[Tyler_JC]

I don't disagree with the paper.

I think a carbon tax (and all reasonable pollution taxes) is a great alternative to government mandates and arbitrary quotas.

Another good idea would be a MPG tax.

Tax = (100-MPG)[sup]2[/sup]

Want to drive a Hummer getting 10MPG? Pay a $8,100/year tax. 30MPG Honda Civic? $4,900.
50MPG Prius? $2,500 per year.

Or the harsher version:

Tax = (50-MPG)[sup]3[/sup]

That Hummer now costs $64,000 per year.
The Honda Civic $8,000 per year.
And the Prius is tax free.

Use this revenue to cut payroll taxes and everybody wins.

The Market is the way the world works for the time being and it is far more useful to try to work within the existing framework in order solve a problem rather than create a brand new controversial framework.

[Gandalf_the_White]

You know, I get the feeling there are a few invisible body parts that are up to no good here.

Am I the only one?

What?

... it's a fair ... it's a fair question.

Let the man answer the question.

Dr. Sachs.

Have you been aware in the last few years, or at any time.....

...of the invisible hand touching you in ways that made you feel......

.... shall we say uncomfortable?

[Mastodon]

$this->bbcode_second_pass_quote('Tyler_JC', '
')The Market is the way the world works for the time being and it is far more useful to try to work within the existing framework in order solve a problem rather than create a brand new controversial framework.

[copious.abundance]

Analyst: Oil could hit $20/barrel --> LINK <--

[pup55]

$this->bbcode_second_pass_code('', '"The pendulum does swing much faster than we give it credit for," says Peter Beutel of Cameron Hanover. Beutel says $37 a barrel is likely, even $20 a barrel isn't out of the question. ')
We might have known that Beutel would say something like this. I am surprised they did not quote our buddy Phil Flynn while they were at it: link

Note that in the last entry in this thread in February, he was saying:
$this->bbcode_second_pass_quote('', 'F')alling demand for gasoline eventually should moderate prices. "Thirteen-week average gasoline demand is down 0.45% against a year ago," Beutel says.

[Revi]

There were people predicting $200 a barrel a couple of months ago.

Kunstler seems to think it's a temporary situation, and that the price of oil will go up soon:

"This means especially oil. I hope you're enjoying the temporarily cheap prices at the gas pumps, because this is purely a function of the compressive deleveraging that is going on right now, as contracts and positions held in energy markets are being dumped by everybody and his uncle to raise cash to meet margin calls. My guess is that oil and its byproducts will become much more difficult to get in the months ahead -- not just more expensive, but literally not available. The current falling price of oil has little to do with the real supply and demand fundamentals. It's simply a function of the markets being in near-total disarray. We're running on current inventory, and running it down. In the background, all kinds of peculiar and terrible things are happening. The entire apparatus of allocation and distribution is being thrown out of whack. The smaller tanker operations are going bankrupt. The "less-developed" nations are heading back to the 17th-century level of daily life without electricity. The oil exploration and development projects that were planned for hard-to-get oil netting $100-a-barrel minimum -- in places like the deepwater Gulf of Mexico, Siberia, and Central Asia -- are being shelved, which means the world has less of a chance to offset coming depletions in old fields."

from Jim Kunstler's blog, Oct 27th, 2008

[Dont_Panic]

$this->bbcode_second_pass_quote('pup55', '[')code]"The pendulum does swing much faster than we give it credit for," says Peter Beutel of Cameron Hanover. Beutel says $37 a barrel is likely, even $20 a barrel isn't out of the question. [/code]We might have known that Beutel would say something like this. I am surprised they did not quote our buddy Phil Flynn while they were at it. link Note that in the last entry in this thread in February, he was saying:
$this->bbcode_second_pass_quote('', 'F')alling demand for gasoline eventually should moderate prices. "Thirteen-week average gasoline demand is down 0.45% against a year ago," Beutel says.

[AirlinePilot]

20$/bbl? I doubt it. If it does go there we have some really significant problems everywhere else. The dolts and pundits predicting this dont understand why prices that low mean some very bad things everywhere else if realized.

I believe a lot of this debate goes to how much farther deleveraging has to play out. That plus the pressure that is going to be brought to bear by oil producers in defense of price.

Hopefully it's orderly and not caused by some artificial crisis. I'd guess we are nearing a bottom with oil price as the dollar does not seem to be likely to continue it's recent meteoric rise. Even with that metric, the demand picture, barring a total world collapse, is going to dictate what happens. with gas prices lower than they have been in almost a year here in the US, that alone is going to spur demand and help to mitigate some of the economic impact of a recession. Notice I said some.

Watch the dollar, and pay attention to the peripheral high cost oil impacts. I believe there are signs already that oil producers and industries are scrambling to figure out what they are going to do at 60-70-80$/bbl prices. I doubt that we stay down here very long.

My guess would be that by early next year, if we are not already into a global economic collapse, than price starts it's rise once again due to all the stuff we already know about here.

[pup55]

$this->bbcode_second_pass_quote('', 'U')hm, he said "eventually"

[threadbear]

If the dollar keeps strengthening, war talk ceases and there is a severe depression, it's possible, but not likely. It seems quite possible it could go to around 50.00 temporarily though.

[dorlomin]

How much oil can we pump at $20 dollars? How many new fields can be developed with $20 oil? $20 oil is doomer porn so obscene it should get an 18 age classification.

[Twilight]

If oil hits $20 and stays there, you can kiss FSU exports goodbye. They will be too busy ripping each other apart with guns and heroin while the fields get stripped of anything reusable. Feel free to revisit the decline curve at the end of the Soviet Union. Cantarell and the North Sea will be sad stories too. In case you have not noticed, they are quite a capital intensive business these days and the UK government was really hoping high oil prices would enable more marginal prospects to be produced to maximise recovery. At $20 I reckon they could not give them away.

[Novus]

$this->bbcode_second_pass_quote('dorlomin', 'H')ow much oil can we pump at $20 dollars? How many new fields can be developed with $20 oil? $20 oil is doomer porn so obscene it should get an 18 age classification.

[yesplease]

Where is this low prices are bad mantra coming from? If it's high, it's TEOTWAWKI, and if it's low, it's TEOTWAWKI. Lets just save some time, and say that if the sun rises tomorrow it's TEOTWAWKI, and if it doesn't it's TEOTWAWKI.

I know this may be kinda hard to grasp, but if prices drop enough to reduce output, that oil will still be there when demand/supply converge and prices increase again. If anything, the lower the rate of oil use, the longer we can use oil for and smaller the rate of depletion.

[happychicken]

I'm no expert, but surely, if oil prices get so low that you're no longer making a profit you would have to pack up and go home for a while and wait for the price to recover. Shutting down an oil well and starting it up again isn't as simple as switching on and off a tap is it?

Wouldn't it take time to get a project up and running again after you've laid all your workforce off etc?

So, if the price went too low it would cause a temporary lowering of supply with a time lag before that supply recovered.

[VMarcHart]

$20, $200, this looks like throwing darts or rolling dice. I see no science, no fundamentals behind it. I took can say a random number and if I'm right I look like a prophet.

[dukey]

if you extrapolate the decline in price, by next year we might reach $0/barrel. Wohoo party on.

[VMarcHart]

$this->bbcode_second_pass_quote('dukey', 'i')f you extrapolate the decline in price, by next year we might reach $0/barrel. Wohoo party on.

[galacticsurfer]

If the price drops too low it willdamage the ability to produce oil. Nobody invested in the 90s or graduated petroleum engineers so now with sudden high prices they have been enthusiastically playing catch up. However the companies were paranoid as they never forgot the 90s with 10 years of depression in the oil fields. They were wary to invest thier time and moneyx and then lose it all again as the market turned. Now it has turned and probably a lot of older guys are saying "I told you so". If it stays at this price or lower for 6-12 months lots of plays won't be made and others will be closed down/capped. Lots of people will be fired. The recession if it hard enough will accelerate PO as oil development needs heavy investment under a stable environment. Except for the very easy to find oil where you just punch a holein the ground, which is all gone, you need very heavy capital investment for offshore, tar sands, Saudi heavy oils, and lots of time and very well trained teams of people. All this will get deep sixed and the hard to find stuff will never be invested in as stop and go is poison for heavy capital long-term projects. The easy light sweet in politically stable areas will get pumped out and the Russian continental shelf willbe left for the next century or much later under a more developed civilization.

[AirlinePilot]

Too low price also may just mean we will reach "Mad Max". It implies a significantly reduced consumption of the resource. The only way we go there is an extremely ugly depression, globally. Either that or a meteorite the size of Madagascar strikes the earth.

In this particular day and age you cant sustain the production structure, the companies or countries producing the oil, or their economies without a reasonable price for the resource. 10$/bbl oil would be wonderful but it could easily mean there isnt much of it to be had. Then the cycle repeats all over again. Those swings are deadly as we have seen.

I guess at this point that if and when the world gets through the credit/banking crisis, TPTB should decide on some realistic range for the price of oil. That would allow investment and capital necessary to continue and the correct signal for J6P to think about using less as we go forward.

My bet is that the difficult and expensive projects for this year and maybe the next quarter or two are ok, but if the price drop continues, budgets and plans for later get slashed and we get an accelerated look at what happens with serious decline.

I think that's the real nature and understanding of PO, why its different this time, and why it means we are truly screwed no matter what the price does.

The only thing to do now is figure out how to have an orderly decline.

As Humans we aren't too good at doing that.