Hope no one minds that I have moved up comment to more-appropriate new open thread. MMS now soliciting comment on rulemaking for alternative energy sitings on outer continental shelf. Via Rigzone:

http://www.rigzone.com/news/article.asp?a_id=28214

Those of us who are in favor of windfarms and other types of alternative energy generation might send comments to the MMS to show that we care about making it easy for alternate energy providers to obtain the permits they need to begin operations.

I expect times will become more interesting now that the holidays are over.  No more gasoline imports from Europe to artificially hold down prices.  The natural gas constraints are becoming more and more obvious, and they will affect oil, since many commercial users can use both, and choose their fuel based on which is cheaper...or available.  

In the U.S., many people will be getting their first real heating bills of winter this month.  They'll also be facing up to a quadrupling of their minimum credit card payments, and many of those who signed adjustable ARM mortgages will see their minimum payments rise.  We'll find out how strong the economy really is...  

I expect crude oil to shoot past $70/bbl
and head to $80/bbl as the driving season
starts in April - May.  Until then we will
likely see it range bound $55 - $70.

The strategic reserve will need to be refilled.
European gasoline shipments are over.

Special Canadian natural gas shipments are
also over (1/1/6).  The weather is the
big factor for nat gas.  If it gets real cold
we will see $20/mmbtu nat gas!

The FED is pumping the economy full of liquidity.
the credit card problem will be quite manageable.
the housing bubble will slowly deflate.
prices will be soft for years, but no crash.

GM and Ford will file for bankrupcty, but
continue to operate.  This will still be a big
negative, but not a crash.

I don't understand the sudden price jump to $63+/barrel.  Is it speculation or the winding down of the european pity imports?

Someone should call me a waaahmbulance;  now I have to get gas payment cards from my credit card rewards rather than best buy  gift cards ;-)

Looks like everyone's gotten their daily helping of james kuntsler.  Slightly unrelated to the price spike i was wondering if everyone saw this...

U.S. consumers recovering from record high gasoline costs last summer may now face a nearly 60-cent price surge next year because of stricter environmental regulations, an industry expert said.

http://www.msnbc.msn.com/id/10533856/

Will this be the next public outcry?  I'm dealing with one here in North Carolina as the gas tax gets a great big $0.03 increase and people are all bent out of shape.  Nevermind the 23% increase in the price of gasoline this year here...

per gallon i failed to add.

My energy / gold portfolio is up almost 3% on the day. Glad to see it working hard for me.

Gasoline prices over the last 6 months for Canada (Red), NY State (Blue) and USA Average (Green)

Look for some movement here in the weeks to come.

Re:  Matt Simmons' 1/2/05 Interview in Barron's

Matt Simmons makes a key point regarding the North Sea.  He predicted that North Sea production would peak between 1998 and 2000; however, the 10 major oil companies operating in the North Sea were confident that the North Sea would not peak until 2010.  The North Sea peaked in 1999, and production is crashing--down about 25% from its peak.  

This is analogous to the major oil companies' response to Hubbert's prediction that Lower 48 oil production would peak around 1970--by and large they thought that Hubbert was nuts.

Based on the Hubbert/Deffeyes P/Q versus Q method, the Lower 48 peaked at 48% of Qt (total estimated cumulative production).   Conventional wisdom was wrong.  Hubbert was right.

The North Sea peaked at 52% of Qt.   Conventional wisdom was wrong.  The Hubbert/Deffeyes method was right.

The world is at 50% of Qt.  Conventional wisdom says that we are not anywhere close to the peak.  The Hubbert/Deffeyes method says we are at, or very close to the peak.  We do know that world oil production is flat year over year.

We also know that conventional wisdom regarding the Lower 48 and the North Sea was flagrantly, 100% and absolutely wrong, while the Hubbert Linearization method was right.  

Take the last 200 days price of West Texas Intermediate Crude (WTIC, a price baseline crude oil that other grades are sold as price offsets too) and average them and graph that and you get Pure F-ing Magic:

The daily price "bounces" off of it like it's an unbreakable barrier.

An alternative view is that the price is being set to that value.  Oh but that can't be right.  I forgot to stay "informed" by the news about

The Associated Press/WASHINGTON

Oil prices climb on speculative buying
JAN. 3 3:02 P.M. ET  Oil prices jumped by more than $2 a barrel Tuesday, and while some cold rain and snow fell in parts of the Northeast, traders said speculative buying appeared to be the rally's main driver.

Yeah, rain, snow, sneezes, all the real news about the price.

I don't have all the information I would need but what is the timing on new production coming online in 2006?

If there are delays for projects in the first half of the year or most projects are scheduled for the 3rd or 4th quarters, that would seem to indicate major shortfalls by the time the springtime arrives and Americans take to the road....

Does anyone have some specific information about this?

This just in:

EIA just came out with its preliminary estimate of world oil supply for October  (including liquids and refinery gain).

Oct number was 83.149 Million barrels per day, still 1.51 million b/d shy of the peak they reported for last April. Take this however you choose. Clearly we are not seeing any great supply increases, even apart from hurricane effects.

http://www.eia.doe.gov/emeu/ipsr/t14.xls

Re:  Non-conventional versus conventional

The question is whether once conventional peaks, can non-conventional increase enough to offset the decline in conventional production?  IMO, the answer is "no," but time will tell for sure.  Case in point, total oil production in Canada (conventional + non-conventional) is down to flat year over year.

Sorry for my bad english.

Maybe you in the US didn't hear the news: last days many EU nations (mainly east) announced they've switched from gas to oil to face the Russia-Ukraine gas crisis.
I think this is a reason for the price spike.

On the topic of investments, I'm surprised no one mentioned the Alberta oil sands stocks.

Suncor (NYSE)
Canadian Oil Sands Trust (in US is COSWF, Toronto COS)
UTS Energy (UEYCF, UTS)
OPTI (OPCDF, OPC)
Western Oil Sands (WTOIF, WTO)

All of these have been wonderful investments over time.

COS is up ten times since inception.  It's partnered with ConocoPhilips, Imperial Oil (Exxon's Canadian sub), Petro-Canada and others.  It's producing 125k bbs a day going to 350k in '06 and has just doubled its dividend.

Each of the companies is in a different stage of development.  Look at their web sites, see who their partners are.  Look at the charts.  These stocks have gone up many time more than crude and should continue to do better than the commodity.  

If you only want to hold US companies, Suncor is an integrated producer-refiner in both the US (Denver refinery) and Canada.  

All of the companies have 50+ years of reserves in a politically safe country.  As time goes on those two facts should become more important.  

The SEC has a ruling pending that will permit oil sands reserves to be carried on a US-traded oil company's books as "reserves," thus giving balance sheets a boost and reserves a real boost.  As soon as the SEC rules, some of the hoards of cash US companies are holding should go into buying up oil sands producers.  

("Total", the French giant (4th largest in the world) just paid a big premium over market for Deer Creek, one of the Alberta companies.)

I want to make a comment which I think is important on this thread or any other. Bubba's post about non-OPEC production forecasts is timely and telling.

Look at the dialogue that begins here.

And here's my point:

There is no end to optimistic forecasts of future supply/demand curves which are based on unsubstantiated future projections. This open thread here, which deals with the short-term oil price rise--which is valuable--still misses the main point. I am only left to deal with the following question:

Whose best interest is served by providing these apparently delusional and happy forecasts cited by Bubba or is this mostly just human pyschology at work wherein it's just not possible to deal with possibly traumatic coming realities? This is also called psychological defense which Anna Freud had some interesting things to say about.

I admit the possibility that us Oil Drummers are wrong somehow, but I doubt it. Given the miracle technology of the internet, it seems to me that most (if not all) of the information we need to make informed judgements is available as regards non-OPEC production as cited in Bubba's post. However, private conversations between, to take some examples, Saudi Aramco or PEMEX on the one hand, and CERA or IEA (or other parties) on the other hand, does not change the current production figures or the acknowledged decline rates in major fields (eg. Cantarell in Mexico). This is all published information albeit with some uncertainties attached. I don't think the error margins we derive are significantly different from those used by the authorities and experts that are often cited.

Who are these Pollyannas trying to bullshit? Us? Themselves? Both?

I think the most common reason for lack of empathy or belief in peak oil in the general community stems from distance. Average people have no idea how energy reaches them; nor does the average person realize the volume of energy they consume every day. For example, I would bet $100 that 9 out of 10 average people on the street could not tell you how many million barrels of oil per day the world consumes. The idea of a rate is not a difficult concept, it simply is not talked about enough.
Finally, and this is the most important, the average person feels unaffected and powerless. They may not like having a house in the 'burbs, but without 'significant financial incentive' will not move. Also, what little they hear about peak oil is offset by the fact that gas prices have not increased THAT much. Ask people to take 5 minutes and figure out the MAXIMUM amount they would pay for gas. I think you'll find it between 2 and 3 times the current prices. Even a Katrina induced shock is of relatively little consequence, except to piss them off enough to complain; they may complain but they are not going to run out and convert their car to electricity. Here's some simple math; driving a vehicle which consumes 17 gallons per week, a HUGE increase of $1 per gallon will equal somewhere around $68 per month. Ok, now consider that the average person spends that on their cell phone minutes. Initially you may think not, but add up all those crazy taxes overages and if you have a teen.....double it. Bottom line, gas goes up kid gets a go phone, not dad gets a prius.
My parting thought: Things like nano-solar sound great to the average person, but can they buy it at Sears?

WHAT ABOUT GW??

Investments in hydrocarbons will eventually be affected by awareness of climate change onset and calls for reduced CO2 emissions.  

Stated another way, which will occur first - massive public concern over oil & gas depletion, or massive public concern over the accelerating pace of climate change and need for drastic CO2 emission reductions?

There are signs that climate change is occurring surprisingly faster than expected - e.g. last Atlantic hurricane season, arctic ice melting, and the reduced warm atlantic currents flowing toward Britain & Europe.

If this trend continues to accelerate, some of the high CO2/unit energy investments (e.g. tar sands) might start to look unattractive.

This is the future, and it won't be confined to Iraq. We deserve it.

http://www.uruknet.com/?p=19201&hd=0&size=1&l=x

Russia and Ukraine have reached a gas deal. See details at: http://news.bbc.co.uk/2/hi/europe/4579648.stm