[ROCKMAN]

Pops - “I'm pretty sure the price no longer being $25 indicates that we've reached the worldwide equivalent of the TRRC setting allowables to 100%” An excellent way of putting it IMHO. Might not be absolutely correct but close enough. Just as there was no reason for Texas to continue to hold production back in order to maintain higher prices the global oil producers likewise have little need to restrict production. We may not like the current price of oil but it has been rather stable.

“Are you saying that we should be happy that Brent is at $114”. And here is where we start chasing our own tails. Would folks be happy if oil were selling for $25/bbl but the tanks at the gas stations were empty most of the time? Would folks be happy if millions of their neighbors lost their jobs because there wasn’t enough energy available for their companies to function? Like the old Russian joke: “Yes…the beef steak is only $0.50/lb. But we are out…and have been for 5 years.” LOL

As you say the price of oil isn’t an independent factor. So what has changed in the supply/demand picture? We are supplying a greater demand with more production at $100/bbl than we were when oil was $25/bbl. Why? As you put it: the world is running at 100% allowable. There is little competition amongst the oil sellers. No one is trying to underbid each other for market share. In fact, when you start adding up the effects of depletion, ELM and the Chinese locking up more future oil production the oil exporters won’t need as much market share as they have now. What will that mean in terms of future prices? I think we can look at current conditions and make a weak guess. A large percentage of the economies can’t afford $100/bbl oil and are thus no longer a portion of the “market”. But those that can pay are paying. And how has the loss of those markets affected to the oil sellers: they are recording record revenues. The KSA could reduce their exports 50% and they would still be pulling in more income than they were just 7 or 8 years ago.

I agree with those that say world can’t afford $150/bbl for an extended period. But that may not be as relevant as it was 5 years ago. If the oil sellers can lose a large chunk of their market but generate the same income (or more) by selling less oil at a higher price why wouldn’t they? IOW it won’t be important to them if the world as a whole can’t afford $150/bbl as long as someone can afford to buy enough of it to satisfy their income requirements. And if the oil producers have little excess capacity then it would be difficult for one to underbid another since they wouldn't be able to meet the demands of that market for cheaper oil...not enough production capacity. And isn’t that a critical component of supply and demand: if a producer can satisfy its revenue goal by selling X widgets why would it sell more widgets at a lower price if they have a LIMITED supply of widgets? Especially if their competitors had no extra widgets to sell. IOW why not charge the max price possible if you are limited to how many widget you can get to market? Seems like the supply/demand law hasn’t changed…just the conditions.

[Pops]

$this->bbcode_second_pass_quote('', 'W')e are supplying a greater demand with more production at $100/bbl than we were when oil was $25/bbl.

...Would folks be happy if oil were selling for $25/bbl but the tanks at the gas stations were empty most of the time?

[SamInNebraska]

$this->bbcode_second_pass_quote('raizcapoeira', 'F')or all the talk about peak oil allegedly being dead, there's very little talk about the fact that, while the sensationalistic collapsenik predictions made by idiots like Michael Ruppert & perpetuated by people like Matt Savinar are bunk, the more level-headed peakists' predictions have been uncannily accurate.

[Pops]

Back in '04 - '05, when someone begged the question of PO by saying, "they've been predicting the peak since the beginning; it's never happened so it won't" it was hard to argue, there was no actual evidence of a peak or even a slowdown in growth, it was all speculation.

Now, with production of oil relatively flat for 8 years even while the average real price of oil has been higher, longer, than at any time in the history of oil, I'm thinking your argument looks kinda quaint, if not completely out of touch.

I realize that with shale growth on the downslope, OPEC spare capacity down to 2.2Mbod and OECD oil stocks about about where they were in '08 you don't have much to hang your hat on; all the evidence now points toward peak. I guess begging the question is all you have left.

Sort of a shoe on the other foot situation.

Pretty funny.
.