[GoIllini]

Jim Rogers is a smart guy, but it rarely pays to short the Fed on money supply and it rarely pays to short Riyadh on oil supply. Saudi Arabia claimed they had spare production in 2008, nobody believed them, they stepped up production and prompted the beginning of the selloff in commodities in August of that year.

What motivation does Saudi Arabia have to talk down the price of oil if we are really about to run out? Lying to talk up the price of oil, I can understand, but why talk it down? Occham's razor= they probably do have some spare capacity.

Long-term, though, I agree with Jim Rogers on sovereign crisis + billions of people trying to enter the middle class + geological production limitations= higher oil prices. Let's just stay away from the kool-aid though.

$this->bbcode_second_pass_quote('pstarr', 'D')ude. The rig count climbed back when they were frantically trying to repeat their all-time production record. Since then they have essentially given up.

[GoIllini]

$this->bbcode_second_pass_quote('OilFinder2', 'T')ranslation: The endlessly repeated claim that Saudi production could not be increased has demonstrably been proven false, so this is the only way a peaker can respond.

[Pops]

I can't understand the surprise.

It's not like they dumped 12MB/d on the market or that they went from 7.5 to 9.5 overnight like they did in '03.

I will be surprised if they can keep it up for any length of time. Actually I'll be pleasantly surprised both at the need to keep it up for any length of time as well as their ability to do it.


Does anyone see prices coming down short of another recession?

What I imagine is that it is no longer strictly a matter of the market wanting more oil that is making the price high, it's more that we've not only passed over the point where desire far outweighs the ability to pay for the congenital oil addict but as we continue to consume, the break-even point of extraction continues to rise.


---
It dawns on me, now that I stuck my neck out, that someone of an inquisitive nature could take a look at the range of oil company profits and compare them to those company's revenues and actual oil produced and do that across the spectrum of producers and maybe get a glimpse into how profitable their return on investment actually is. Shell just posted a 60% increase in profits, doesn't sound like my fear of oil being structurally, fundamentally more expensive to produce is actually founded in reality does it?


So many questions, such a little brain...

[GoIllini]

$this->bbcode_second_pass_quote('Pops', '
')Does anyone see prices coming down short of another recession?

What I imagine is that it is no longer strictly a matter of the market wanting more oil that is making the price high, it's more that we've not only passed over the point where desire far outweighs the ability to pay for the congenital oil addict but as we continue to consume, the break-even point of extraction continues to rise.

[GoIllini]

$this->bbcode_second_pass_quote('pstarr', 'Y')ou are both out of your respective minds? I have not been silenced. Rather the wanton disregard for simple math and obvious trends had reduced me to complete awe and stupification

[Pops]

$this->bbcode_second_pass_quote('GoIllini', 'T')he market runs in 17-year swings between commodities and equities, and we're ten-eleven years into a commodities cycle.

[GoIllini]

$this->bbcode_second_pass_quote('Pops', 'I') just can't buy that oil prices went up in the '70s because of a line on a chart and not the Arab embargoes, or came down in the 90's because of that chart and not massive exploration and technology improvements.

[Pops]

I agree with most of that.

Not necessarily the part about the US becoming much more efficient - especially because GDP seems like a really flawed measurement since a good portion measures things like cleaning up toxic dumps, unemployment checks and unmanned drones carrying hellfire.

I'd venture that we consume more energy per capita than in the '80s, not less.

!

Mainly because we consume so much more stuff and all of it consumes energy in production. My grandkids just left after their summer vacation and they each have access to vastly more stuff than I did at their age in 1970 - I consume vastly more stuff than my parents did.

Just because we're now the back office to the worlds manufacturers and industrial energy use was offshored along with our jobs to factories producing iphones in China doesn't mean we're not the consumer.

[GoIllini]

$this->bbcode_second_pass_quote('Pops', 'I') agree with most of that.

Not necessarily the part about the US becoming much more efficient - especially because GDP seems like a really flawed measurement since a good portion measures things like cleaning up toxic dumps, unemployment checks and unmanned drones carrying hellfire.

I'd venture that we consume more energy per capita than in the '80s, not less.

Mainly because we consume so much more stuff and all of it consumes energy in production. My grandkids just left after their summer vacation and they each have access to vastly more stuff than I did at their age in 1970 - I consume vastly more stuff than my parents did.

[kublikhan]

$this->bbcode_second_pass_quote('GoIllini', 'A') general rule of thumb is that in a free market, the least valuable use for the oil consumed and the most expensive oil to produce sets the price. So in theory at least, there's at least a few barrels that between government excises, production costs, and capital costs, cost $96/barrel to drill today.

[vision-master]

Just one of the many peaks, ask shorty...... lsol

[seahorse3]

You all do realize that all these estimates as to what SA are producing are just estimates by people done outside of SA, and that SA itself refuses to say how much it produces. For proof, just go to the Opec Monthly Oil Report and even the Opec report says it is based on outside sources unconfirmed by any of the source countries.

[seahorse3]

No, production does matter, as one can't use or export what isn't produced. I fully understand all the "net exports" etc, but PO is about decline.

The point of my message was this, no one knows how much SA is producing but SA, and they won't say. So, despite the best efforts to try to gather such info from third parties, it is still coming from third parties who in the end, don't know, but are trying to guess by either counting the number of rigs, tracking tankers etc.

[copious.abundance]

$this->bbcode_second_pass_quote('seahorse3', 'Y')ou all do realize that all these estimates as to what SA are producing are just estimates by people done outside of SA, and that SA itself refuses to say how much it produces. For proof, just go to the Opec Monthly Oil Report and even the Opec report says it is based on outside sources unconfirmed by any of the source countries.