265 comments on DrumBeat: October 6, 2008
Comments can no longer be added to this story.
Show without comments | PDF version
265 comments on DrumBeat: October 6, 2008
Comments can no longer be added to this story.
Show without comments | PDF version
Search The Oil Drum with Google
Support The Oil Drum
Recently on TOD:World
TOD:Campfire
TOD:Europe
- Peak Gold, Easier to Model than Peak Oil? - Part I
- Carbon Capture and Storage
- Oilwatch Monthly November 2009
TOD:Canada
- In this house, we obey the laws of thermodynamics!
- The Round-Up: October 24, 2008
- Compressed Air Energy Storage - How viable is it?
TOD:Australia/NZ
- International Energy Agency calls 'Peak' on OECD Oil Demand
- Australian Senate: Peak Oil motion defeated 31:6
- The Bullroarer - Friday 20th November 2009
TOD:Net Energy
Blogroll
Energy Sites
- The Coming Global Oil Crisis
- Die Off
- Dry Dipstick
- Energy Bulletin
- From the Wilderness
- Life After the Oil Crash
- Peak Oil Crisis
- Peak Oil News and Message Boards
- Powerswitch
- Rigzone
- Matthew Simmons
- Wolf at the Door
Environment & Sustainability Sites
- The Daily Green
- EcoGeek
- Eco Street
- Green Car Congress
- Green Options
- green.alltop.com
- Gristmill
- RealClimate
- Sustainablog
- Treehugger
- WorldChanging
Blogs
- Casaubon's Book
- Cleantech Blog
- Clusterf
k Nation (Jim Kunstler) - The Cost of Energy
- David Strahan
- Early Warning
- The Energy Blog
- European Tribune
- GraphOilology
- Health After Oil
- jeffvail.net
- Mobjectivist
- Peak Energy (Australia)
- Peak Energy (USA)
- R-Squared
- Resource Insights
Finance & Economics Blogs
- The Big Picture
- Calculated Risk
- The Crash Course
- Ecological Economics
- Econbrowser
- Environmental Economics
- Infectious Greed
- The Mess That Greenspan Made
- Mish's Global Economic Trend Analysis
Organizations
Peak Oil Primers
Beware email scams!
Beware email scams claiming to be from this site. We do not have any job openings. If anyone contacts you about a job at The Oil Drum, do not reply to them, and definitely do not give them any personal information or send them money. Read more here.
“So one may almost say that the theory of universal suffrage assumes that the Average Citizen is an active, instructed, intelligent ruler of his country. The facts contradict this assumption.”
—James Bryce (1909, 35)
User login
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
Personnel
- Editors: Nate Hagens, Gail the Actuary, Prof. Goose
- DrumBeat Editor: Leanan
- Contributors: ace, Engineer-Poet, Heading Out, jeffvail, JoulesBurn, Sam Foucher, Robert Rapier
- TOD:Campfire: Glenn, Jason Bradford
- TOD:Europe: Chris Vernon, Euan Mearns, Francois Cellier, Jerome a Paris, Luís de Sousa, Rembrandt, Rune Likvern, Ugo Bardi
- TOD:Canada: benk, Libelle
- TOD:ANZ: Big Gav, Phil Hart, aeldric
- Emeritus: Stuart Staniford
- Technician: Super G
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
Oil prices falling. Corn prices falling. Natural gas approching unprofitable numbers.
Unlike the first Depression, want in a time of plenty, this one will entail extreme shortages.
Lord have mercy.
A lot of people thought the spread was too broad on the last oil price poll. (Low of $85.) Doesn't seem so silly now, does it?
I scoffed at my brother's prediction of $80 oil. Now I'm wondering if the number is low enough.
Unlike me, he's an industry professional.
I suspect the $80 is a number he thought they could live with.
When it falls below that, (if it falls below that), I can almost guarantee you'll see drilling prospects scuttled or put on hold.
Kind of like watching a snake eat its own tail.
Iran wants more that $100
http://www.rigzone.com/news/article.asp?a_id=67461
Iran has been talking about peak oil and pushing for higher prices for years. But it's all talk. They need the money from oil production.
But I think if oil starts showing anymore downwarn momentum the other gulf states really will jump on the bandwagon. Especially in light of things like that new giant 1km high tower in Dubai I posted about on the economic thread. How the heck they are going to fund that if oil drops any more?
Marco.
By pumping more oil?
Pump more oil?!? Like that Abiotic stuff they've got growing in their back gardens:-)
I guess they will just have to start getting those casinos, strip bars and drinking establishments ready for the tourists.
On a more serious note: is OPEC suddenly innefectual?
Marco.
Well, before America peaked we had a little thing called the Texas Railroad Comission that had controled the oil price by controlling supply. Once Amrica peaked, they really didn't have a way to control supply anymore and became ineffectual with respect to that.
Once global supplies peak, OPEC is probably in the same boat.
Leanan,
do you have some links of Iran talking about peak oil? I'd like to learn a bit on this.
Don't have any links on hand. They were talking about peak oil back in 2003 and earlier, so many of the news links would be dead by now. They were often dismissed as "just trying to talk up the price of oil."
However, Samsam Bakhtiari was a National Iranian Oil Company official.
May he rest in peace (though I'm afraid he will turn around in his grave)
Peak oil and Bakhtiari's 4 phases of transition
http://www.energybulletin.net/node/19701
Thanks PaulusP and Leanan.
As he appeared in The End of Suburbia
Well Undertow, I've just finished a day and night with electrical engineers in Vancouver about innovative energy and the majority at the table were displaced Iranians.
Now I know why Dr. Bakhtiari settled in Vancouver after leaving Iran. Here he had the support of an academic and professional system of ex-pats.
Iran's loss, our gain - phfff!
I'm wondering if NYMEX oil price will be the criteria used to decide whether to lay the rigs down or not.
If money is limited, and one can either acquire reserves through buying them or drilling for them, and it becomes cheaper to buy reserves through mergers and acquisitions than to drill for them, perhaps the companies with money to spend might opt for buying reserves instead of drilling for them.
This would mean that the rigs will be layed over, even though the current oil price would justify the drilling projects.
Actually DS, production acquisition (of both individual fields and corporations) has been THE game in the domestic oil patch for over 15 years. We recognized the general inability for most corporations to grow substantially by the drill bit long ago but have referred to it as the "reserve replacement issue" and not PO. It doesn't garner the headlines as big oil strikes off Brazil etc. (about 6 weeks ago XTO bought Hunt OIL for $4.2 billion and no one even noticed). For the last couple of years most of the major oils have been unable to prevent y-o-y reserve base declines. But buying reserves has been far from cheap even before the run up in prices. Typically selling for 4 to 5 years pay back. These days even more. The acquisition is usually made with a combo of stock and borrowed money. You see the large independents making big acquisitions because of their inability, in general, to increase asset base volumes through the drill bit. Even if an acquisition isn't especially profitable it does grow the asset base. And this growth is the primary tool Wall Street uses to value these companies. Given credit availability issues and declining economic value of drilling, we may begin seeing major devaluation of many oil companies. This would likely cause a slump in drilling which would probably go a long way towards letting out the potential NG bubble that has been developing.
This cycling is nothing new. It has been running since the beginning of the oil patch. The only noticeable difference seems to be the shortening of the cycle periods. If this does turn into a significant slow down I suspect it will last only a couple of years or so. This would be especially true for NG. All those unconventional NG wells that have given rise to production rates are declining rapidly.
Does this mean I should look at reinvesting my Exxon-Mobil (XOM) stocks elsewhere, before the company gets "nationalized?"
All those new supplies of unconventional oil, oil sands, oil shale, deep sea, ung, will be adversely affected and new drilling will be cut back to make the business models work better. Some assets will be sold to pare down debt and highly leveraged companies may be toast in a lower oil market that is still 300% higher than 4 years ago. The cost of new oil supplies have gone through the roof in the past 3 or 4 years all around the world. If oil and ng prices are not high enough to cover costs, who would want to increase supplies if they think prices may not recover quickly?
The cost of new projects is high mostly because of steel and labour being expensive.
They should both become much cheaper in a major Depression.
They will become cheaper but not necessarily more afordable.
You could be right.
During the last Depression, some major projects like the Hoover Dam were started. We'll have to wait and see what this Depression produces (wind farms maybe?).
see what this Depression produces
More demogaugery.
http://economics.about.com/cs/businesscycles/a/depressions_2.htm
I've also seen it defined as four consecutive quarters of economic contraction.
I don' theng tha' (demagoguery) mens wha you theng it mens... (especially since you can't spell it, either...)
One, is the poster a leader here? Two, what power is to be gained? And, three, how is predicting a depression demagoguery? I'd be surprised if we didn't hit both definitions.
Cheers
last great depression also produced the holocaust and nuclear bombs going off.
there is a loong way until shortages. with the exception of gasoline in hurricane struck states, i don't see a shortage anywhere.
it's still cheap to haul stuff across the globe, not to mention a continent, but who will buy it, and with what?
Could it just be the markets are painting by numbers here?. Recession = oil surplus = falling prices. The supply fundamentals haven't changed and reality will bite when the oil surplus fails to materialise. The question is when. Guess that and you can make a lot of money.
Corn down 26 cents, beans down .57....its starting to look bad.
I would say harvest is about half completed. Late beans to go yet. Most corn done.
Farmers might be hurt....bad....
No rain in sight. Dry dusty dirt everywhere. Burn bans now in effect.
River dropping. If they plant wheat may not be enough moisture to germinate. Its a gamble as always but now no help for failure perhaps.
If our farming goes......if farmers take a bloodbath?
If contracts can't or wont' be honored? I wonder just how this financial aspect can play out?
All around here farmers are trying to not even think about it.Much else talk about it. Bankruptcy has always been waiting in the wings and has happened more often than not in the past.
Airdale
I live in that red heart shaped spot of Texas.
And I can attest that we are way dry.
D3 extreme drought the legend says.
Didn't you just have a massive hurricane come through? What was it's name ... Mike or something?
Most of Ike's rain passed to the east of this area.
Yes, we saw rain for a day. Not enough to offset months (years?) of too little rain. Darn it.
When oil was at it's high I was saying it will definitely fall to below $80. My friends who had not quite grasped my earlier predictions of a soaring oil price were once again incredulous that I was predicting the exact opposite.
Oil could easily drop to below $50. Inevitably though, oil will rise in price, though not necessarily relative to the US$. The US$ may decouple from the world financial system, leaving it a worthless piece of paper.
Regardless of this, peak oil has already had it's impact, as soaring energy costs were the final straw. We are living in a post peak oil world.
I now doubt that oil will ever rise above $120US in today's value, as the economy will crumble further.
Predictions of $300US are just laughable, where is the money going to come from for oil to reach such highs?
Anyway, off to work now; I've got a vege garden to put in. So glad I threw in my career in tourism for something a little bit more certain. As long as the sun comes up I will have work.
The titanic has hit an iceberg, we are all on it. I stitched together a life raft and jumped years ago, however, I may just be standing on the iceberg that it hit, not the terra firma I assume.
As WC once said. "The chain of destiny can only be grasped one link at a time"
hmmmmm, RickJames your claim ::
and then we have Saudi needs oil above $49 to avoid deficit
I'm not sure, but from that above I see "little or NO oil" coming out of SA at 50 dollars a barrel.
Why so? In the case of widespread disruptions to the global oil supply network, something that could be caused by, say.... a military strike on Iran, $300 might be a cheap price -- in the short run, anyway.
Bring war into the equation, at strategic locations and involving the major powers, and sky-high oil prices are certainly not out of the realm of possibility.
Maybe I am misunderstanding something about the way these things work, but if the US$ becomes relatively "worthless", then a US$ will buy much less of another currency, correct? Which, in turn, means that you need to charge a lot more US$ to get the same value for a barrel of oil, expressed in that other currency. i.e. all else being equal, the price of oil, expressed in US$, goes way up. Right?
What exactly do you mean by the US$ decoupling from the world financial system? How is that possible? There will always be a way to exchange US$ for other currencies or for gold or whatever, if not through an official exchange then through the black market.
Am I missing something here?
OPEC is worried about world oil prices:
http://www.guardian.co.uk/business/feedarticle/7845179
If the bottom drops out of the market they might consider an emergency meeting like they did in 2006. For now they watch and wait for a chance in December.
A global financial crisis is not likely to increase the demand for oil. People were looking for ways to reduce expenses and increase income, In a reversal, the dollar is strenghthening and low interest CD's and treasuries seem safer than stocks. Some oil stocks are so low in price people do not want to sell them as OPEC looms large in the world oil supply chain and might yet be capable of stabilizing prices. On the other hand high prices have brought more projects potentially delaying peak oil.