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188 comments on DrumBeat: September 9, 2006

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Oil CEO on September 9, 2006 - 9:42am Permalink | Subthread | Parent | Comments top
OilGline2002_6

It gives different numbers. I don't think it matters. You can take your pick. I didn't use the pink on this one. I'll explain details if you ask.

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Bitteroldcoot on September 9, 2006 - 9:44am Permalink | Subthread | Parent | Comments top
It's a nice graph.  I've always wondered about he relationship, but I am also wondering if it's valid to use a straight line. The price of gas may be  more asymptotic as the price of oil approaches a particular value.  You can almost see that kind of  behavior in tail of the graph.

PS: Don't let the use of the word "asymptotic" fool anyone into thinking I know how to do the math involved.  I haven't used those parts of my brain in 20 years.
http://en.wikipedia.org/wiki/Asymptote

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Oil CEO on September 9, 2006 - 10:06am Permalink | Subthread | Parent | Comments top
I made these about two months ago I think. Nothing has really changed since then.

I was originally interested in knowing when we might hit $4 gasoline, or what gasoline would cost at $100 oil.

Here's the deal - I keep very close track of average gasoline and oil prices(in the US) as most of you know. In fact I make my own averages out of daily prices. So the numbers are cool.

So it's a simple plot with excel. You match a week's oil price with the price of retail gasoline. Two columns. I use raw numbers and moving averages, I can manipulate them any way I want, and I do, and I found there wasn't much difference in this particular case, so I just stuck with my four-week averages. You can see in the one how the pink correlation, which was one shift variation I used doesn't really differ too much from the blue. In fact, I removed the pink trendline in that case because it almost perfectly overlapped the shown blue one. In other words, the dots may be in different places, the trends are not.

Then I let excel draw what it calls a "trendline" through the datapoints. This is the line in the middle.

I then used the drawing function in Excel to copy that line (twice) and moved those copied lines north and south and extended them to form what looks like the barrel of a gun.

I moved those parallel "outriggers" to just about the outer bounds of where the known points lay. I don't know if they hold the key to the future.

I did one graph with data from Jan 2002 to present and one from Jan 2004 to present.

The best part about these two graphs and why they are two of my favorites is the fact that they work for me.

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Oil CEO on September 9, 2006 - 10:36am Permalink | Subthread | Parent | Comments top
Uh, yeah, to actually answer this question - I have no idea. I stare at this stuff for days and play with it certain ways and think about asymptotes and higher-level polynomials and whatever you got. I got no answers. Throw me in a room with Khebab, a computer, a pencil, and a stack of graph paper and I'm sure we could come up with something. There's a couple other things you could throw in that room but I won't mention them here.
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Bitteroldcoot on September 9, 2006 - 3:18pm Permalink | Subthread | Parent | Comments top
I guess I'm just wondering if the psychology and market forces are the same between the price a refinery is willing to pay at any given time and what a consumer is willing to pay.  A consumer is more likely to panic and pay any price. While a refinery will have long term contracts and savvy purchasing agents willing to negotiate down to the last cent.   I would also thing that at a certain price the government will step in with rationing.  This would create a black market with even higher prices.  

It's and interesting concept to ponder.  Eventually reality will step in and give us an answer.

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oilmanbob on September 9, 2006 - 7:18pm Permalink | Subthread | Parent | Comments top
 Our current government believes only in rationing by price. In other words, poor people can do without. And they count on apathy, we didn't protest the election frauds in two succesive national elections, we have allowed our votes to be manipulated by fraudulent refusals to count and by illegitematly disenfranchising huge numbers of people- oh shit, they're right! Mexicans have more cojones!
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geewiz on September 9, 2006 - 8:53pm Permalink | Subthread | Parent | Comments top
could adult beverages be one of them?
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Oil CEO on September 10, 2006 - 2:58am Permalink | Subthread | Parent | Comments top
I was thinking more like basic office supplies. It's amazing what you can achieve with paper clips, magic markers, and a stapler.
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Euan Mearns on September 10, 2006 - 5:31am Permalink | Subthread | Parent | Comments top
Fishing trip

Or should that be fission trip?

CEO - nice charts - I've grabbed both for my TOD folder that now has so much stuff in I can't find anything.

I'm working on a post on demand destruction - so here's the $50,000 question - at what gasoline price do Americans stop driving, start sharing, trade down to SUVs from Hummers.  Where is the pain threshold?

And here's the fishing part - how about doing the same for the UK (I can hear you howling).

There is an interesting paradox about the different tax regimes in Europe and the US.  In the US you have low tax, burn gas like there is no tomorrow, but when the price of crude goes up you get the full force at the gas pump - I think your blue line shows a 1:1 correlation - did xl really draw that?

In Europe, we have a lot more tax and this acts to de-gear the price rises at the pump - so crude prices will have to go a lot higher before we begin to howl.  In other words there may be different demand destruction regimes in the US and Europe.

UK premium "petrol" is around £1 / litre right now - that's $7 / US gallon (this sum has been checked by all members of my family apart from the dogs).

So here'e the potentially clever part.  Higher prices in Europe are compensated for by normally smaller more fuel efficient cars.  So on average, does it cost the same for Europeans and Americans to drive 100 miles?

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Oil CEO on September 10, 2006 - 5:52am Permalink | Subthread | Parent | Comments top
Fusion, I'd prefer. 50 megatons and more rocks my boat.
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Oil CEO on September 10, 2006 - 6:05am Permalink | Subthread | Parent | Comments top
On a serious note, I'm considering your questions, each and every one, very carefully. The UK sets a great example that the US needs to mirror if it wants to survive. And it will. It has no choice. You already know this. And you also know we will be working more closely soon.
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geewiz on September 10, 2006 - 6:18pm Permalink | Subthread | Parent | Comments top
Uk is different than most of US, with regards to the transportation infrastructure. Many small towns (pop-50K) also have a bus system, and the trains that will take you into London. Most every town has a highstreet with all the necessary shops, where parking is largely restricted or very tight.
And the parking is metered, where lovely Rita, the meter maid checks your ticket, and may often write you one.

The US is mostly sprawled out, where a car is necessary to get from one point to the next. There is not really an efficient transportation infrastructure, much less a good bus system. New Orleans, Chicago, New York City are the ones that come to mind for me, maybe Boston too, where transportation infrastructure excels.

I don't think the US could reburbish a medium sized town in short order to accomodate the infrastructure. esp. a town of 50K or more.
Clearly most of the US population is East Coast, West Coast and Gulf Coast to some extent Florida.
The rest of the nation is really mostly small towns where a railroad comes through or the Interstate Highways pass by. Of course each state has its populated cities, St. louis MO, or Shreveport, LA. Las Vegas NV, Denver, CO etc...
But the rest of the nation is either farming, forests or desert!
in a nutshell.

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tom deplume on September 10, 2006 - 9:57am Permalink | Subthread | Parent | Comments top
What I've noticed at least here in Michigan gas price is about $/bbl/42+$1. This makes $100/bbl work out to $3.38/gal.
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Oil CEO on September 10, 2006 - 10:20am Permalink | Subthread | Parent | Comments top
I'm using the Triple-A(AAA) average weekly price for retail. I've noticed over the years that it is pretty goddamn accurate. There's a wide swing on this price, which you note. State to State, station to station, this swing is huge. I'm hoping you and others with start to follow the national trend and peg your local situations to the average. It's hard. I know. But I've done it myself

When my family and my relatives discuss gasoline prices with me, I gotta re-adjust. But that's OK. I just gotta move by about 20 cents. It ain't no big deal. I do this because I have a larger agenda and I can accomodate.

Yes. I have a larger agenda. It's called Peak Oil.

This is an issue some of us deal with here.

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