<POLL: How much will OPEC Quotas be cut on Friday? The Oil Drum DrumBeat: October 24, 2008>

22 comments on October 24, 2008 OPEC Meeting Open Thread

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offtrack on October 24, 2008 - 1:06am Permalink | Subthread | Comments top

they can:
cut
do nothing .
or fix a price (min price and starve for 30 days...?) [ say $75 ]

Cut , the question is, how much each would cut.? Long days of arguments and no agreements.. (Echo here)
who cuts ,by how much. Same..
then how would one cut production and not accidentally cut off oil to one buying customer , by too much?
The logistics are mind boggling.
Do they think the have the world by the tail?
Playing God with out a license has problems. Back lash, or worse Electric cars.

Remember , the last time they did this they messed up big time and the buyer , got mad (?) and bought millions of Toyota's , so that when the spigot came back on , Demand was at a new low.
They still remember this event, and know it could happen again.
It hurt bad, in fact it seems the they were hurt worse for a longer period of time.

So I say , SHOW ME.

I'm ready.

No guts, no glory.

see Eco 1a curves:
I wonder if they can tune the curve of supply and demand, such that it hits a new equilibrium.
I bet you $100, they can't.
I bet if they try, it will back fire.

No takers?

http://www.investopedia.com/university/economics/economics3.asp

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BlueTwilight on October 24, 2008 - 3:48am Permalink | Subthread | Parent | Comments top

The world is in a different situation this time. We are near global peak oil meaning new discoveries will not be able to compensate for their reduction. Americans have no savings and are dependent on credit during a credit crunch. Consumers do not have the ability to purchase new vehicles, and business do not have the capital to design new ones. Electric cars may be expensive. Developing new oil wells is expensive. Rather than raising a stable price, restricting crude oil production currently would correct the undershoot of a falling price. At $75 to $100 / barrel for crude oil Americans would be happy to pay $3 / gallon of gasoline rather than $4 / gallon. Slashing production enough to increase price will not create a backlash this time.

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ThatsItImout on October 24, 2008 - 6:00am Permalink | Subthread | Parent | Comments top

"The world is in a different situation this time."

Ah, that is the central question, isn't it? "This time it's different"...the deadliest phrase ever uttered in planning the future!

But what if it's not? Or what if your right in fact, but wrong in timing by say only 20 or 30 years? That's a relatively short amount of time in the grand scheme of oil history...or what if we have used about a trillion barrels and about a trillion barrels remain...but what if it's three or four trillion? Again, it's pretty easy to be off by that much in the complex world of oil exploration and extraction. You will certainly be right that peak oil will come, and in the grand scheme of modern history, it will probably not be long until it does. But in the life of an individual, only a few decades means everything...it means that many folks will be able to buy their new relatively efficient ride, like a midsize Buick or BMW, and still bring down fuel consumption compared to the SUV idiocy, and live out the rest of their life in air conditioned OnStar guided comfort. Peak oil will still be coming when they throw off the mortal coil, but it won't matter to them.

Of course the opposite may be true too...they may buy the comfortable new Buick and be unable to refuel it in a matter of months...there is simply no way to know.

Of course, I would feel a lot more comfortable with a plug hybrid lithium ion midsize luxury ride that would get about 80 plus miles per gallon in routine use...enough to be just what the public would tolerate (most people could care less what's under the hood as long as it works and provides a comfy ride), but such a development could be shattering to the oil producers. The oil producing nations are showing signs of very great concern, as the U.S., China, Japan and Europe all seem to be developing very rapidly in the direction of low carbon, high mileage convenience (I know people who have bought Camry Hybrids not for the economy but for the long range, meaning less stopping to refuel. People will not give up convenience for efficiency, but an interesting little fact is starting to be learned: Efficiency can be very convenient. Things are going to get very, very interesting.

RC

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BlueTwilight on October 24, 2008 - 9:45pm Permalink | Subthread | Parent | Comments top

The world has had 4 years of exponentially rising crude oil price while production remained constant. In spite of an huge financial incentive, the producers could not get it up. That is a powerful indicator that the world is at or near peak oil making all other explanations unlikely.

The crash in crude oil price that occurred in the 1980's was brought about by conservation and increased production from non-OPEC countries. Increased production from OECD countries does not appear possible this time leaving only conservation. Once the low hanging fruit is picked conservation becomes harder and harder.

As for plug-in hybrid vehicles saving the day, I would feel more reassured if the auto industry and Bush administration had not thwarted California's zero emission mandate and they had been on the streets for the last 10 years. In the U.S. conversion of the transportation system away from crude oil has not yet begun and will start late (if at all) during a major economic downturn. The conditions are not ideal.

Your argument can also work against you. What if you are wrong? Doing nothing to prepare for peak oil means we will crash and burn on the falling edge.

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ThatsItImout on October 25, 2008 - 3:21am Permalink | Subthread | Parent | Comments top

"Your argument can also work against you. What if you are wrong? Doing nothing to prepare for peak oil means we will crash and burn on the falling edge."

Oh, I have never and would never argue for "doing nothing to prepare", if by prepare you mean reducing fossil fuel consumption. There are easily 25 huge reasons to reduce fossil fuel consumption and peak oil is just one of them. If the price drops, and it looks to the public like the threat of peak is gone, they will probably go back to being comfortable if they can...but being comfortable may now mean using less fossil fuel.

We are about to test something very important: Can fossil fuel consumption stay down even in the face of decreasing prices? Or is the flattening and decline in fossil fuel consumption purely a price related thing? This is big. I don't know the answer yet (I have guestimates, but that's all), and niether does anyone else. But the oil producers as well as the oil consumers are watching this one closely. Their future, as well as ours, may be at stake.

RC

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Paleocon on October 25, 2008 - 8:21am Permalink | Subthread | Parent | Comments top

The key is the kinds of cars that buyers drive off new car lots. The well-used lots will only get the cars that were originally sold as new. Many relatively poor people are driving huge, gas guzzling SUVs because that's what sold well to middle-class surbubia about 5 years ago. Not many years before that they were driving the Geo's and Hyundais of a few years earliere.

If we have a couple of years of low pricing, there is an opportunity to wash out upside-down SUV values, rotate through a generation of gas-guzzlers, and get the system well-primed with smaller cars and hybrids. This would be a good time for a gas-guzzler tax on high-consumption vehicles and a rebate for efficient vehicles, but that won't happen.

The immediate problem is that you can't buy many hybrids, CNG vehicles, or high-mileage diesels simply because there aren't enough made, and they don't cover the vehicle size range. Where are the hybrid or diesel/CNG minivans?

Better still would be to use this lower prices to roll out a lot of public transport growth -- if fuel costs less and deflation makes labor and materials less, this is a great period for infrastructure growth.........except that few cities or states can afford it.

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22 comments on October 24, 2008 OPEC Meeting Open Thread

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