[Graeme]

The Coming Oil Crash

$this->bbcode_second_pass_quote('', 'B')ut the experts who are predicting the worst, based on geology and geopolitics, are missing the crucial role that economic incentives play in determining the price of crude. The tripling of oil prices since the summer of 2003 has unleashed forces that within the next two or three years will bring oil prices tumbling back down to below $50 a barrel. Looking even further ahead, prices could easily fall to $30 a barrel or even lower. So before you trade in your Cadillac Escalade for a Toyota Prius, think twice: $1.50-a-gallon gas might not be gone forever.

[AirlinePilot]

Yeah, and monkeys might fly out of my butt too!

Denial is a harsh mistress.

[roccman]

$this->bbcode_second_pass_quote('AirlinePilot', 'Y')eah, and monkeys might fly out of my butt too!

Denial is a harsh mistress.

[AirlinePilot]

Somehow I think you would enjoy that rocc.

[Fishman]

You know, I try to keep an open mind about this oil issue. I read the article thinking, ok, so give me some data, perhaps they are right. But nothing, no data. Yes, "unleashed forces" are out there but not in exploration, at best reworking old holes. Lots of fools will read and believe, not ask questions.

[steam_cannon]

$this->bbcode_second_pass_quote('AirlinePilot', 'S')omehow I think you would enjoy that rocc.

[Armageddon]

$this->bbcode_second_pass_quote('Fishman', 'Y')ou know, I try to keep an open mind about this oil issue. I read the article thinking, ok, so give me some data, perhaps they are right. But nothing, no data. Yes, "unleashed forces" are out there but not in exploration, at best reworking old holes. Lots of fools will read and believe, not ask questions.

[roccman]

$this->bbcode_second_pass_quote('steam_cannon', '')$this->bbcode_second_pass_quote('AirlinePilot', 'S')omehow I think you would enjoy that rocc.

[sittinguy]

That is a VERY reassuring thing to say, I feel better already But it could happen actually. temporarily. It would be a backwards dead cat bounce. The next few months I will be watching carefully.

[americandream]

We will NEVER again return to the days of cheap oil. NEVER. Anyone who believes that is either inordinately stupid, in denial of a magnitude that defies belief or is such an adept liar that he/she has even kidded themselves.

We cannot assess price imperatives on the profile of the limited global market that existed pre-globalisation and the rise of asia and latin america as new sources of resources demand.

[seldom_seen]

$this->bbcode_second_pass_quote('americandream', 'W')e will NEVER again return to the days of cheap oil. NEVER. Anyone who believes that is either inordinately stupid, in denial of a magnitude that defies belief or is such an adept liar that he/she has even kidded themselves.

[Ardalla]

I like these predictions of lower oil prices. It frames the issue very clearly. One the one hand we have people like Yergin insisting prices in '08 will definitely be much lower, and then we have Pickens and Simmons saying they will definitely be much higher. For once the market in '08 will telll us who is right.

Simmons was wrong on his prediction of a crisis in NA nat gas. Yergin has been wrong every year for at least the last 5. Pickens has yet to be wrong. He said crude would not make it to $100 by year's end (right so far), and he says we will see $100 oil before we see $80 oil.

I hope by year's end the losers will finally shut up. Not likely, but one can hope.

[TonyPrep]

$this->bbcode_second_pass_quote('Ardalla', 'S')immons was wrong on his prediction of a crisis in NA nat gas.

[MD]

The cliff notes rebuttal:

"Here comes cheap oil again, because it always has."

Yes, so far. So did whale oil.

"One-hundred dollar oil means flood of investment."

Yes and no. The oil companies have been paying out massive dividends and investing in LNG and alternatives in a big way. Who the hell knows what the Nationals are doing with their money, and I'm not sure I want to know in any great detail. We have enough to worry about.

"Efficiency will kick in -- is kicking in."

Yes, and it's great to watch it happen, Jevons or no.

"Hundreds of stripper wells in Texas coming back on line."

Oh, yes! We need every ten-barrel-per-day-well that we can get our hands on! Problem is: we need millions of them, not hundreds.

"Shell is bringing in those tar sands."

Yuck. Please keep pushing for green production practices, please!


"Big investments are going into development and exploration. The result of that will be felt in a few years because there is a long lag time between investment and production"

So very true. And we are waiting patiently for previous big investments to come on line (see skrebowski's mega projects report).

But the current "big investments" in sweet-light high-volume production still fall far short of anticipated future need, yet the majors are investment the bulk of (or rapidly increasing share of) their capital in LNG (exxon mobil), Tar sands (shell), or alternatives (BP).

He finally concludes "the cheap stuff is running out", but fail to mention the clear corollary: "you won't have as much energy to work with now".

Then he dribbles off into substitutes.

He completely missed ERoEI and energy density.

I should have stopped reading at "stripper wells".