[Lifer]

Funny I haven't heard anyone muse that $1000.00 per barrel oil is on the way, despite the fact that oil production has yet to decline globally. With the prices this high while production is only flat, what will happen when it begins to decline?

[joeltrout]

I don't think the world will ever see $1000/bbl oil. Demand destruction will come into play way before.

Paying $200/ bbl in 2045 might be equivilent to $1000 due to loss of wealth across the world.

joeltrout

[heroineworshipper]

$1000 oil is no problem. We already have $80 steaks. Probably won't hit 1000 Euros however.

[Pretorian]

1) high inflation-- totally possible;
2) growing scarcity---die off for folks with $2 a head per day wages. Perhaps for those with 5-10 a day too. By that point it won't matter for most how much oil is worth, there are will be massive migrations, starvations, executions, ets. They won't go without shaking your sleeve , you know.

[Pops]

I didn't think we'd see US$120 oil in '08...

[Tanada]

The only way I see this happening is a dollar collapse, otherwise demand destruction combined with substitution will prevent it. Substitution might mean running the neighbors through TCP, but hey, you have to have fuel right?

[Micki]

$1000 not being inflation adjusted? (as hyper inflation allows for much higher price than that.)

No, I don't think so. That is too soon.
We would have to go through a change first where oil is no longer considered bulk commodity in the samne way as today and priority use is identified and the purchasers of this are willing to cash up.
That would be somewhere after a loong recession/depression when the world has gone through a couple of adjutments and oil is considered too valuable to use for generation of electricity, driving to work etc.
So in other words I don't think demand will hold up at any price and at some point it will drop faster than depletion rates.

My theory is however that inflation adjusted in US$ terms, it is very possible. US will b e priced out of the oil market and possible also Euro market (although I think they will hold up better). Oil will be abundant for wealthy asian nations like China where the strong yuan will allow for cheap imports. Depletion rates should however prevent China from ever reaching same level of consumption as US.

[pedalling_faster]

considering how much energy is in a barrel of oil, $1000 would be seen as a good deal, if we were starting from a condition of new oil, and found this liquid fuel that is $20 a gallon and has incredibly high energy density.

if you grow a quarter acre of sunflower seeds, and press them by hand, or even using a diesel powered press, it becomes more obvious what a good deal $20 for a gallon of light sweet crude oil is.

compared to one of our earlier sources of oil, oil from whales, $20 a gallon is also not a bad deal. how many gallons of oil do you get from a whale ?

i doubt we'll see $1000 for a barrel of heavy sour, the peanut butter stuff.

maybe the world of 2018 will be a world without spam selling Erectile Dysfunction drugs. that would be nice. of course, in 2018, i might need ED drugs.

[Revi]

In 2018 I plan on retiring. If heating oil costs $30 a gallon I am not even going to be able to buy it at all. That means I'll have to cut wood. My back wouldn't be able to take it.

Nobody's going to pay $30 a gallon for gas or oil, unless they are super rich.

It could happen.

[Tanada]

$this->bbcode_second_pass_quote('Revi', 'I')n 2018 I plan on retiring. If heating oil costs $30 a gallon I am not even going to be able to buy it at all. That means I'll have to cut wood. My back wouldn't be able to take it.

Nobody's going to pay $30 a gallon for gas or oil, unless they are super rich.

It could happen.

[catbox]

Here's hoping that we won't be worried about the price of oil in 2018....how that plays out is anyones guess.

cb

[eastbay]

It'll easily reach $1,000/bbl. Definitely way more.

Remember, the jump from $120 to $1,000 is exactly the same gain as the (fairly) recent jump from $15 to $120. When was the last time oil was $15? Not too long ago and that 8 fold increase happened during what most would call, 'normal times'.

There is increasing consensus that Other-Then-Normal-Times are just now getting underway so who knows how high it will reach. $1,000 will no doubt be reached in seemingly no time at all. Then $8,000, maybe?

[phaeryen]

We can't go on like this till 2018.

Before that we are going to see major "glitches" in our eternal growth dream. Rioting, violence, despair. Intricate, big systems and paradigms of society that relied upon the input of oil-based products to function... we will see those things grinding down to a crawl, and in the most stupid or extreme cases of petroleum being wasted - to a halt. Not all of them, but a whole great many of them. People are going to need food, electricity, water, warmth and transportation to some degree. Oil will be used to get those things, albeit very sparingly. But everything beyond that will be up for reconsideration I think. We will have a new world of sorts, before 2018. I am completely certain of that.

edit: What im trying to say is that it will not be possible to "keep the party going" by just raising the cost of a barrel of oil to to $1000 or $1500, it won't play like that at all. Before 2018 money wont be enough to get all the oil you need - parties will have to start sharing due to scarcity. :]

[eastbay]

$this->bbcode_second_pass_quote('phaeryen', 'W')e can't go on like this till 2018.

Before that we are going to see major "glitches" in our eternal growth dream. Rioting, violence, despair. Intricate, big systems and paradigms of society that relied upon the input of oil-based products to function... we will see those things grinding down to a crawl, and in the most stupid or extreme cases of petroleum being wasted - to a halt. Not all of them, but a whole great many of them. People are going to need food, electricity, water, warmth and transportation to some degree. Oil will be used to get those things, albeit very sparingly. But everything beyond that will be up for reconsideration I think. We will have a new world of sorts, before 2018. I am completely certain of that.

edit: What im trying to say is that it will not be possible to "keep the party going" by just raising the cost of a barrel of oil to to $1000 or $1500, it won't play like that at all. Before 2018 money wont be enough to get all the oil you need - parties will have to start sharing due to scarcity. :]

[yesplease]

At $1000/bbl, 60-70+% of demand is outs the picture. EVs pay themselves back in a year or so and every year thereafter save buckets of cash. Even industry would substitute a lot at that price.

[kokoda]

That would be around 25% per year for 10 years. Feasable but it would wreck the world economy. I doubt anyone except the mega rich could afford it and that would drive down demand which in turn would drive down the price.

The irony is that oil could end up costing about the same as it does today but nobody could afford it.

[phaeryen]

$this->bbcode_second_pass_quote('eastbay', '
')You mean, instead of continuously allowing the market to increase prices, we use some sort of government mandated rationing system accompanied by price controls? Such a system will crush exploration and production infrastructure. I suspect such a system will also accelerate the crash... but on a positive note, it will result in less energy being burned!

[Dezakin]

$1000 dollars /barrel is ludicrous because the math doesn't add up unless the dollar tanks or the economy grows huge amounts. Lets assume massive oil depletion, down to say 50 million barrels per day, or 18.5 billion barrels per year. At $1000/bbl thats 18.5 trillion dollars a year thats devoted to oil. Thats reasonable if the fed decides to just print paper and the dollar actually doesnt mean anything anymore but it we're talking constant dollars, then unless the economy grows thats 40% of the entire economy, compared to a historic high of 8% today. I just cant see people spending half of the entire economy on oil, especially when theres more pertinent concerns such as electricity.

The demand just isn't there to sustain it I dont think. Perhaps the question is, whats the highest percentage of the economy we'll devote to just oil?

[wisconsin_cur]

The Oil Drum

$this->bbcode_second_pass_quote('', 'T')his is a guest post by Phoenix, an engineer working in the energy sector, and a friend of mine for well over 3 decades.

In January 2006 Phoenix emailed me a spreadsheet that predicted an oil price of $100/barrel by 2008, followed by an ongoing geometric rise in oil prices. I remember immediately phoning him to point out that the scenario was impossible because it is unsustainable - $100/barrel would cause economic havoc comparable to the oil shock of the 1970s and if a geometric price progression followed, then no economic recovery would be possible and... well, I recall using the phrase “rioting in the streets inside of 18 months”.

As we know, oil hit $100 in January 2008 and kept climbing, surpassing even Phoenix’s predictions. So when Phoenix offered to explain the model that generated those numbers, I leapt at the opportunity. Here is the story of how Phoenix became Peak Oil aware and generated his Price Calculator.

[timmac]

If oil gets to $500.00 per barrel I dont even think half of America will be driving cars at that point,, and the rest of the world will be driving a whole lot less too,, and that will help with the shortage and demand,, should help keep prices down but not cheap,, as fuel prices keep going up more people are going to turn to mass trans and bicycle's,, I think the BIG tipping point will be $4.50 gal for America...