[Spanktron9]

During the height of the oil rally when Matt Simmons was on CNBC several times, he was asked to give a worst case scenario for oil. After saying they didn't want to hear his worst case (DOOM!), he responded that he felt a precipitous drop in oil pricing would lead to a back-burnering of energy policy and research (paraphrase). It seems to me that we are witnessing this now. Has Simmons or other PO leaders offered any further analysis on this situation? Thoughts?

[ohanian]

In all things in live, there are limits.

But there is no limit to human stupidity!

It's not that there are no wise men (or woman).

It's that those who art wise are not in power.

Those who are in power, are only as smart as George W Bush.

[Daniel_Plainview]

$this->bbcode_second_pass_quote('Spanktron9', 'D')uring the height of the oil rally when Matt Simmons was on CNBC several times, he was asked to give a worst case scenario for oil. After saying they didn't want to hear his worst case (DOOM!), he responded that he felt a precipitous drop in oil pricing would lead to a back-burnering of energy policy and research (paraphrase). It seems to me that we are witnessing this now. Has Simmons or other PO leaders offered any further analysis on this situation? Thoughts?

[ROCKMAN]

I can offer a scenario in which the recent price drop might actually put PO back into the national conversation in just a few months. Not going to offer a probability of this happening but I do think it is possible.

It could hinge on two variables. First, OPEC finally establishing itself as a true cartel.
That doesn't mean they'll push oil back up to $150/bbl by shutting in enough production. But if they could ramp prices back up closer to $90 -100 it would start hitting the public seriously in the pocket book again. But the practical, and I think equally important, psychological impact would be confusing for many. The public would see a future where even the demand destruction currently developing won’t ensure cheap oil in the future. The second shock would come if we do in fact have a colder then normal winter as forecast by the NWS. With much of the NG still shut in the GOM it’s easy to anticipate a NG price spike this winter. Though not directly related to oil pricing this might still bring energy to the forefront of conversations.

Of course, it still remains to be seen if the OPEC members can finally muster the necessary discipline. But we should know that answer by the New Year. I don’t think Matt was talking about a short term (6+ months or so) drop in price as far as a WCS. I would think he meant several years which would bring us much closer to PO before the negative impacts started hitting us at an obvious level.

[Spanktron9]

$this->bbcode_second_pass_quote('DoomWarrior', 'S')panktron: Do you have a link for this CNBC interview? I vaguely recall it.

[sjn]

ROCKMAN, actually Matt, like myself and many others here have long been of the opinion that we've been on the PO plateau for a few years now. The moment of decline from that plateau was always going to appear to the world a financial event. I didn't expect oil prices to fall this low, but I did expect severe development/production financing problems to appear around this time.

[vtsnowedin]

Did you catch Sarah Palin's speach today in Ohio? She was calling the present price drop a window of opportunity to become energy independant. Made a pretty good case. It was a set piece of course, read off a tela-promter, but she used the term "tap into" way to many times for it to have been written by a professonal speach writer. Pretty scary that she is the voice of reason on the subject. They don't seem to have a clue as to the lead time to get any alternatives into production but perhaps they don't want to panic the sheeple this week.

[ROCKMAN]

I agree with you, sjn, about the plateau as well as the above ground factors looming large. Now did I expect to see such a big price drop but I don't think it will last too. Just going to be a bumpy plateau for a good while perhaps.

[Pops]

The Worst Case is the scenario where you breath a sigh of relief filling up at $1.99 today and do nothing to change your life.

PO is gonna getcha sooner or later so best get ready sooner.

[smallpoxgirl]

$this->bbcode_second_pass_quote('ROCKMAN', 'I')t could hinge on two variables. First, OPEC finally establishing itself as a true cartel.

[ROCKMAN]

You're right girl. That's why I offer it as a possibility and not a prediction. But over the years I've heard things from expats that worked over there. How much is was true (and still is) I can't be sure. But there are strong forces within the KSA always vying for control. But it is clear that the ruling family has used the oil revenue to subdue internal discontent.

And they certainly must consider those political/military reactions you mentioned. But the KSA doesn't live in a vacuum. With the US a hop, skip and jump away in Iraq and Iran right across the gulf I can imagine they are constantly looking over both shoulders. But there are also some hard biz considerations: I'm not sure of the current status but there was a time 6 or 8 years ago that the KSA was so deeply in debt that there was quit chatter about a possible default. But I doubt we can get a clear picture of their current financial situation any better then their reserve numbers.

The main reason I offer that scenario as a possibility is because of the volatility of the situation on so many fronts at the moment. And such uncertain times can lead to unpredictably, even unimaginable, consequences.

[Serial_Worrier]

$this->bbcode_second_pass_quote('ROCKMAN', 'Y')ou're right girl. That's why I offer it as a possibility and not a prediction. But over the years I've heard things from expats that worked over there. How much is was true (and still is) I can't be sure. But there are strong forces within the KSA always vying for control. But it is clear that the ruling family has used the oil revenue to subdue internal discontent.

And they certainly must consider those political/military reactions you mentioned. But the KSA doesn't live in a vacuum. With the US a hop, skip and jump away in Iraq and Iran right across the gulf I can imagine they are constantly looking over both shoulders. But there are also some hard biz considerations: I'm not sure of the current status but there was a time 6 or 8 years ago that the KSA was so deeply in debt that there was quit chatter about a possible default. But I doubt we can get a clear picture of their current financial situation any better then their reserve numbers.

The main reason I offer that scenario as a possibility is because of the volatility of the situation on so many fronts at the moment. And such uncertain times can lead to unpredictably, even unimaginable, consequences.

[ROCKMAN]

For one thing the US Navy, nor any other portion of the US military, will never lack fuel thanks to the SPR. That's why the SPR was built in the first place. Secondly, if the KSA sold "our" oil to some else then they would be receiving oil from their original supplier. The only way to deny any oil imports to any country would be for all exporting nations to agree. Given the critical need for revenue by all the exporters that's not likely to happen. IMO.

[vtsnowedin]

We spend a lot of time contemplating conditions here in North America post peak oil but imagine for a minute if you will KSA after the last barrel is pumped. That last barrel will probably sell for $1000 but who will be running the pump and where will it get shipped? Will the country revert to a pile of sand crisscrossed with rusting plumbing? Wonder what their plan to keep the oil wealth is?

[Spanktron9]

$this->bbcode_second_pass_quote('vtsnowedin', 'W')e spend a lot of time contemplating conditions here in North America post peak oil but imagine for a minute if you will KSA after the last barrel is pumped. That last barrel will probably sell for $1000 but who will be running the pump and where will it get shipped? Will the country revert to a pile of sand crisscrossed with rusting plumbing? Wonder what their plan to keep the oil wealth is?

[Cloud9]

The Wahabists will get their country back.

[Koyaanisqatsi]

$this->bbcode_second_pass_quote('Spanktron9', 'I')t seems to me that we are witnessing this now. Has Simmons or other PO leaders offered any further analysis on this situation? Thoughts?

[pedalling_faster]

the oil companies might cut back R&D for alternative energy sources but the venture capital community in Silicon Valley hasn't.

the drop in energy prices lowers development costs, and there is zero doubt about the long-term need for the alternatives to oil & natural gas.

how American businesses will make money when the fat margins associated with fossil fuel energy abundance dwindle away, i don't know.

[sittinguy]

I strated driving my old truck a few days ago again. Drove it to work today. 7 mpg.. Its fun to drive. Figure I better burn some gas while its cheaper. For now

[ROCKMAN]

guy -- on behalf of myself and the rest of the oil patch: THANK YOU...THANK YOU...THANK YOU.

It's just human nature. We all enjoy our own brand of luxuries: driving...eating out...buying a new pair of shoes. We all know we should conserve but life without little joys isn't much fun. For me, I have enough different types of guns to handle any potential activity. But it still doesn't stop me from craving a new one I see at a great sale price. But that look I get from my better half does serve to hold me back some.