands, or shale oil fields and is far more expensive to produce than “conventional” oil. As a result, investment in new oil production projects has dropped substantially in the last year and is likely to fall further.
On the demand side of the equation China is the biggest unknown. For the last 30 years the Chinese have enjoyed unprecedented economic growth, but recently the “world’s factory” has not been doing as well. Its government has been thrashing around wildly trying to stimulate growth and fend off a collapse in its stock market. Some believe China is a huge economic bubble that is about to collapse taking much of the world with it, and obviously reducing its ever-increasing demand for more oil.
The other 800-pound gorilla looming out there is climate change. Except for the drought in California and the storm that flooded New York a few years back, much of America and China for that matter has not been hurt badly enough by anomalous weather to reach an agreement that stopping climate change is the number one priority of all of us. Reports of “feels like” 159°F coming out the Middle East this summer have little impact on those convinced that climate change is a hoax. Should the effects of climate change worsen in the near future to the point that “do something before life on earth becomes impossible” becomes the majority perception of the issue, consumption of fossil fuels could be severely restricted. Although not widely appreciated, there do seem to be viable alternatives to fossil fuels waiting to be exploited.
The violence in the Middle East has grown worse in recent years. Although oil production in some areas has been restricted by geopolitics and violence, most of the oil continues to be produced. It is useless to talk about the next five years in the Middle East; however, we should keep in mind that there are at least a half dozen confrontations going on in the region that could morph into situations where oil production becomes more restricted.
When we net this all together, what do we have? Conventional wisdom currently says that oil prices are likely to be closer to $50 a barrel than to $100 for the next year or more. Capital spending on new production to offset declining production from existing oilfields is likely to drop still further leaving us in the situation where depletion may exceed the oil coming from new wells or fields. This is the argument that those who believe that we are at or near the all-time peak of world oil production about now are using.
The International Energy Agency says that the demand for the cheaper oil is rising rapidly, that production of shale oil currently is falling and the rest of world’s production is relatively static so we should be seeing oil prices rising again by 2017. This is where the turning point in the history of oil production could occur. In recent history rising prices have led oil producers to increase drilling for new oil production again. However the next time around, as mentioned above, there are new factors that may come into play. Will China be increasing its demand for oil in another two years? Will the Middle East still be exporting as much oil, and producing oil given the turmoil and the need to increase air conditioning? Will the world have decided the time has come to clamp down seriously on carbon emissions?
If global oil production does reach some kind of a peak this year and is lower in 2016, can it recover to reach new highs in the years following? Anything from inadequate investment stemming from persistently low oil prices to a major conflict in the Middle East could keep production from rebounding to new all-time highs. We are living in interesting times and just could see peak oil before we realize it.
http://fcnp.com/2015/08/19/the-peak-oil-crisis-a-4-trillion-hole/
How is the peak oil story changing.. with all the tar sands and shale and fracking and then growing alt energy..
Could it possibly be, that oil just gets cheaper in the future? The more we don't even need it?
Another perspective:
$this->bbcode_second_pass_quote('', '[')b]The Peak Oil Crisis: A $4 Trillion Hole
Last week reporters at the Wall Street Journal sat down and did some arithmetic. They looked at how much oil was selling for in the spring of 2014 (over $100 a barrel); looked at what it is selling for today (under $50); and concluded that if prices stay low for the next three years, the global oil industry and the countries it finances will be out $4.4 trillion in revenues. As these oil companies, nationalized and publically traded, will be producing roughly the same amount of oil in the next few years, the $4 trillion will have to come mostly out of profits or capital expenditures.
This is where the problem for the future of the world’s oil supply comes in. The big oil companies, especially those that export much of their production, have been doing quite well in recent years. National oil companies have earned vast profits for their political masters. Publically traded ones have developed a tradition of paying out good dividends which they are loathe to cut.
This leaves mostly capital expenditures on exploring for and producing more oil in coming years to take a dive as part of the $4 trillion revenue hit. Even if oil prices of $50 a barrel or less do not continue for the next three years, this still works out to a revenue drop of $1.5 trillion a year or about three times the planned capital expenditures of some 500 oil companies recently surveyed.
The International Energy Agency just came out with a new forecast saying that while current oil prices have the demand for oil products increasing rapidly, there is still so much over-production that the oil glut is expected to last for another year or more before supply/demand comes back into balance. The return of Iran to unfettered production would not help matters.
In looking at the next five years there are several trends or major issues that are likely to impact the supply and demand for oil. First is the recent price collapse that no longer makes it profitable to start projects to produce new oil, most of which now comes from deepwater, tar sands, or shale oil fields and is far more expensive to produce than “conventional” oil. As a result, investment in new oil production projects has dropped substantially in the last year and is likely to fall further.
On the demand side of the equation China is the biggest unknown. For the last 30 years the Chinese have enjoyed unprecedented economic growth, but recently the “world’s factory” has not been doing as well. Its government has been thrashing around wildly trying to stimulate growth and fend off a collapse in its stock market. Some believe China is a huge economic bubble that is about to collapse taking much of the world with it, and obviously reducing its ever-increasing demand for more oil.
The other 800-pound gorilla looming out there is climate change. Except for the drought in California and the storm that flooded New York a few years back, much of America and China for that matter has not been hurt badly enough by anomalous weather to reach an agreement that stopping climate change is the number one priority of all of us. Reports of “feels like” 159°F coming out the Middle East this summer have little impact on those convinced that climate change is a hoax. Should the effects of climate change worsen in the near future to the point that “do something before life on earth becomes impossible” becomes the majority perception of the issue, consumption of fossil fuels could be severely restricted. Although not widely appreciated, there do seem to be viable alternatives to fossil fuels waiting to be exploited.
The violence in the Middle East has grown worse in recent years. Although oil production in some areas has been restricted by geopolitics and violence, most of the oil continues to be produced. It is useless to talk about the next five years in the Middle East; however, we should keep in mind that there are at least a half dozen confrontations going on in the region that could morph into situations where oil production becomes more restricted.
When we net this all together, what do we have? Conventional wisdom currently says that oil prices are likely to be closer to $50 a barrel than to $100 for the next year or more. Capital spending on new production to offset declining production from existing oilfields is likely to drop still further leaving us in the situation where depletion may exceed the oil coming from new wells or fields. This is the argument that those who believe that we are at or near the all-time peak of world oil production about now are using.
The International Energy Agency says that the demand for the cheaper oil is rising rapidly, that production of shale oil currently is falling and the rest of world’s production is relatively static so we should be seeing oil prices rising again by 2017. This is where the turning point in the history of oil production could occur. In recent history rising prices have led oil producers to increase drilling for new oil production again. However the next time around, as mentioned above, there are new factors that may come into play. Will China be increasing its demand for oil in another two years? Will the Middle East still be exporting as much oil, and producing oil given the turmoil and the need to increase air conditioning? Will the world have decided the time has come to clamp down seriously on carbon emissions?
If global oil production does reach some kind of a peak this year and is lower in 2016, can it recover to reach new highs in the years following? Anything from inadequate investment stemming from persistently low oil prices to a major conflict in the Middle East could keep production from rebounding to new all-time highs. We are living in interesting times and just could see peak oil before we realize it.
http://fcnp.com/2015/08/19/the-peak-oil-crisis-a-4-trillion-hole/
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Re: Crude to hit $10-20?
by Keith_McClary » Sun 23 Aug 2015, 01:52:19
$this->bbcode_second_pass_quote('JohnDenver', 'H')i to all the old-timers. It's JD from Peak Oil Debunked.
Long time no see. Hope you guys are all doing well.
This writer from Bloomberg thinks oil is going to hit $10-20, and he seems to have a pretty good handle on things. What say ye?
http://business.financialpost.com/news/ ... y-shilling
Hi-ho, young whippersnapper.Long time no see. Hope you guys are all doing well.
This writer from Bloomberg thinks oil is going to hit $10-20, and he seems to have a pretty good handle on things. What say ye?
http://business.financialpost.com/news/ ... y-shilling
Meanwhile, major companies are continuing with $multi-billion projects that can only profitable with $100 oil. Are they stupid or what?
Facebook knows you're a dog.
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Re: Crude to hit $10-20?
by ROCKMAN » Sun 23 Aug 2015, 07:10:53
Keith - I suspect you're aware on big multi year projects that suspension does necessarially save a lot of capex. And there's always the time lag that they hope prices will recover to some degree. But sometimes youhave no choice: you've seen my story about Devon: when NG prices crashed in '08 the paid $40 million to cancel long term drill rig contracts. Chicken feed compare to a company that's paying a $300 million penalty to cancel the contracts on two offshore rigs.
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Re: Crude to hit $10-20?
by Cog » Sun 23 Aug 2015, 07:46:42
Still searching for that elusive Peak.
LOL
LOL
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Re: Crude to hit $10-20?
by ROCKMAN » Sun 23 Aug 2015, 10:08:25
Cog - Along that line of thought: some here still don't beleive me when I say that nothing has happened in the last 12 months that has surprised anyone in the oil patch. The timing was uncertain but most thought it wouldn't last very long. This ain't our first BBQ. LOL.
In retrospect folks might better understand why companies pushed so hard and fast to drill as fast as possible. Especially true of pubcos that needed to add reserves as fast as possible to pump up the stock before the bottom fell out. And every CEO with experience knew that was going to happen...just a question of when. This also explains why those companies took on such huge debt loads: eventuaaly the company would suffer. Having a lot of debt or no debt those stocks were going to tank. But until then big salaries would be paid and nice stock options cashed in. For many CEO in the late 50's/60's they knew this was their last rodeo. Over the last few years I've tried to make this point to some cornies. Most would 't accept this. I guess they thought prosperity was never ending. Or that oil patch managrment wasn't so selfserving. LMFAO!!!
In retrospect folks might better understand why companies pushed so hard and fast to drill as fast as possible. Especially true of pubcos that needed to add reserves as fast as possible to pump up the stock before the bottom fell out. And every CEO with experience knew that was going to happen...just a question of when. This also explains why those companies took on such huge debt loads: eventuaaly the company would suffer. Having a lot of debt or no debt those stocks were going to tank. But until then big salaries would be paid and nice stock options cashed in. For many CEO in the late 50's/60's they knew this was their last rodeo. Over the last few years I've tried to make this point to some cornies. Most would 't accept this. I guess they thought prosperity was never ending. Or that oil patch managrment wasn't so selfserving. LMFAO!!!
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Re: Crude to hit $10-20?
by Outcast_Searcher » Sun 23 Aug 2015, 12:54:58
$this->bbcode_second_pass_quote('ROCKMAN', 'C')og - Along that line of thought: some here still don't beleive me when I say that nothing has happened in the last 12 months that has surprised anyone in the oil patch. The timing was uncertain but most thought it wouldn't last very long. This ain't our first BBQ. LOL.
In retrospect folks might better understand why companies pushed so hard and fast to drill as fast as possible. Especially true of pubcos that needed to add reserves as fast as possible to pump up the stock before the bottom fell out. And every CEO with experience knew that was going to happen...just a question of when. This also explains why those companies took on such huge debt loads: eventuaaly the company would suffer. Having a lot of debt or no debt those stocks were going to tank. But until then big salaries would be paid and nice stock options cashed in. For many CEO in the late 50's/60's they knew this was their last rodeo. Over the last few years I've tried to make this point to some cornies. Most would 't accept this. I guess they thought prosperity was never ending. Or that oil patch managrment wasn't so selfserving. LMFAO!!!
In retrospect folks might better understand why companies pushed so hard and fast to drill as fast as possible. Especially true of pubcos that needed to add reserves as fast as possible to pump up the stock before the bottom fell out. And every CEO with experience knew that was going to happen...just a question of when. This also explains why those companies took on such huge debt loads: eventuaaly the company would suffer. Having a lot of debt or no debt those stocks were going to tank. But until then big salaries would be paid and nice stock options cashed in. For many CEO in the late 50's/60's they knew this was their last rodeo. Over the last few years I've tried to make this point to some cornies. Most would 't accept this. I guess they thought prosperity was never ending. Or that oil patch managrment wasn't so selfserving. LMFAO!!!
All true, Rock.
OTOH, commodities rise and fall, and sometimes steeply. Thus, with the volatile ones, there's plenty of risk and reward. Any modestly educated investor or stockholder knows this -- or they certainly learn within the time span of a big price cycle.
OTOH, the actual FF's aren't going anywhere, thus the big picture hasn't meaningfully changed.
1). Global BAU growth (and the related demand) continues apace, over time. The basic human desire to have all they can afford (or borrow) hasn't gone away -- the latent energy demand from third world growth as hordes of new entrants to the middle class demand new homes, cars, appliances, travel, etc. is staggering in coming decades.
2). Green energy progress continues, but will take a LONG time to meaningfully replace the bulk of FF's, especially when transportation and heavy industry are fully considered.
3). Finding new "easy" (cheap) oil sources in meaningful amounts is unlikely. There's plenty of "difficult" oil to be found, but of course, at a high to VERY high price.
4). The long term laws of supply and demand haven't been repealed. Thus, whether oil averages $10 or $40 over the next year or three, the prudent, patient investor in oil seens to be in a good risk/reward position for the long term. Trying to call the TIMING of the recovery though, based on history of markets, is sheer madness.
5). Again, there's risk in commodities. Maybe the doomers are right and people really can't afford $40 or even $20 oil. However, given the real world facts about the last 5 years of global economic growth and the oil prices that existed during that growth -- I think they're delusional. I think the odds of a cheap and easy "Mr. Fusion" invention magically solving all our energy problems "any day now", corny style, are also delusional -- but I could be wrong.
...
So, I think it's too bad that greedy corporate management over-invests to feather their own nests to the detriment of the stockholders. But in the longer run, that's just noise, and it's not as if this is anything new. Just look to the 1990's US tech boom, for a recent blatant example of this (in another area).
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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