This is from wtrg.com - Demonstrates how oil, in 2008 dollars has averaged 22 dollars per barrel for the past 140 years.
Since 1869, US crude oil prices adjusted for inflation have averaged $22.52 per barrel in 2008 dollars compared to $23.42 for world oil prices.
Fifty percent of the time prices U.S. and world prices were below the median oil price of $16.71 per barrel.
If long-term history is a guide, those in the upstream segment of the crude oil industry should structure their business to be able to operate with a profit, below $17.65 per barrel half of the time. The very long-term data and the post World War II data suggest a "normal" price far below the current price.
Crude Oil Prices 1869-2009 http://www.wtrg.com
The results are dramatically different if only post-1970 data are used. In that case, U.S. crude oil prices average $32.36 per barrel and the more relevant world oil price averages $35.50 per barrel. The median oil price for that period is $30.04 per barrel.
If oil prices revert to the mean this period is likely the most appropriate for today's analyst. It follows the peak in U.S. oil production eliminating the effects of the Texas Railroad Commission and is a period when the Seven Sisters were no longer able to dominate oil production and prices. It is an era of far more influence by OPEC oil producers than they had in the past. As we will see in the details below influence over oil prices is not equivalent to control.
Crude Oil Prices 1970-2008
Click on graph for larger view
PeakOil is You
$22 Oil For 140 years
$22 Oil For 140 years
by Hughj » Mon 20 Jun 2011, 11:32:27
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Re: $22 Oil For 140 years
by Pops » Mon 20 Jun 2011, 11:54:04
Yep, certainly points up the fact that our economy, and society too, is built on cheap oil.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
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Re: $22 Oil For 140 years
by Hughj » Mon 20 Jun 2011, 12:45:53
$this->bbcode_second_pass_quote('Pops', 'Y')ep, certainly points up the fact that our economy, and society too, is built on cheap oil.
Indeed, like capital, labor, and entrepreneurship, natural resources are required for an industrialized economy to function. When OPEC places contrived and artificial constraints on supply, bad things happen. Remember when Jimmy Carter had interest rates at 20 percent? Similar results.
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Re: $22 Oil For 140 years
by Pops » Mon 20 Jun 2011, 13:21:30
$this->bbcode_second_pass_quote('Hughj', 'W')hen OPEC places contrived and artificial constraints on supply,
Interesting choice of words, I guess that means you think the whole problem is that Saudi Arabia (who ostensibly holds the worlds only spare capacity) is holding out and that's causing oil to be what, 7 times its "historical" price?
Really, if anyone else had the capacity don't you think they'd be opening the valves wide?
"Conventional" oil has peaked, it's in decline, in the US we're making up for that by burning half-baked bitumen steam cleaned from strip mined sand up in Canada, mixed with lighter oil and synthesized into "artificial" crude using large amounts of both water and energy - do you think that can be accomplished at $17 a barrel? Ditto Fracked oil, deepwater, arctic, etc. Take a look at the chart I posted in your other thread, it shows the cost for "New" oil, second half oil, post-peak oil.
It goes like this, all oil is priced at the value of the last barrel needed to satisfy demand. So even though KSA may be able to lift oil for $10/bbl it gets to sell it for $90 because there is no longer enough $10 oil to satisfy demand. Producers need $90/bbl to steam clean sand and drill 5 miles down in 5 miles of ocean and make a profit.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
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Re: $22 Oil For 140 years
by Pops » Mon 20 Jun 2011, 13:27:47
Oops, premature submission there...
.... Producers need $90/bbl to steam clean sand and drill 5 miles down in 5 miles of ocean and make a profit. If we are going to consume oil at the record levels you were crowing about elsewhere, we will pay at the price level that makes the last barrel of oil profitable.
.... Producers need $90/bbl to steam clean sand and drill 5 miles down in 5 miles of ocean and make a profit. If we are going to consume oil at the record levels you were crowing about elsewhere, we will pay at the price level that makes the last barrel of oil profitable.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
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Re: $22 Oil For 140 years
by Hughj » Mon 20 Jun 2011, 13:32:09
Don't shoot the messenger, Pops, but oil is down again today. Sure sign of a shortage wouldn't you say? If it costs 90 bucks, that's where it will stabilize.. wanna bet it goes lower much lower?
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Re: $22 Oil For 140 years
by ian807 » Mon 20 Jun 2011, 13:45:03
$this->bbcode_second_pass_quote('Hughj', 'D')on't shoot the messenger, Pops, but oil is down again today. Sure sign of a shortage wouldn't you say? If it costs 90 bucks, that's where it will stabilize........wanna bet it goes lower much lower?
Hugh, The price will undoubtedly go much lower, and then much higher, and then much lower again. And we've just started with that one. When oil demand becomes very inelastic and oil price feedback (i.e. when high oil prices themselves raise the price of everything, including the price of getting oil from well to gas tank) starts, the oscillations between high and low prices over time are going to be mind boggling.
Regardless, market price is not the physical world. The simple math of oil extraction, however its done, guarantees liquid hydrocarbon depletion over time. Economically this raises the price and contributes to price inelasticity. Moreover, as it slowly penetrates the minds of politicians worldwide that their militaries can't function without oil, you'll see large chunks of oil suddenly become unavailable as Iran, Russia, the USA, and so on suddenly stop selling their oil on the world market and hoarding it. At that point, the price will become permanently high and oil will leave the stage as a major energy player.
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Re: $22 Oil For 140 years
by Pops » Mon 20 Jun 2011, 13:56:08
Did I say shortage?
No, looking back at my post I don't see shortage mentioned. I see an explanation of why oil is 4x your historic average and why it won't ever be down there for any significant period ever again. I'm thinking the historic average price of oil has no more to do with it's future price now than the historic average population of dodo birds has to do with it's future population.
Although I don't pay much attention to the day to day price, here is what the oracles have to say about todays price:
$this->bbcode_second_pass_quote('', 'O')il dropped to its lowest level in four months in New York on concern the Greek debt crisis will derail Europe’s economic recovery, curbing fuel demand.
Futures pared an earlier loss of 3 percent as German Chancellor Angela Merkel moderated earlier conditions for supporting a Greek rescue plan. Crude is down 5.2 percent this week as data showed U.S. manufacturers turned pessimistic in June and demand for diesel declined. Prices will slide further next week, according to a Bloomberg survey of analysts.
“Oil demand growth has slowed in the second quarter with a weakening of the economic recovery,” said Harry Tchilinguirian, London-based head of commodity-markets strategy at BNP Paribas SA. “The recent oil move is forex-driven. Past the current soft patch, we expect growth to pick up as we move into the fourth quarter.”
No, looking back at my post I don't see shortage mentioned. I see an explanation of why oil is 4x your historic average and why it won't ever be down there for any significant period ever again. I'm thinking the historic average price of oil has no more to do with it's future price now than the historic average population of dodo birds has to do with it's future population.
Although I don't pay much attention to the day to day price, here is what the oracles have to say about todays price:
$this->bbcode_second_pass_quote('', 'O')il dropped to its lowest level in four months in New York on concern the Greek debt crisis will derail Europe’s economic recovery, curbing fuel demand.
Futures pared an earlier loss of 3 percent as German Chancellor Angela Merkel moderated earlier conditions for supporting a Greek rescue plan. Crude is down 5.2 percent this week as data showed U.S. manufacturers turned pessimistic in June and demand for diesel declined. Prices will slide further next week, according to a Bloomberg survey of analysts.
“Oil demand growth has slowed in the second quarter with a weakening of the economic recovery,” said Harry Tchilinguirian, London-based head of commodity-markets strategy at BNP Paribas SA. “The recent oil move is forex-driven. Past the current soft patch, we expect growth to pick up as we move into the fourth quarter.”
I like that last bit, aimed at the gamblers.
But hey if this is your argument against PO, more power to ya.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
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And quite far afield of the thread......remember, my topic was historical in nature, and therefore quite impossible to refute. Look at it this way. If oil prices had steadily escalated for the last 140 years, then your contention that "the end is near" would be a little more palatable. The inconvenient truth is......THEY HAVEN'T.