[KevO]

The world’s oil supply is expanding. It is possible to meet increase in global demand comfortably with new reserves and new technologies. For example, the newly discovered oil reserves in the Gulf of Mexico that may contain 3-15 billion barrels will relieve production demands.

:: A slowdown has begun in global demand. High oil prices and slowdown in growth rates have brought about a decline in demand. This year, the demand of both Europe and the United States won’t increase significantly. The increase in demand in China, which was at 900,000 barrels a day in 2004, will recede to 500,000 this year.

:: It will be easier for producers to meet demands. The increase in global oil production is 2,7 million barrels a day. After Saudis start oil production in Khursaniye in 2007, this figure will be 4.5 million barrels daily.

:: If the elections in Nigeria decrease the tension among the groups around the Niger River, a total of 500,000 barrels will also be marketed daily. Even if the other countries restrict production by preferring quality Niger oil, the daily supply will be around five million barrels.

:: Companies do not invest in any projects as long as they don’t see a profit of $40 per barrel, despite high prices in the past two years. If companies believe that prices would remain high, they would allocate most of their profits for research and drilling work. Shareholders of ExxonMobil and BP will be paid $40 billion this year.

:: The OPEC members’ restriction on oil production will not stop the fall in prices, either.

more at
link

also is
Traders are discussing the future of oil prices after crude oil dropped to $55.26 per barrel, the lowest level in 17 months.

Some experts claim prices will decline even further.

In an interview with Forbes magazine, Michael C. Lynch, president of Strategic Energy & Economic Research in Amherst, Massachusetts, said prices would regress.

Lynch, known for his optimistic analysis in energy issues, asserted that new supplies would amply meet growing demand.

He did not expect price hikes even if an economic embargo was imposed on Iran, which produces 3.75 million barrel per day (bpd).

Lynch said oil disruptions, nuclear threats, wars, terrorism, tornados and pipeline decay affected oil prices with a $20-per barrel risk premium.

According to Lynch, prices might fall to $25 per barrel if risks were eliminated.

that's at
link

and also
Oil's price collapse, more or less
Are we heading back to $40 a barrel, and is talk of $100 crude now silly?
that one's at
link


wow!

[emersonbiggins]

Where does one start with this? I'll just pick one and go.

$this->bbcode_second_pass_quote('', 'I')f companies believe that prices would remain high, they would allocate most of their profits for research and drilling work.

[OZ_DOC]

Hang on theres a problem with this logic. I agree we have seen some demand growth reductions and new production investments recently with high oil prices. However these patterns are BECAUSE of high oil prices and RELY ON CONTINUED HIGH OIL PRICES TO BE ECONOMICAL.

If Oil prices return to low levels then the majority of projects eg the very deep water GOM discoveries will be put on the shelf till they are economical again. Also any demand growth reduction will rapidly be reversed when its only trigger (high prices) is no longer present.

If you agree with this article can you please explain how in one article they associate high prices with demand destruction and production increases, yet deny that sudden drops in prices will have any reverse effects?

[joewp]

My turn!

$this->bbcode_second_pass_quote('that article', 'T')he world’s oil supply is expanding. It is possible to meet increase in global demand comfortably with new reserves and new technologies. For example, the newly discovered oil reserves in the Gulf of Mexico that may contain 3-15 billion barrels will relieve production demands.

[OZ_DOC]

My belief personally is were seeing the first dip of the undulating plateau, prices went too high, demand was destructed investment was triggered. Next prices fall too low demand surges investment is stifled so prices rise too high and on we go with the merry go round that is the peak oil plateau. However I believe that the plateau will be undulating with an overall upward trend, each round of new investment will be more costly than the last, and as we've seen already the sheeple will become more and more accustomed to high prices. Meaning even higher prices will be required over time to achieve the same demand destruction effect (wow its amazing how similar this process is to the increasing substance demands of a drug addict developing drug tolerance)

So basically prices will dive up and down with the whole lot gradually drifting upwards over time. IMHO.

[KevO]

$this->bbcode_second_pass_quote('joewp', 'M')y turn!

[
Haven't people been saying that the price of oil is coming down for about 3 years now? Haven't they been wrong?

[KevO]

Japan's Stocks Fall; Energy-Related Shares Drop on Crude Prices

and

US economic slowdown feared on oil drops

[snowhope]

$this->bbcode_second_pass_quote('KevO', '')$this->bbcode_second_pass_quote('joewp', 'M')y turn!

[
Haven't people been saying that the price of oil is coming down for about 3 years now? Haven't they been wrong?

[joewp]

$this->bbcode_second_pass_quote('KevO', '
')Well, not really.
They closed Friday at a 2 year low didn't they?
or was it a 1 year low?

anyway, they've dropped $22 in 6 months. That, in my book, is a 'coming down'

[KevO]

$this->bbcode_second_pass_quote('snowhope', '
')I am of the opinion that prices will gradually rise again as the winter hits proper, bar any geo-political events that could still cause the price to rocket again.

[TreebeardsUncle]

Yes, there will be a bit of a mini-glut within a couple years as more oil is produced in the Caspian Sea region, in the GOM, off the west coast of African, in Brazil, in the ME etc. Yes, the prices this summer were driven up by excessive speculation, geopolitical, and weather concerns. Furthermore, a lot of speculators such as investment banks that cannot receive deliveries have been selling off lately and driving the prices down a little bit. However, demand in the USA, China etc is still very strong and will increase over the next few years, so don't expect to see oil prices come down much below $50/barrel anytime soon. It is highly unlikely that we will see $25/barrel again during the next 100 years. $200/barrel is likely by 2020 once the all-liquid peak has passed around 2015.

Lates.
g

[Heineken]

Demand never "slows down," except very briefly. What declines (and then increases; back and forth it goes) is the rate of increase in demand growth.

Absolute demand increases inexorably with the population and the global buildout of McDonaldses, SUVs, McMansions, etc.---the whole goddamned suicidal infrastructure.

Hardly a foundation for $25/bbl oil.

I don't know why more of us can't drive this fact through our skulls. I see this misreported in the corporate media almost every day; maybe that's why.

[DantesPeak]

Lynch has been predicting $40 oil for quite some time. Look into the Lynch thread if you want to see exactly when he started predicting that, and how many times.

While nothing is impossible, such as a disease or environmental caused population downturn, most trends favor the price to continue rising.

There is no demand destruction apparent, at least in the US. Unless prices rise significantly, the demand for oil and products appears to be growing even faster than general GDP trends - possibly because oil produced is of lesser quality and being used to produce other forms of energy (i.e. ethanol).

[Heineken]

SUV sales in the past couple of months are UP. A good indicator of the failure of demand destruction to materialize despite the overall leap in fuel costs.

[Dreamtwister]

Yeah um...inflation alone is going to prevent it from dropping below $40. $25 is...pardon the expression...a pipe dream.

[Chuckmak]

I'll believe it when I see it.

[shortonoil]

$25 per barrel oil? Possible - it is called a world wide monetary/financial collapse. A depression that will make 1929 look like a Quaker picnic. Of course, Michael C. Lynch is not suggesting that; technology and oil companies are coming to the rescue in his scenario. From a thermodynamic point of view that is impossible, because the ERoEI of oil has fallen so low that the production from declining fields can no longer be compensated for without driving the ERoEI below 1:1. Oil exploration and development takes huge amounts of energy. Of course a concept like that is beyond Lynch and his ilk. Sorry folks, but we must endure while fools babble. Someone hand him a pacifier, and change the brat’s diaper.

[JustinFrankl]

$this->bbcode_second_pass_quote('shortonoil', 'S')orry folks, but we must endure while fools babble. Someone hand him a pacifier, and change the brat’s diaper.

[No-Oil]

Of course no one has mentioned the 100-120M barrels that were taken out of reserves (in US & Europe for the US) at the end of last year as the result of the hurricane damage in the USA. Practically none of which has been replaced in 2006 !

Now imagine how high the price would have been in July if the demand to refill those reserves had been added to to 2006 supply ! Remeber that those reserves still need replacing & no one is doing it yet, to deliberately keep the price of oil artificially low. As soon as that demand for a full day & a half's production is re-introduced, the price will climb again.

They have been lucky this year with no major disruptions to supply, but what happens next year if there is & they still haven't replaced these reserves ? Will they draw on more reserves, thus increasing the pain further when they do decide to refill them ?

Watch this space !

[nocar]

No-oil, I think it is very interesting that the oil reserves have not been refilled. How the people responsible for the reserves reason about that? Do they not think problems can appear again? How stupid can they be?

And why has there been so little discussion about that?

What are your sources for your knowledge of no refill?


nocar