Neat - 100 is 1.01% higher than 99.

And did you see this article on nat gas prices.

http://www.321energy.com/editorials/mckenziebrown/mckenziebrown122907.html

In the UK, nat gas spot prices have been running about double last year's prices. I find it difficult to understand why nat gas prices else where are not going through the roof.

Eaun

"Peepers" at PO.com linked to this graph as an explanation of why prices are spiking;

I will repeat my posting from the older thread since this one just opened up:

$100 oil is interesting, but like Y2K and the alignment of the planets/end of the Aztec calendar in 2012 it only has psychological significance in and of itself. I think the actual price of oil is not as important as the reaction to it. For example, $100 oil inflation adjusted was a much bigger deal in '80 after the Iranian revolution when it caused a pretty severe recession. Now, it is just a news story, much less important than the current election coverage. It will be interesting to see at what price we (the American people) feel the impact full force.

Although this is not the proper place to post the following, I must comment on the irony of the fact that I happen to be in Houston on the day oil first hit 100. I am here for business, but have about 1 free day, and was wondering if anyone knew of any "must-see" attractions here besides the NASA center? Thanks.

Any chance of seeing the words net oil exports in any of the msm reports on $100 barrel oil?

I LOVE the excuses:

"ports closed due to bad weather in Mexico..."

Apparently, Oil Tankers cannot load when it rains...

fighting in Nigeria

Heck, haven't they been fighting in Nigeria for a while?

Or is it really due to the fact that those Oil Tanks at Cushing are a bit emptier..?

The Peak That Dare Not Speak it's Name, p'raps?

$100 oil= $.1488095 per 8oz. cup. Still a LOT cheaper than bottled water or sodapop. It's a marker of sorts. But with EU gasoline priced at about $300, I think $200 will have more meaning. In the realm of psychological expectations, there may be some impact as most folks understand this means petroleum products will become more expensive and might alter their behavior; this will be especially true for those on fixed incomes or already up against a financial wall. Otherwise, I expect $100 oil to have exactly zero impact on BAU.

Nate: Here's what it means to me: Profits. Sorry I know it sounds crass. But what can you do? Demand has crossed production and it will not likely be going back, ever. That means Oil and Gas are going UP! I continue to bang the drum: Any pullbacks on crude oil are huge opportunities to add or to establish new positions. Yes, I have my money and my client money where my mouth is and I will keep doing so! Look for crude going to $120 then $150 and $5.00 at the pump will become the new reality for americans (my guess sooner, not later). All the energy alternatives need to be agressively pursued...with rationing already happening in China and growth and urbanization exploding over there...

People in Europe are still buying all the cars they can and driving them all they can with gas prices double what they are in the US, so I don't see $100 oil affecting the "Non-Negotiable" US consumer much if at all. Besides, oil's been effectively $100 for some time now and that hasn't had any effect in the US.

It's sure fun on rare visits to the gas station to see those $50-$100 fill ups though - most anyone who commutes is doing this once a week.

$100 is still way too low for oil companies to even start considering making investments that might delay the impact of depletion.

To me, it mostly means that my wife is less likely to strangle me for my multi-year spread of $100 crude call options.

I don't see it as a way to make "profit", but as insurance. If oil stays below $100 in US dollars, odds are the social infrastructure in the US won't change much. If it doesn't, odds are some extra money will be useful.

Of course, there's always the possibility/likelihood of deflation, so I may or may not remain unstrangled. A much more exciting bet than RR's.

Big thanks to american drivers. My 2 oil future contracts are up $22,220 for the year. I collected .01 cents from every American driver. Or you could look at it as free gas for 14 years.

When will the pyramid collapse?

Simmons Says $100 a Barrel Oil Is `Remarkably Cheap': Video

January 2 (Bloomberg) -- Matthew Simmons, chairman of Simmons & Co. International, and Jan Stuart, oil economist at UBS AG, talk with Bloomberg's Pimm Fox about crude oil's rise to $100 barrel today, the outlook for oil prices and prospects for alternative energy. Oil rose to $100 for the first time in New York as record global fuel consumption threatens to outpace production.

Do you mean to say that TOD did not have a press release on $100 per barrel oil already drafted???

It's not just a arbitrary number that has been broken, but once a psychological barrier has been exceeded, it becomes less of an impediment for future increases to exceed. I think back to the days when it seemed to take forever for man to figure out how to break the sound barrier. After that barrier was surpassed, it seemed all of a sudden that it wasn't a big deal, everybody was doing it. It wasn't too long ago that everyone was holding their breath when gas got close to exceeding 2.00 a gallon, now that doesn't seem like a big deal. Unfortunately, a year from now we will have a new barrier that causes us anxiety, and $100 a barrel will seem so insignificant. What will it mean to me and my wife? It means that we will think twice before we take a long road trip, we will weigh how well we want to eat at home against eating out, we will ignore the TV ads for the latest whiz bang, because we know we will likely need the money for an increased cost of something else we truly will need. We will see more desparate TV ads for car dealers trying to unload their floor plan before the buying public turns a deaf ear to them also. My two cents worth(not worth as much today as yesterday!!).

if you had to pick a number for what oil should be priced at, ignoring global warming and everything, to reflect it's value? you can use a range.

what price would gasoline have to be so that people would fully appreciate the work it does?

I've seen the future.

Full-frontal flora
Growing number of folks tearing out their front lawns and planting vegetable gardens
http://www.knoxnews.com/news/2007/aug/03/full-frontal-flora/

Most people I know who grow their own food are usually immigrants or grew up in a home of someone who was an immigrant and grew their own food.

the magic of higher prices is working.

http://www.boston.com/business/globe/articles/2008/01/02/as_jet_fuel_pri...

As jet fuel prices rise, even the drink cart's weight matters
In a high-cost era, airlines look beyond increased ticket charges to cope

Globe Staff / January 2, 2008
As jet fuel prices soar to record levels, airlines are doing more than just raising fares and passing along the costs to travelers.

To conserve fuel, some are squeezing more passengers onto fewer planes. Others are getting creative and using less paint and lighter beverage carts. And some are scheduling more direct routes and adjusting their flying to take advantage of tail winds.

Airlines have little choice.

little choice

So Matt Simmon's famous 8 oz. cup of oil is now worth 15 cents. Corn at $4.50 per 56 pound bushel is worth 4 cents for 8 oz. Does anyone see a problem here? He says we should be careful (obviously referring to corn ethanol) not to chose alternative energy sources that require more energy to produce than is available in the product. Spoken like the true oil man he is. Electricity is well known to have far less energy content than the fuel used to produce it and hardly anyone says peep about it. This fallacious argument can never be put to rest and is repeated over and over again just like the big lie technique used by propagandists. It only applies to corn ethanol because corn ethanol is the only realistic competition that the oil companies need to worry about and they know it.

What if we used such logic to determine which metal should be produced? Suppose for sake of argument that 10 pounds of iron are consumed to produce 1 pound of gold. The metal return on investment would be .1. Using this logic no gold should be produced. It is obvious that when price is left out of the equation, the result is nonsense. Electricity is the "platinum" of energy and liquid fuel for transport is the "gold" of energy. It makes no difference if more energy is used to produce the expensive forms if the energy consumed is of a less useful or cheaper form. It is simple economics as can more easily be seen in the metal analogy.

Why otherwise obviously intelligent people get so confused on this issue is beyond me. It's becoming more obvious to me that where you stand on this issue depends on where you sit as the old saying goes.

I believe we are now starting the downward slope of the plateau of peak oil. Unless there is an economic recession or depression of a global nature (other than that caused by the rising price of fossil fuels), we should witness the relentless rise in oil prices until economics takes over, in which case, growth of an economic variety will cease to exist. I gave a lecture on global warming and peak oil in June of 2003 and in that seminar, I predicted almost to the quarter the price of oil and gas using a simple model. There is hope on the horizon, Genesys, LLC,
www.genesys-hydrogen.com , has invented and developed a new technology that generates hydrogen from water vapor that is economic and viable. They produce their own electricity for the RET (radiant energy transfer) technology which they have filed patents for using conventional steam turbine technology, cracking the waste steam to hydrogen and oxygen. The technology can be applied to any primary energy source such as solar thermal, geothermal, combustion of biomass, etc. This is what we need in order to have a common fuel (e.g. hydrogen) from various sources. Since water vapor rather than liquid water is used, any water source (e.g. waste water, sea water, etc.) can be used. Very high efficiencies can be obtained using this process technology. In fact, in one of their technical papers, they have established using the principles of thermodynamics and physics that it is MORE efficient to generate hydrogen than electricity. This is true because the technology utilizes the internal energy of the waste steam in the production of hydrogen. Generating electricity alone does not use the waste steam from a turbine, thereby lowering the thermal efficiency of the electricity generating process.

"Will high prices bring about more production?"

Absolutely! Producers will search out every option. Everything from deep well, to NGL, to synthetic fuels, to biofuels will be explored. No stone will be left unturned. High fuel prices for the forseeable future provide a gold mine incentive.

The question is -- how much fuel will be supplied and will it be enough to beat the increase in demand coupled with the depletion rate. In my opinion, this is the 'great game' of the 21rst century.

Off to the races...

A wrinkle in the game -- renewable energy/electric cars will be an increasingly competitive alternative. With liquid fuel prices going up and renewable prices going down, eventually there has to be an economic tipping point.

"Will high prices begin a "hoarding" phenomenon among exporters and producers?"

Absolutely! With the commodity becoming so valuable -- both as a fuel and as an engine for economic growth, the incentive to hoard will become a very powerful altering dynamic. Exporting countries, enriched by their oil wealth are, therefore, likely to consume more and export less. Add this to the depletion rate and the problem really does begin to look insurmountable.

"Will $100+ oil spur energy alternatives with the scale and quality of energy dense crude oil? Is this even possible?"

This is the solution to the whole peak oil problem. In my opinion, it is not only possible it is likely to be an increasingly clear path forward.

The arguments stating that renewable energy is both energy diffuse (as opposed to dense) and variable are valid points. But the abundant nature of solar energy, for example, is an effective counter to the variability/density arguments.

For example, if you look at coal the amount of land required to mine the coal, produce it and transport it are more than the total amount needed to generate the required solar energy needs of this country (http://www.sciam.com/article.cfm?id=a-solar-grand-plan). When you take this fact into consideration, if you're looking at energy density, it's better to look at the product -- electricity -- than the means of production -- solar panels. What's the energy density of all the world's oil infrastructure when taking into account the massive land mass, platforms, and devices used to transport the oil? If you're going to argue EROI, you need to add these into the equation.

Renewables, especially solar, have such a huge upside that, in my opinion, we will be shocked by the advances that are likely to occur over the next three decades. In my opinion, renewables are the solution that will ensure a civilized, prosperous, and clean world for us, our children and our children's children.

"Will society start to realize the dichotomy between natural capital and financial capital?"

I think we will begin to. But this is a much slower process. People are energized by crisis. If climate change picks up and becomes a serious threat, natural capital will begin to mean more.

I think the transition away from fossil fuels will, ironically, be monetarily driven. You will have the old oil capitalists warring with the new renewables capitalists.

"Will $100 oil reduce demand in developing countries?"

In those countries that have not subsidized their fuel or who are primary producers, the likelihood of demand destruction is high. However, since many developing countries have subsidized oil and/or produce it, the likelihood is that developing countries will continue to consume more unless the subsidies regimes are lifted.

Demand destruction will occur first in countries without subsidies or adequate means of oil production. The non-subsidized importers will be hurt first. In my opinion, the subsidized importers will be hurt second but harder. And the subsidized exporters are in the best spot to reap economic benefit from the current situation.

"Will OECD oil-importing countries (like the US) take the lead on changing the cultural carrot of consumption that drives energy use?"

OECD countries will be forced to conserve. Even in the US. political pressure will likely force regime change in the US presidency and Congress. Those who are best able to articulate strong and diverse energy policies that do not involve war are most likely to win elections in the current political climate. Those who do not stand on such policies will be forced to wage campaigns of fear in order to galvanize support. In my opinion, fear will lose this time. People don't have the stomach to fight wars over oil when it is obvious to many that we can walk away if we choose to.

Perhaps I am an optimist in this sense. If I am proven wrong and there is no regime change in Washington the next few years are going to be very bad. The potential for war is not just in the Middle East but with an emerging China as well.

"What does $100 oil mean to you?"

Though the point is psychological, it is also historical. We have never reached such a high price in oil without some obvious catastrophe. The last time we were here Iran pulled 5 million barrels per day off the world market. If Iran did that today where would we be? $200 oil?

What does $100 oil mean to me? It's a warning shot, a call to action, the canary in the coal mine is dead. Now are we going to get the hell out of the coal mine? Or are we going to stay here and see who else drops off?

*****

The last question is implied by the graph.

"Where will oil prices go from here?"

In my opinion, without major structural change the current trend is up for the forseeable future. We will likely have demand destruction in the OECD. We will likely have new supply. But we will also likely have severe depletion rates, increased demand in oil exporting countries and in subsidized India and China, high cost new supply (synthetic fuel, deep water, ethanol, NGL etc), and continued risk of disruption due to weather events and geopolitical tension all supporting prices.

The last straw is OPEC. Though unable or unwilling to control price on the down side they are very much able to control price on the upside. So what is the bottom for OPEC? And can we see some new supply coming on line in the next year that will erode OPEC's current price command?

In my opinion, the normal range for 2008 will be from $70 at the very low end to $140 at the high end. In my opinion, tightening forces will still retain their upward pressure and we are likely to see $120 or more at some point in the coming year. At this point, recession in the OECD is not as important as recession in India/China and/or worldwide recession. In other words, consumption losses and falling prices due to reduced demand in the US are likely to be resupported by growing demand in China/India as long as economies continue to grow there. To put it more simply, subsidies allow them to opportunistically snatch up any destroyed demand in the OECD.

Extreme low side potential: for prices to fall in any significant way we will need a worldwide recession and demand destruction that off-sets any consumption gains in oil producers and that results such a ground swell that it overwhelms OPEC's price command and the depletion rate together. This coupled with substantial efficiency gains could return prices to a more reasonable $40-70 dollar range.

Extreme high side potential: Any disaster or political tension that results in significant quantities of oil being removed from the market will likely result in a very severe spike -- $130-$200 oil depending on how much oil is removed from the market and the length of that removal.

Final assessment: look for the beginnings of structural and political changes in the OECD becoming a factor in 2008. This will result in new economies but no new pressure on the price of oil as yet. In the meantime the crisis is likely to become all too clear and the evidence of 'peak oil' will continue its march into the public eye.

The shifting of wealth from West to East is beginning. the great oil arbitrage will probably shift barrels from the West to the East. From the higher per-capita users to the lower per-capita users.

Since September, Middle Eastern and east Asian sovereign wealth funds have made a succession of investments in four US banks: Bear Stearns, Citigroup, Morgan Stanley and Merrill Lynch. Most commentators have been inclined to welcome this global bail-out : better to bring in foreign capital than to shrink balance sheets by reducing lending. Yet we need to recognise that these “capital injections” represent a transfer of the revenues from the US financial services industry into the hands of foreign governments. This is happening at a time when the gap between eastern and western incomes is narrowing at an unprecedented pace.

In other words, as in the 1870s the balance of financial power is shifting. Then, the move was from the ancient oriental empires (not only the Ottoman but also the Persian and Chinese) to western Europe. Today the shift is from the US – and other western financial centres – to the autocracies of the Middle East and east Asia.

http://www.ft.com/cms/s/6667a18a-b888-11dc-893b-0000779fd2ac.html

Well guys, 100$ oil is the tipping point to go massively solar. As I previously pointed out, Europe is going to invest billions in CSP technology. It seems that the idea catches up in the US at last:

http://www.sciam.com/article.cfm?id=a-solar-grand-plan

looks to me like a land based copycat to the MARE Initiative plan:

www.mareinitiative.com

Now how about that ?

Sun

The cost to ship bulk & containerized commodities by sea continues to move up. Ocean carriers & vessel owners have been adjusting their bunker fuel surcharges every month for quite some time now. Shipping costs for containerized goods have jumped in some cases five times. Many traditional shippers of dry bulk commodities are unable to pay high bulk shipping rates and have begun to shift over to containerized mode.

Quite often, the cost of ocean transportation does not seem to be discussed as much as is the cost of gasoline or jet fuel. The majority of goods are shipped by sea and that cost has been steadily increasing; the cost of bunker fuels account for about 50% of the transportation cost.

We will all be feeling the effects of increased shipping costs in the form of higher prices for all goods that are shipped by sea.

Meanwhile, the construction of the new Stratosphere hotel is in full swing:

http://i29.photobucket.com/albums/c272/Brush_rat/Second%20album/Strat-213.jpg" title="" >

Hi, I'm new here. I take economics at UNBC, my brother works in oil in Alberta, and the Peak has been growing on my mind.

To me, the speed the price of oil is rising signals major hoarding ahead. In fact, I'm amazed that more countries aren't hoarding already. It's baffling. By now, oil stewards ought to be scrambling to find out the return on keeping their proven reserves in the ground. Many countries would come out ahead, right? Whoever controls the world's proven reserves, what stops them from sitting on it? Internal politics? Threat of invasion?

Whatever the reason, I think we can no longer rely on it. Hoarding will soon be the only sensible strategy for oil exporters looking to come out ahead. When something in your ground is rapidly gaining value, why pump it out and trade it for something that's losing value?

Forget $100 oil from the point of view of having any impact. Consumers make the USA work. Consumers buy gasoline not oil. It's $4 gasoline that I'm waiting for, that's when the MSM are gonna go ape!!

For all the people out there who say "but gasoline is US$9 per gallon in Europe"
From http://www.fhwa.dot.gov/ohim/onh00/bar4.htm (the numbers are 10 years old but its the proportions I am interested in)

USA Total Vehicle Miles Traveled: 1570 Million
UK Total Vehicle Miles Traveled: 236 Million

Americans do 6 times more miles per year!!! And you think the country could survive with gas at triple its current price of $3 per gallon do ya???
I don't. I think 'No super cheap gasoline, no US of A !!!!'

Oh and don't forget that indirectly, Americans are paying up to US$8 per gallon already, much of it indirectly via the US Military.

It means for me personaally that my gross income has jumped from 8,000/mo to 80,000/mo and my plan has worked, so far. Net income is up as well, but not by 10x, or even close to 5x. This is compared to $10 Oil, of course, since I didn't actually sell any at $8. It means that I now feel secure in starting to set $ aside for retirement. It means that I can help put my grandkids (my youngest's two boys) to college while I couldn't help her.

On the other hand, my extended family will be as bad off as the other cornucopians, since they will not listen to my musings, warnings and rants. I probably couldn't pay off their credit card debt every month, either. They will suffer the hoarder's shortages and unavailability of fuel at any cost and live through any recovery as well.

My community will continue to thrive, since I live in "oil country." My country will not. The US will begin to suffer from price increases without insulation, not on the futures markets, but at the pump, the store and the bank. It means that will be a lot of suffering as prices remain high, and while I could help by lending a hand physically, I will most likely be asked to lend hand figuratively, like $'s.

It will hopefully mean that the great unwashed public will finally start to pay attention to their consumption and make moves to prepare themselves for a paradigm shift in how we live, for all the wrong reasons, but still prepare.

And it will mean that I can hire a guy to move pipe around so I won't smash my fingernail like I did yesterday - the one which just grew back about three months age. Oh well, the gelatin for my arthritis helps keep my nails strong.

Saudi Aramco Postpones Khursaniyah Project Oil Production Start
2008-01-03 06:34 (New York)
By Glen Carey

Jan. 3 (Bloomberg) -- Saudi Aramco, the world's largest state-owned oil company, delayed the start of production from the 500,000 barrel-a-day Khursaniyah field. The facility will be brought online ``upon completion of commissioning activities,'' Saudi Aramco said today in a statement received by e-mail.

What I did this year to insure against $100 oil :

1) got a wood-pellet furnace installed to replace the fuel-oil one. Cost : about 12000 euros, of borrowed money unfortunately, but will pay for itself in about 6 years at CURRENT oil prices... heats my house including two rented apartments.
Saving in fossil fuel : 3000 to 4000 litres a year, depending on the coldness of the winter (very cold in December!)

2) fell in love with a woman who lives about half a mile from where I work... Fossil fuel saving : 80% of my diesel bill (I only go home on weekends...) about 1600 litres a year.

The downside : my capacity to reduce fossil fuel use in 2008 is severely limited!

My first Howdy from Moscow! (idaho)
$100/bbl just means to me that the ceiling just flew off. Guess we better start nailing stuff down.
Thanks to all the contributors of TOD for this place on the tubes!

Filled the car up with petrol yesterday, 41 liters at £1.02 per liter, roughly 10.8 gallons for $80. Did I travel any slower, no, as I wanted to get back before it was dark. The higher cost by itself is not the thing that will affect usage when most people have discretionery income they can spend on other things and the freedom a car gives them is highly valued. When that fat is used up and there is no discretionary income left then I will slow down and use the bike or a train.

Having said that the other car is a old diesel which seems to be running quite happily on a mix of diesel and neat sunflower oil. Cooking oils are cheaper than diesel at the pump, here at least. A bit messy but I know of a quite a few people using this now.

Talking to my parents who remember the UK in WWII, and they remember cars running on ballons of town gas, chicken manure and home made coal gasification contraptions strapped to the rear of buses.

Innovation may be the name of the game on a personal level and who knows maybe someone will get a car to run on water.

( By the way, why do you Americans use the term gas when you put a liquid in the car?)

This may not be the best place to ask such a question, but I suspect there's more knowledgeable people here than most other places... Specifically, this relates to Aussies:

How do you go about buying Oil futures (buy in January at $99.50, sell in April at $110)? I'm registered with ComSec for Shares trading, but I can't see any way of buying and selling 'oil'. Since we all seem convinced that Oil is only going to go up (barring a moderately bad eceonomic downturn), it'd be nice to at least be making some money on the whole deal, and getting myself a little nest egg (debt reduction, buying tradeable non-monetary items etc) to insulate myself with. Cheers for any advice.

Apparently the big money is not betting on Peak Oil. I can say that with confidence since I just picked up options to buy crude at $120 per barrel in December 2010 for only $3/barrel. If people really thought that peak oil was real then these options would cost a lot more. In fact, futures contracts for delivery in 2013 are going for only $87/barrel.

If people really believed in Peak Oil then they'd be snapping up these contract and options and thereby drive their price up.

Am I missing something here?? If oil is selling for $200/barrel in December 2010 then a $15,000 investment today will be worth over $400,000 when the contract expire.

Robert, you are barely saved in that bet, i not see any wisdom in your saying that oil wouldn't hit $100 in 2007, it went so close, in your own words 99% of the bet, you shouldn't be proud on wining the bet but you are not only proud you even published a post bragging about yourself.

One writer at MSNBC seems to think that the consumer will not worry about high energy prices. According to the author, it is less of a percentage of income for energy than in the past. With the housing market taking away the illusion of wealth, we will see.