The Oil Drum

19 comments on Bloomberg: Goldman's Murti Says `Peak Oil' Risks Sending Prices Above $105

Comments can no longer be added to this story.

Agric on December 19, 2005 - 3:02pm

I mentioned this a week or two back:

This is how I expect peak oil to announce itself to the world unless some major geopolitical supply disruption occurs:

Oil supply remains tight, just about meeting demand as perceived by the USA, occasional minor disruptions like hurricanes and demand peaks due to cold or hot weather bumping the price up and up, never quite falling back to previous levels.

After a year or so of this there will be excuses of delayed projects causing temporary supply constraints, prices continue to bump up, now above $100 bbl.

Another year and supply is getting still tighter, price is forced up beyond $200 bbl, excuses won't wash - $10 gas in USA getting hard to ignore, some major world leader says "Peak oil is here" and we must ration oil.

sounds kinda familiar, don't it? Expect 2. to become apparent in 2006, and 3. to follow in 2007 or 2008.

What I really expect to happen is stages 1 and 2 of the whimper, then the bang. Best guess for that: October 2007 give or take a year.
If peak oil isn't just about happening you can expect the price of oil to drop back below $50 by mid 2006 and stay there for several years as new supply comes online without being offset by even greater declines in existing production.

When I saw this "UBS AG analyst James Hubbard, a former oil engineer at Schlumberger Ltd., said an inevitable decline in supply will start sooner and be worse than expected unless investment increases for many years." in the article I thought: hmmm, does that [emboldened] count as the start of phase 2 above?

We should know the probable outcome within a year - $50 oil or $stratospheric oil. Perhaps we can expect to welcome Mr Murti as a recruit to imminent peak oil in about six months or so ;)

Comments can no longer be added to this story.

creg on December 19, 2005 - 4:38pm

Thanks for your predictions. I will keep the salt handy, but unnnnfortunately I think/feel similiarily. As I struggle to get our house in order my biggest concern is the possibility of the markets crashing. Some say we have much better protective mechanisms and a crash is not likely- just a grinding down. My instinct is that Knowing we've peaked the markets would panic. I know when I learned of peak oil 5/05 I knew life would never be the same; oh how deluded I/we have been. I am beginning to think peak will be hidden, and as you said elsewhere in a very few years we'll be too busy with more important things. Anyway your thoughts re market trouble/price/crash/grind would be greatly appreciated.Thanks.

Comments can no longer be added to this story.

Agric on December 19, 2005 - 8:33pm

You're welcome, I'll post what I feel might happen as soon as I can work it out fairly reliably. I don't expect anything significant for maybe nearly 3 months and that should only be the gentle start of things.

Stocks have mostly been trading in a fairly narrow range sideways for over 2 years with only about +/- 5% movement. I think it's pretty likely that the Fed PPT has stepped in to hold a floor on stocks so when that fails there will probably be a 10% drop in fairly swift time. I expect the DJIA to drop to about 10,000 by mid March and lose another 1000 sometime late March / April. Energy, utilities and commodity related stocks still look the wisest sectors, steer well clear of retail and financials.

Some people are suggesting, even though they expect 2 or 3 further Fed rate hikes, that long term real rates (10 year+ bonds etc) may drop to about 4% (currently around 4.4%) during 2006.