DrumBeat: December 20, 2006
Posted by threadbot on December 20, 2006 - 9:55am
Nigeria militants say ransom offer nixed
LAGOS, Nigeria - A militant group in Nigeria's oil-rich river delta region said Wednesday it has turned down offers of ransom for four foreign hostages, reiterating that the captives will only be freed in exchange for imprisoned comrades."As earlier stated, the release of these four individuals is tied to the release of four hostages of Niger delta origin in Nigerian government hands," said an e-mail from an address used by the Movement for the Emancipation of the Niger Delta, MEND.
Feds withdraw rare wildflower proposal
SALT LAKE CITY - The U.S. Fish and Wildlife Service on Tuesday withdrew its proposal to list as threatened a wildflower that grows only in areas of Utah and Colorado where oil shale and tar sand exploration are being done.The decision prompted environmental groups who have fought for the listing of the Graham's penstemon to accuse the FWS and Bureau of Land Management of choosing energy development leases over a threatened species.
Incentives pushed deep-water drilling
Government incentives played a key role in spurring companies to drill for oil and natural gas in the Gulf of Mexico that might have otherwise been too costly to explore, according to a report prepared for the Interior Department and just made public by the agency.
Middle East crude's differentials higher
Singapore: Differentials for Middle East crude continued to creep higher yesterday, with medium and heavy sour grades gaining the most on the back of Opec's second supply cut, traders said.
Sakhalin-II Stake Sale May Hit Shell's Reserve Replacement Strategy
Given the importance Sakhalin II has in Shell's reserve replacement strategy, any significant loss of future production volumes and reserves under a renegotiated production sharing agreement could be detrimental to Shell's efforts to catch up with its peers in respect of reserve replacement and reserve life, an important parameter to evaluate an oil major's long-term growth prospects.
The Cultural Economist's Report on Oil Depletion
Of all the issues we confront in the 21st Century, resource depletion promises to have the greatest impact on our economic and cultural destiny. And of our dwindling resources, none will have a greater impact on our future than the decline of oil and natural gas production.
Lester R. Brown: Why China Is Rising And The U.S. Is Declining
National policy failures such as not adequately supporting the use of renewable energy technologies have contributed to the growing U.S. trade deficit. For example, the United States should be a leading manufacturer and exporter of solar cells and wind turbines, but it has fallen behind both Europe and Japan. The solar cell, invented at Bell Labs in 1954, is an American technology. But the U.S. effort to develop solar energy was so weak and sporadic that both Germany and Japan forged ahead and developed robust solar cell manufacturing and export industries.
Energy spurs US producer prices surge
US producer price inflation rose at its fastest pace in more than three decades last month as energy and vehicle prices rebounded, helping push wholesale costs higher, government figures showed on Tuesday.The producer price index rose 2 per cent after a decline of 1.6 per cent in October, the strongest gain since 1974. There was also a sharp rise in core prices – excluding food and energy – which saw the fastest rise in 26 years, with an increase of 1.3 per cent last month.
ConocoPhillips producing renewable diesel fuel
ConocoPhillips has started commercial production of renewable diesel fuel at the company's refinery in Cork, Ireland. The refinery is currently producing 1,000 barrels of the renewable fuel, which includes soybean and vegetable oils among its ingredients.
Sanyo to Spend Y19 Billion to Boost Solar Cell Capacity
China to limit use of grains for biofuels amid renewed worries over supply
SHANGHAI, China: China will restrict the use of corn and other edible grains for producing biofuel, state media reports said Monday, noting concerns over surging prices despite expectations for yet another bumper harvest.
EU tackles aircraft CO2 emissions
BLM Releases Study of Proposal to Ease Pinedale Anticline Restrictions
The Bureau of Land Management released a study last week of an industry proposal to waive seasonal restrictions on natural gas drilling on Wyoming's Pinedale Anticline, which found that the plan "could cause significant adverse impacts to the human and natural environments."
Global energy hunger means boom for Norwegian outpost: Barents Sea's possibilities weigh against ecological concerns
Could Spot Uranium Prices Reach $100/pound?
I feel the uranium market right now is the world’s most unbalanced commodity market. In a sense, the world, through the nuclear power industry, consumes approximately 172 million pounds of uranium per year, and the world only produces about 92 million pounds of uranium per year. The supply deficit is made up through above-ground inventories, which are being worked down pretty quickly.
Oil Prices Impact Negatively On Zimbabwe
International oil prices soared in 2006, reaching an all-time high of US$78,36 per barrel in August impacting negatively on non-oil-producing countries such as Zimbabwe.
Venezuela's Chavez Offers Malaysia Oil Exploration Stake
Venezuela is ready to jointly explore for oil with Malaysia and help it boost its reserves, President Hugo Chavez said Tuesday."We can help over there too. We can explore in Malaysia," Chavez told visiting Malaysian Prime Minister Abdullah Ahmad Badawi while touring an oil refinery in eastern Venezuela.
Nigeria: Biofuel - Nigeria Needs 7bn KG of Cassava Annually
China to assess the energy consumption performance of real estate projects
Energy-saving initiatives will be obligatory for all real estate investment applications in China from the first day of 2007, as the country moves to boost energy efficiency.
Is There A Synthetic Fuel In Your Future?
As wider unrest threatens traditional petroleum resources in the Middle East and as industry observers disagree on whether "peak oil" has been reached, the U.S. military is moving forward with plans for half of its turbine fuel to be synthetically derived by the next decade.
The Iranian government has finally developed a new weapon that can destroy the financial system underpinning the American Empire. The U.S. dollar dominance is coming to an end.
Rosneft to boost oil production 8% y-o-y in 2006
MOSCOW - Russia's state-run oil company Rosneft will produce 8% more oil by the end of the year than in 2005, the company president said Tuesday.
Georgia claims energy crisis 'over'
A recent agreement signed with Azerbaijan and Turkey appears to have lessened Georgia’s gas woes just in time for the winter. But the country’s energy talks with Iran remain a wild card - both in terms of the Georgian government’s relationship with the United States, and its ability to do without higher-priced Russian gas.
Army Engineers Work to Improve Iraq's Oil Export
Court gives hope to price-gouging case
A federal appeals court on Tuesday revived California's claim for $1.4 billion in refunds to utility customers for high-priced electricity during and after the 2001-02 energy crisis, saying federal regulators failed to examine whether the state was gouged in long-term energy contracts.
EU New Joiners to Get Biofuel Crop Cash from 2007
BRUSSELS - The European Union's newest joiners, including Bulgaria and Romania, will receive subsidies starting in 2007 to support them growing more feedstock crops for producing biofuels, officials said on Tuesday.
Helping America Take the Lead: A Climate Exchange
Video clips from a Sierra Club forum on climate change, including one of our pal, Vinod Khosla.
Oil Rig Shortage Slows Chevron Bid to Tap Gulf of Mexico Fields
A global shortage of deep-sea drilling rigs is costing Chevron precious time as it taps the Gulf, and the equipment deficit may keep oil prices high. A prime example is the $3 billion field dubbed Jack. Chevron and partner Devon Energy Corp. announced the deepest-ever well test there on Sept. 5. Politicians backing energy independence exulted. Investors sent Devon shares up 12 percent and Chevron's up 2.3 percent.They didn't know the drilling rig Cajun Express had already plugged the Jack well and moved to another urgent job. Drilling at Jack won't resume until at least July, Thornburg says.
This guy's making a movie about peak oil, and he didn't even link to us. What a Way To Go: Life At the End of Empire
A middle class white guy comes to grips with Peak Oil, Climate Change, Mass Extinction, Population Overshoot and the demise of the American Lifestyle.
Gas prices jump in California, U.S.
Retail gasoline prices rose nationwide and jumped substantially in California over the last week, the federal government said Monday, a partial reflection of crude oil prices that have stayed above $60 a barrel for the last three weeks.
Auto trade group names Democrat to top post
Major auto companies on Tuesday turned to tech industry lobbyist Dave McCurdy, a former Democratic U.S. representative, to lead their legislative and regulatory initiatives in Washington....Automakers in 2007 will be looking for Congress to approve consumer tax breaks and incentives for companies to retool and develop plants for manufacturing more vehicles that run on ethanol and other alternative fuels.
Honda to invest in eco-friendly cars after record year
Some European birds delay migration due to warmth
OSLO - Some European birds have failed to fly south for the winter, apparently lured to stay by weeks of mild weather that experts widely link to global warming.
It is time to accept Interstate 69 and move on
Some argue we don’t need a new road between Indianapolis and anywhere. We should be rebuilding the rail system we had back in the 1920s. Sorry, my friends, the automobile is a far superior means of transportation than any train. Most of the people who support mass transit would not ride it even if they had the opportunity. They do not want to wait in the rain, walk significant distances with packages, and be out at night unprotected by steel and a powerful motor.As for the oil shortage: as the price of oil rises, alternatives will be sought and offered. That’s the way the market works. The “peak oil” problem is a crisis that we will never see.
New Zealand's response to Peak Oil
The Transport and Oil Working Group of the New Zealand Sustainable Energy Forum has just released Peak Oil: A Major Issue for New Zealand [PDF, 60 KB], which is designed as a quick guide for the public and the media on what the Peak Oil issue is about, how it affects New Zealand, and how New Zealand should respond.
Impeach the President: The Case Against Bush and Cheney, a New Book - Reason #8:
Denying global warming, disregarding peak oil, and placing oil industry profits over the long-term survival of the human race and the viability of the planet.
As we approach the end of the year, there will not be a similar energy crisis, because Russia has taken its own lesson from the crisis. At any rate, because it has come to an agreement with the Ukraine, there is no possibility of a crisis emerging. However, it is obvious from now that at the end of this year and the beginning of next year there will be other issues related to natural gas and these will lead to other problems nearby in the region.
Here's a warning: this generation that is alive now is in for a very rough ride. While the above books are gut-wrenching and entertaining in a reality-TV sort of way, The Long Emergency paints an alarming picture of a world filled with catastrophe. Kunstler is an excellent writer, and a very well informed one. Being forewarned with so much insight, and so much sensible detail about the "converging catastrophes of the 21st century" may be depressing for some, I found it very helpful.
Despite the potential of wind as an alternate energy source for Idaho, a recent proposal by Idaho Power Company makes some wind developer plans seem quixotic at best. The state's largest utility wants some of the windmill wild-catters to pay for power grid upgrades to transmission lines and then some.
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People who believe they can repeat past victories with methods that worked before would be well-advised to look at evidence to see whether the underlying situation has changed. Nothing fails like success.
Nice one Sailorman! Is this yours?
A credo for a doomer like me.
Another nice variation is:
Nothing fails like excess.
Could be the motto of our wasteful "happy motoring" society in the U.S.
If we can find an agreeable arrangement, I will bet $100 per person for up to 10 people, or any combination up to $1,000. If there is enough interest, I may bump it up to $2,000. My suggestion would be that the money goes into a Paypal account by early in January. The account could be administered by one or more of the editors here. TOD could keep the accumulated interest for administering the account.
The bet would be for a specific contract on a specific benchmark crude. Something like the front contract on WTI.
Any interest?
That is why I think, for instance, the large fall we saw this year in the price of oil from $78, was due primarily to rising interest rates around the world. Unlike many, I don't think it was due to the high price of oil reducing demand, I think it was the high price of money which reduced demand. I tend to believe in many of Andrew McKillop's arguments in this regard.
So, since I don't claim to know what is going to happen to interest rates, I am not going to bet on the price of oil.
This is true, which is what I think the "$100 oil in 2007" voices are missing. For me, betting against $100 right now looks like a safe bet.
I just read that all of 2005 the Fed conducted three permanant fed open market operations. As of this morning they have conducted NINE! 3X's as much credit was pumped into this economy in the last year, than the preceding year. The pump is being primed. Oh and we're only talking about $14B ((this year)) against roughly $4B last year.
Widespread acceptance that Saudi oil has peaked would probably guarantee oil went to $100 (barring interest rate increases), but the peak itself might not be enough to do so.
BTW crude oil stocks are down 6.3 mln.barrels. Maybe OPEC will manage to spoil our Christmas parties after all...
But I have reasons to refrain. 2007 is preelection year. Who knows what the neocons will think out of desperation for losing office. Israel bombing Iran - and there you lose otherwise certain (in my view) bet. Your arguments may still be valid but in the end it may encourage the cry-wolf-and-lose -credibility crowd.
Israel bombing Iran with US support is a quite probable threat and you need to be much more argumentative to convince me on the opposite.
Partly it is my fault because I did not extend my thought, I just assumed you know what I was implying. Inventing an external enemy and/or fighting it is a century-old priom used by any government to strengthen its positions at home. Just look at the Bush ratings prior Afghanistan or Iraq. Just look at the timing of all wars lead by the US in the past 50 years. Every president has his war, have you heard of that? And please don't tell me that you are from those "war on terror" believers, because I'll totally write you off.
Complete history here: http://www.pollingreport.com/BushJob1.htm
How would you like to interpret this phrase?
Gee...this woman name Valerie Plame gets outted after her husband makes some rather snide comments about the reality of Iraq before we entered which it so happens was the TRUTH. However his family takes the fall with him. Yeah thinking that people want to get back at you for losing is a conspiracy theory. What an idiot.
No, if they do it it will be out of the most simple and pure reason on Earth - greed for power (and money as it's flip side).
He particularly goes after WT, partly because WT's "important," and partly because WT is a gentleman who always responds resonably and at length. What better way to get reactions than to bait him day after day?
The blowfly is only good at eatting shit and bothering people.
Robert, is this a bet you would take me up on?
Hothgor = Yergin
- sgage
Dragonfly41, I will bet you $1,000,000 that I am not Yergin, or even distantly related to him, nor have any connection whatsoever to him.
Want to take me up on my wager? :)
The original phrasing was not perhaps sufficiently perspicuous, but I think the meaning came through.
How about a bet that oil will break the price set in 2006? What was it...around $75?
Keep in mind that if/when worldwide economic collapse happens, the reduction in air pollution will allow worldwide temps to quickly rise as the true effect of greenhouse gasses is felt without the counterbalancing effect of air pollution reflecting energy back into space.
And Bush just told us all to "keep shopping". Sigh...
I would further suggest that you adjust this price for any currency variations - i.e. if the dollar were to significantly weaken, then oil prices may rise in $ terms but not in real terms for the rest of the world. You are betting on the "scarcity" of oil - not currency fluctuations.
The Federal reseve publishes a "Major Currency Dollar Index" that can be used as a factor to determine the real value of oil.
http://www.federalreserve.gov/releases/h10/Summary/indexn96_b.txt
eg. as a hedge against an oil shock.
But it seems like an expensive hedge. I wonder what sort of upside protection you could get for $2000 on the crude options market. (It's all OTC, I believe. Public quotes available?)
I was recently looking at the annual report of an oil sands company. They had sold calls on a chunk of their future production with a strike of $90. But they didn't mention how much revenue that generated. They were also buying puts with a strike of 40.
But we need a quote on those jan 08 calls before we open shop. :-)
http://futures.tradingcharts.com/marketquotes/index.php3?market=CL
RR can definitely afford to sweeten his terms considerably and still come out ahead!!
Come on Robert, offer us as least 5 to 1.
Thanx for the quote.
Can you give us quotes for strikes in the 90's for jan 08?
Is there a link to this data?
Dollar value dropping...1) demand destruction with more consumer dollars going to pay for more expensive yet nec. items? 2)recession with related demand destruction - housing bubble colapse reducing those giant housing ATM's supporting the consumer economy. 3) The world has had enough of GWB and decide to squeeze his balls - oil prices rise to $120.00 barrel...war...oil at $150.00...
No thanks, great idea! See you in dec 2007 god willing. Cheers!
He can not be a winner either way, best case he can be at draw either way. I I were him I'd buy a forward contract now that would cover the bet in case he loses. He can buy 30brls. @ 65$ at 1st of Jan, and if oil touches $100 sell the contract to cover the bet he lost and he is at 0$ profit at the end.
If oil is between 65 and 100 at 1st of Jan he gets both the bet and the contract premium. If it is below $65 his profit drops and if it is below $30 at 01.01.2008 he will even be at net loss.
If oil doesn't hit $92.00 RR wins $90 ($1000 - $910)
Anything above $92.00, and RR starts raking it. e.g. at $100 he receives $8000 - $1000 (bet) - $910 (option cost) = $6090.
I take this wager as a sign that RR thinks oil will hit $100 in the next 12 months and wants the option cost covering :)
What you missed is that oil can hit 100$ any time until Dec, 2007 and then retreat to say 85$ in December. Thus Robert can both lose the bet and the option money.
The perception that these are "risk free" money means that the market is much more conservative than we are here at TOD (because it's giving some 1% probability of oil @ 92$).
Ron Patterson
Is that true? I just did a Google search of Internet gambling, and a lot of companies are advertising it:
Internet Gambling Alive and Well
but imo you are making a risky bet and not about whether or not the saudis are peaked or not $100 is as close as another hurricane or search for wmds away
Yeah, that's what some have been saying. That's why I offered the bet. I don't see it as a risky bet. In fact, I wouldn't even hedge it.
Whaddya think?
I am not actually a gambler by any means. I have just seen some comments over the past few days from those who believe oil is going to $100 in the near term. In fact, I think someone offered to wager on this. I view this as a pretty sure bet on my part, but if we start lowering the price, putting currency fluctuations in, or giving odds, then suddenly it is gambling to me. If I feel I have only a 70% chance at doubling my money, I won't take it (unless I can make many separate bets with these odds).
I won't say definitely not on $90 WTI. I think there is only a 20% chance of that in 2007, and that is starting to get into my comfort range for risking money. I will think about it.
It's always tricky to actually put a price AND time on future events. For me, that's half of what makes markets so interesting--you have a very candid feedback of whether or not you were right by seeing your returns over time.
Your original proposition was very provocative and an excellent idea to put in front of so many oil price bulls, but a short time frame to take the other side. A 50% rise in WTI, which we've had in several annual periods, wouldn't quite hit $100. But who knows, right.....
That is really my hedge right there. If oil went to $100, I would lose a thousand or so, but my oil investments would go up by much, much more.
http://www.theoildrum.com/story/2006/12/18/85510/573#43
He said he'd bet $100 that oil would hit $100 in 2007. He even said he was hoping to find a "cornucopean sucker" who would take him up on it. "InfinitePossibilities" chimed in to say he'd offer the same bet if a "sucker" could be found.
Well, I offered to take his bet (making me a "cornucopean sucker") and laid out the same data regarding option prices that have been mentioned today:
http://www.theoildrum.com/story/2006/12/18/85510/573#414
Then Robert spoke up and offered even higher stakes, as he has repeated today.
But suddenly today, everyone's cautious and conservative. They want odds in their favor, they think Robert is taking advantage of them. It's pretty interesting to see how things change when real money is on the line.
(meaning I more than doubled my supply of imaginary electronic USD fiat currency, which could be frozen in my brokerage account if the US adopts capital controls - oh well, life is risky, then we die)
But still, why mess around with small internet wagers when much better wagers are available every day the markets are open?
However that leaves the question of why believers in high prices would take unfavorable even odds rather than the high odds they could get in the market. Possible reasons include: it's complicated to set up a futures trading account and get into position for options trading; these accounts require you to buy contracts controlling at least 1000 barrels at once, so you can't bet as little as $100; buying a single contract may have relatively high commissions especially for far out of the money options like these ones; options can be illiquid and it might be hard to cash out.
But frankly I think the reason is largely social, a way to show that you are a card-carrying Peak Oil True Believer by publicly making rather extreme claims. It remains to be seen whether anyone will be willing to follow through with their bet offers. It's easy to brag about how confident you are but a little harder to put money on the line.
However, price really proves nothing regarding the question of whether we have or have not peaked. There could be a physical peak, but if we have an all-out global recession, the price of oil might go nowhere. Conversely, we might not be anywhere near peak, but if there is an all-out war in the Middle East, the price of oil could go through the roof.
So, instead of wagering whether the price of oil will hit $100 in 2007, why not be more direct and wager whether total 2007 Saudi oil production will exceed total 2006 Saudi oil production? You will find out one way or another in early 2008 when the production figures for December come it.
While both the price of oil and oil production are at the mercy of a variety of 'aboveground' factors, oil production is a far less volatile number and far more indicative of what is actually taking place.
Regardless of where the price of oil goes, if indeed we see that Saudi production has been flat or declining for several years in a row, the weight of the evidence for peak having arrived gets heavier and heavier.
I think that proof of peak won't come with a bang, but will gradually sneak up on us and will finally get to a point where even the most die-hard optimist can no longer deny it.
Only time will tell. When OPEC lifts its quotas, and Saudi is unable to get production back over 9 mb/d, this will be proof enough. And I expect that point to come sometime in 2007 or early 2008.
But right now the best hand is definitely held by Roger, (West Texas). Saudi production is down by .6 mb/d since last summer. Even though they claim that they were deliberately cutting production because they could not find buyers, we must remind ourselves that no one else in the oil exporting world had any trouble finding buyers. In my opinion only a very naïve person would buy that line. No offense Robert. ;-)
Ron Patterson
Of course that's not true, Ron. I have pointed out on a number of occasions that there continue to be locations that can't sell all of their crude and have some production shut-in. Stuart and I discussed this earlier in the year, and he agreed that this looked to be the case. So, the Saudis certainly would not have been an isolated case. Sorry.
Sorry Robert but I missed those posts of yours. But if it is not too much trouble please tell me which nations had shut in capacity because they could not sell their oil? How much was shut in? What percentage did they drop. Was it as much as 6.25% which is the amount Saudi dropped, from 9.6 mb/d to 9.0 mb/d.
Sorry for missing those very important posts Robert. But if you will just catch me up this one time I promise not to ask such a favour of you again.
Perhaps it was Mexico?
Ron Patterson
Lots of fields in Canada have spare capacity. Also, there have been news stories that the Williston Basin has shut in production. This was the topic of my discussions with Stuart. Here is one mention:
http://www.theoildrum.com/story/2006/4/15/72931/5527
Here is specific mention of Williston:
http://www.theoildrum.com/story/2006/4/11/12259/3484
This is just the part of the world I am most familiar with. I would bet that there are other areas not producing flat out. But the conclusion is that the Saudis weren't the only ones who couldn't sell all of their oil. As far as I am concerned, their story adds up. The inventory picture at that time, as I showed in my debate with Jeffrey, also supports them.
http://www.theoildrum.com/story/2006/4/8/154949/7316#107
There is not the remotest possibility that these Midwestern problems affected markets in China, Japan or anywhere else in the world. But I can certainly see how this bottleneck would cause Midwestern oil to be discounted.
Is this the only example you can come up with? Do you have an example of world markets being flooded with oil, causing nations to hold back on production. If you do then methinks it just might have affected prices a wee bit.
Ron Patterson
I am not talking about being flooded with oil. That was never the issue. I am talking about not being able to sell all you can produce. And I can give lots of examples of crudes being discounted in various areas.
The point is, the Saudis were not the only ones who couldn't sell all of their crudes. The Canadians couldn't either.
And of course crude, even light sweet crude, is being discounted in various areas. That is how the market works. Supply and demand you know. That, Robert, is the entire point! One can always find a market for any product you have for sale. All you have to do is price it at the price in which the market will bear.
High prices have, especially in many third world nations, driven down demand. And when demand is driven down one must price the commodity at a price that the market will bear.
Saudi Arabia could have easily sole every barrel of oil they pumped. All they had to do is price it at one dollar below what Kuwait or Russia was pricing theirs. If you have no buyers at $60 a barrel you will still have many buyers at $55 a barrel.
Saudi, who was always worried about the price of oil being too high, now seems all too willing to cut production to keep it over $60 a barrel. But the earlier cuts was not to drive up prices, those earlier cuts was (supposedly) because of "no buyers".
Sorry Robert, but I simply do not believe it. But as I said earlier, only time will tell.
Ron Patterson
Denial can take so many different forms, and the easiest person to fool is oneself (I do it all the time).
I can't remember the name of it, but back around the 1960s there was an offbeat play that was televised about a remote army garrison in the desert of some unamed country. The garrison had been set up many, many years before, and though there had been no hostilities for decades, red tape and bureaucracy dictated that it still be fully manned. Not surprisingly, the soldiers settled into a mind-numbing routine, with their only enemy for years being bordom and creeping insanity.
Day after day and year after year the lookouts would scan the desolate desert horizon and see absolutely nothing.
I forgot what took place in the interim, but the play ends with the same lookouts scanning the horizon. However, this time in the background is the unmistakable sound of tanks advancing, cannon fire, and troops marching. The lookouts neither see nor hear any of this and keep on scanning the horizon while engaging in their well-worn banter in a vain attempt to relieve the boredom. That I think is where too many Americans are today.
Damned if I can remember the name of it though. Sound familiar?
(By the way, where do you get all these cute little images that you sprinkle into your posts?)
If you want desert rats, just type in "desert rats" :-)
It was more of an avante-garde play with a mythical garrison in a mythical land. It was purposely left vague, so as to add to its creepiness.
I tend to think that the orginal play was by some well-known playwright, but I am not sure.
Anyway, the core message of the play was the human penchant for denial in the face of certain doom.
CRUDE OIL Options :-14:20 - Wednesday, 20 December
Dec 2007 Exp: 11/13/07 Days to Exp: 328 Futures: CLZ07 68.60
Last Value
85.00C 1.80 1800.00
What this means is that I would double my money if oil reached 85 + 1.8 +1.8 = $88.6
If oil went to $100, I would make (100 - 85) x 1000 = $15,000 return on a $1800 investment, for a sweet 733% profit. Obviously, this is a much better deal than RR is offering. Robert's 100.00C option is extremely overpriced and no sane person with trading access to NYMEX would take it.
Although I am more pessimistic about oil supplies than you are $100 for barrel is high. I cannot bet againt it.
But even if average price ( not peak ) for 2007 is 75 - it woudl be quite a lot. It would keep demand to be the same as this year, which means we are around the peak.
Igor.
I expect the global economy to crash before oil got that high, that would lead to some serious demand destruction.
I do believe oil would get that high if it came to a US-Iran war however.
For fun, I'd bet $100, but I don't regard it as a serious money making proposition.
I also add it is not necessarily proof of a Saudi peak. I discount the idea that the PO concept will suddenly take hold of the markets. There is plausible denial by OPEC for many years yet. I may be wrong, but I don't believe the futures market really pays much attention to future supply fundamentals. I think the trading is mainly technical. They may have expert analysts, but we all working from the same dodgy data.
Still, unless you count getting married, I'm not a gambling sort of person.....
From the top Leanan posted this morning
$120 million to drill a dry hole, and 80% of all wells drilled are dry holes. One well in five is not a dry hole. That means that each producing well costs about $600 million. Each producing well must produce 10,000,000 barrels of oil before the reach the break even point at $60 a barrel.
That is a lot of oil from just one producing well just to break even.
Ron Patterson
The government subsidized these GOM operations to some degree, and the resulting brouhaha over "Jack" convinced many people that PO was not something to be worried about just yet. What a waste of taxpayers money!
The article described "exploratory wells", not "all wells".
There is a big difference. Most wells are not exploratory, most are development, and nowhere near 80% of development wells are dry.
I would think it would need to be much higher, since I don't believe this includes production costs, ie getting the extracted oil to market, well pressure regulation, maintaince, etc.
Wouldn't you have to drill a lot more than 10 million, what about production costs in getting ashore?
Bush: Army, Marines need to increase in size
http://www.cnn.com/2006/WORLD/meast/12/20/iraq.main/index.html
Bush has not raised the idea of a draft, nor will he, I believe. The last thing TPTB want is a draft. BTW, no one has said anything about nefarious purposes - you projected that yourself, though Dragonfly seems to think Bush will -need- a draft to increase the numbers.
Since the armed forces are having a pretty hard time meeting recruitment goals as it is, it is hard to imagine how they might increase the numbers short of a draft, but whatever.
But your post was pretty much knocking down some strawmen.
- sgage
But Bush wants another 70,000, as of yesterday. I imagine he'll find a way. But not a draft, not without another major escalation like Iran gone bad. The congress and the American people won't allow it at present.
Option A: Sneak across the border and get paid little for doing crap jobs always in fear of government.
Option B: Ride across border in US government transportaition. Get paid substantial money to be a soldier for four years after which you have all sorts of VA benefits and legal citizenship.
We have only lost 3,000 soldiers the odds are no where near as bad as trusting coyotes and mother nature to not kill you in the desert. I would gladly support granting citizenship to any foreigner willing to serve in our military.
matt
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/curren t/txt/wpsr.txt
I only made one prediction this week: Gasoline inventories to rise. They did, but there was a huge draw on oil inventories this week.
That is huge. Perhaps the OPEC cuts are having an effect.
Ron Patterson
Ron Patterson
"Total products supplied over the last four-week period has averaged over 21.1 million barrels per day, or 0.4 percent more than averaged over the same period last year. Over the last four weeks, motor gasoline demand has averaged over 9.4 million barrels per day, or 2.3 percent above the same period last year. Distillate fuel demand has averaged nearly 4.3 million barrels per day over the last four weeks, or 2.0 percent above the same period last year. Jet fuel demand is down 7.2 percent over the last four weeks compared to the same four-week period last year."
So total petroleum products, the litmus test WT has used in the past, are in fact 0.4% above last years rate.
Ten week averages for these three imports averaged 11.120 mb/d for the last ten weeks. Twelve weeks ago that ten week average stood at 12.122 mb/d.
Imports of crude oil, gasoline and distillates, the ten week average, have dropped by over one million barrels per day in the last twelve weeks.
What is left out of the equation are natural gas liquids. I do not track them.
Ron Patterson
Ron Patterson
This is Total products supplied over the four week period, as compared to the same four weeks one year ago. This includes US Crude Oil Production! At this same period last year we were still recovering from hurricanes Katrina and Rita. US crude oil production was still way down. The four week average, December 16, 2005, for US crude production was 4,902 mb/d. For the four weeks ending December 15th, 2005 US crude production was 4.902d mb/d. For the same four week period this week, it was 5.276 mb/d. So 374,000 bp/d of that increase was US crude oil production.
That was the only reason for your increase. Imports of crude, gasoline and distillates were down 860,000 barrels per day from that same four week period one year ago.
The rest of the difference, which is considerable, was natural gas and natural gas liquids production That was down considerably for that period also due to Katrina and Rita.
We were discussing imports only Hothgor. Get with the program!
Ron Patterwson
We are continuing to draw down both our crude oil and product inventories--by a total of 60 million barrels since early October.
Again, you need to keep focused on this chart that Khebab did: http://www.theoildrum.com/uploads/28/Data_4weeks.png
The long term trend since 1990 is that we need close to 5% more total petroleum imports every year, because of declining domestic production and rising consumption.
Our imports are falling below where they need to be to meet the combination of rising demand and falling domestic production, thus the continuing draw down in inventories.
The WSJ noted that we have been drawing down our inventories at a rate that is more than five times higher than normal for this time of year--with a very mild heating season so far this year. Imagine what will happen if we have anything approaching a normal winter in January.
Two things I notice from that chart:
- It looks like there are variances of 12-15% from the trend line over the past 10 years. (That's a rough ball park estimate just from looking at the graph) I'm sure Khebab could get us a more accurate figure.
- It also appears that the longest period of time we have gone WITHOUT a new high in imports is approximately 2 years.
The trendline is currently at 12.5 mbd. So if we break below 10.6 mbd (12.5 * .85) that's a major signal.Likewise, if we don't set a new high in imports by December 2007, that is also a major signal.
I won't say it confirms peak, because there have been declines before in the past, but if we have a double confirmation that a 14 year trend (1992-2006) is ending, especially if prices continue trending upwards... Well, lets just say it won't be good news.
Ahh geez.. That was really directed towards Westexas. Sorry about that.
All I want for Christmas is an 'Edit' button. :)
Garth
IIRC, This should begin to accerate since some production from Alaska will be shutting down in the next couple of years. I read an article that North Slope production is planned to switch from oil to natural gas as the fields become depleted in the next couple of years.
As your aware, many good regions are off limits and even if the laws were changed today, it would be many years in development before production could be brought to market.
So, even if we froze our consumption at current levels, our demand for imports would increase as our domestic production continues to fall.
We are fast approaching a collision between the expectations of continually increasing imports and the reality of declining exports.
Can they still get oil out of a field with such a high water cut?
At what point do they just give up?
Running a 250 HP REDA [submersible pump] moving maybe 2500 bbls of fluid per day with an electric bill at $10,000 or $12,000 per month. The water goes down an adjacent well bore into another formation on a vacumn at very little cost.
25 bbls per day of oil. 30 days per month. $60 per bbl. 20 percent to the mineral rights holders. 7 percent [Oklahoma] to the state in severance taxes. $33,480 in net revenue to the producer. $2,000 per month for costs other than electricity to operate the lease for a total of let's call it $12,000 with electricity.
$19,400 monthly net on an operating basis. If you factored in the costs of drilling a new producing well, a new disposal well [typically deeper and thereby more expense to drill ... and about as expensive to equip as a producer] and the economics don't look as good, but "yes" in the right circumstances a 1 percent oil cut is more than enough to be economically viable.
So you could just keep pumping a field to the bitter end and still make money off of it.
But I guess at the same time your production rates would plummet.
The perfect situation is probably a field that was produced too rapidly initially and where the old producers weren't plugged.
Remote locations / offshore locations -- probably not.
The real life model I was describing is in Oklahoma. The wells in that field were produced at rates up to 1000 bbls per day in the 1930s. The wells watered out prematurely leaving a lot of oil in place outside the cones of water around the existing wells.
In the 1980s the field was redeveloped with REDAs and new well bores strategically drilled between the old producers. At slow rates of fluid extraction, all the fluid would be drawn from the cone of water. As higher rates that could be achieved with submersibles, more of the fluid outside the cone bearing higher oil cuts became mobile.
That play in the 1980s was very lucrative. Still a lot of oil there. How much is economic depends on engineering and obviously prices. :<)
Are there any fields near Enid or Tulsa that one could see the use of water drive to increase production?
I am not that familiar with much of OK production. The field I described is one that I have a small fractional interest in in the general vicinity of Shawnee.
A classic water flood is a secondary recovery technique that uses injected water to maintain pressure and [like the natural massive water drives] sweep the oil toward a producing well.
There are probably a lot of old fields, and reservoirs that were never developed because when tested the water cut was deemed unacceptablely high where oil will be produced in the future using these sorts of techniques.
This is good news in terms of managing the decline in oil production, but to some extent the effect is trading electicity [typically coal fired] for somewhat more energy content in the form of oil. The return on energy invested is positive, but nothing like a flowing well or most wells produced in the standard pumping units.
He's a pro.
LOL sorry I had to ask.
I was more surprised by an increase in distillate and gasoline stocks, given the small amount of imports of those products.
In the UK, Heathrow is badly affected by fog today, cancelling lots of flights. Probably going to occur tomorrow as well.
Source
SO in two weeks, there must be a rebounce..
And then, for WT (same source):
The Time may be set out..
In the light of it I am amazed at the market reaction, which is close to none. Actually the price even dropped slightly. Let me suggest that the market is some sort of "self-induced sleep mode" and everyone is waiting for the end of holidays to do anything.
This time it seems either the authorities are relaying the news or more people in the market are keeping an eye on the channel and were aware of the fog related problems. The market has reacted in the past few days but everybody was expecting bad crude figures this time, hence hardly any market reaction. With news of lots of oil tankers queuing in the Gulf waiting to off load crude, the market can see that it is a temporary problem that time will sort out.
If the drop in this week's numbers was caused by weather disruptions, then we should see some rebound in the next two weeks. If the rebound amounts to less than half of this week's shortfall, then clearly something else is going on.
Sierra Club has come out with an editorial that apparently points out how ethanol ain't all it's cracked up to be...
From their Jan/Feb 2007 magazine...
http://www.sierraclub.org/sierra/200701/decoder.asp
apologies if this has been referenced already...
Drummers like yourself should know the difference between 'ethanol' and 'corn-ethanol' by now.
Did you notice they also discussed cellulosic ethanol in the article? This is what they said: A lot of research remains to be done before cellulosic ethanol will be ready for prime time.
I thought Catskill's post was informative, as I had noticed Sierra Club's silence on this important issue.
And here a site for a graphic illustration of the historical price of uranium. It seems peak uranium is already history.
For those who hadn't noticed, Canada and Russia are now the batteries of the world. For the french readers here, you thought that our "all nuclear" strategy will help us overcome the peak oil crisis ? Well, think again ...
Gaz de France (GDF), the national nat gas provider for France has signed a deal with Gazprom yesterday, specifics unknown. The merger GDF-Suez seems to be postponed (if not definitely burried) until June 2007. Officialy because of our constitution counsil didn't accept the privatisation of GDF before then and because of a deadline issue with belgian unions or such a thing. Less officialy, a lot of shareholders from suez listen to the sirens from gazprom whose leaders have now sometimes a direct access to our economical broadcast network.
I think the French are very smart about their nuclear power and only hope that they are willing to share their expertise!
B) Uranium's role historically has been primarily military: That's why the stocks were so high, which is why prices were so low, which is why the mining industry in the expensive-labor / environmentally-sensitive modern US was destroyed when we stopped racing to build a nuke for every fishing village in the USSR.
C) Did I mention that uranium is cheap versus the energy it provides? Oh, yes, in A). We could mine it into the low part per million range from a number of high-yielding rock groups, down all the way through seawater, rather than the major high-quality ore deposits we've mined thus far. When you take those into account, there's disgustingly little chance that breeders will take hold in the near future. We're busy with implementing passive safety mechanisms and reducing plant costs.
The world cannot prevent itself from going nuclear in its attempt to cope with diminishing energy from Fossil Fuels. As such peaceful nuclear applications will be developed and if those can be developed so can non-peaceful applications.
I strongly suspect that this India move in conjunction with the obvious flaunting done by N Korea, Iran, along with the less obvious interests of nations like KSA, Kuwait and other entities, are the harbingers of the death throes of the non-proliferation treaty, and frankly I think its about time.
The ability to police all these nations and organizations dealing in nuclear technology is simply impossible to keep up with. I think MAD proved itself out on a macro scale between super powers the first time around and I believe MAD on a smaller scale within the confines of say the UN security council will suffice in being a deterrent in the future. Certainly from an EROEI stand point, we are probably seeing diminishing returns as spy services which were "decent" against a monolithic enemy like the USSR are being stretched impossibly thin against a network of enemies composed of multiple facets.
Anyhow, the first country to use nuclear weapons as a tool of aggression needs to have a joint immediate response from the US, Britain, France, Russia and China of being wiped off the face of the planet.
That being said, I suspect within the next 20 years we will see a small scale nuclear event in a local theatre war. Could be something as small as a "suitcase" nuke used to take out a dam or bridge in a hurry or something larger scale such a nuclear device taking out a military target like a base, or carrier group or possibly in the case of terrorism a civilian population center. But once that event happens, the response needs to be sudden and utterly horrible to the aggressor nation or else the Djinni truly will be free to run amok and nuclear weapons will become part of the "conventional" force make up of future conflicts. And yes, I fully mean, wipe every man, woman, and child of that country off the face of the planet. Consider it the ultimate in feces throwing at the bad monkey(s).
I oppose the building of, (and thinking we can rely on) a new network of reactors and the complex system that must support them, but the gift horse of reprocessed weapons fuel is too good to miss.. smoke 'em if you've got em!
Bob Fiske
The US was fighting a defensive war, not a war of aggression.
Transcript
The idea is so incredibly unpopular that any party seriously proposing it would go down to devastating defeat in the next election
There are other ways to increase the number of enlistees/re-enlistees:
Who don't know Jack now?
I'm not taking the fact that thye've plugged 'Jack' and let it sit for another 7 or 8 months as a good sign about its future potential - to put it quite mildly, since there are a lot of readers who may get disturbed about what I really think of 'Jack'.
I'm impressed!!!
Atlantic Planning (city planners, mostly) document re: Peak Oil
Med. size PDF
The first law of Thermodynamics: There is no free lunch.
Ron Patterson
Well, not so much as optimistic as just simply wrong. They are falling for the current paradigm that is so terribly, terribly wrong. For instance, reading the web page of an obvious doomer posted by Neon9:
No it is not! My best guess is that about 42% of the remaining oil is located in OPEC nations, with even a smaller percentage of that in the Middle East, give or take 5%. That Middle East lie about those vast proven reserves has been repeated so many times, from so many sources that we have been hypnotized into believing it.
And this myth dear hearts, when it is finally revealed as a myth, will be the bombshell that rocks the world. How could so many people have been so wrong about one simple fact? Those vast Middle East reserves are a myth. Already Saudi Arabia and Iran are in decline. Kuwait is not far behind. But when it finally sinks in that there is no pot of gold behind the Middle East rainbow, it will shock the world.
Ron Patterson
At current rate of consumption, the world will use about 180 Gb of C+C in seven years, which (as Ron knows) is why world oil production is declining.
Based on HL, KSA is 60% depleted. I believe that Iran and Kuwait are about 50% depleted.
Kuwait, in 1972, produced 3.283 mb/d, C+C. Today they are producing about 2.55 mb/d. Well hell, I guess they are well past 50% as well.
Ron Patterson
Assuming 40 acre spacing, and a 3/16ths royalty, if you own all of the minerals on your property, you would receive about 4.7% of the cash flow, at no cost to you, assuming a 40 acre unit. At current prices, this would be about $4,400 per month per 50 bpd of production. If Matt Simmons is right about oil prices, you would receive $14,000 per month per 50 bpd in 2010.
I don't know what the law is in Illinois, but the mineral estate takes precedence over the surface estate in Texas. In Texas, a surface owner can't keep a company off the surface, if the company has an oil and gas lease from the mineral owners, although the company has to pay for damages.
This is a 2002 AAPG article on the Illinois basin. They were talking about a horizontal well doing 2,000 to 3,000 bpd.
This is a more recent technical article.
It's not called Peak Oil, it's called "reduced organic growth opportunities" for Big Oil companies.
(ROGO means no go.)
War Not About Oil
Dig in a little deeper, and ask why we're in Iraq, and not Darfur or Burma or Congo? Why do we care about the Middle East, and "protecting" people who hate us? Nope, can't be about the oil. Must be about human kindness to strangers.
The first argument stems from Marxist conceptions of how 19th Century imperialists ran their mercantile empires. England, France, et al, had to actually own the resources. Now, under the guise of globalism, we don't have to own the sources of strategic raw materials. We just have to ensure that they are sold to the highest bidder, and that most states play the same capitalist game.
The danger posed by Saddam was that he wasn't playing by the rules, and by invading Kuwait and surviving his expulsion, he was always going to be waiting for the chance to use force to create a local, anti capitalist monopoly on persian gulf oil. As soon as sanctions were lifted (which was becoming more inevitable), Saddam would be unleashed.
Now he's out of the picture, and US troops are stuck in his place.
The US is 3 years into an occupation of Iraq and this is the first time the above argument has been raised as a justification for US action.
Perhaps you can explain all of the US posturing prior to the war. Was the US presentation to the UN based on the fact that those of us in the rest of the world (ROW) are just credible monkeys to be bought off with some smoke and mirrors about rolling bio-weapon factories?
Were all of the presentations to the US congress and the US people just another act in a Bush administration manipulative farce, one that has cost almost 3,000 lives and 30,000 US wounded, not to mention 600,000 civilian deaths?
http://en.wikipedia.org/wiki/Lancet_surveys_of_mortality_before_and_after_the_2003_invasion_of_Iraq
Do you really believe what you write or do you just make it up as you go along as did Feith, Wolfowitz, Bremer and the rest of Bushco?
The danger posed by Bush was that he wasn't playing by the rules, and by invading Iraq and surviving his re-election, he was always going to use force to create a local, capitalist monopoly on persian gulf oil.
That is your text, slightly edited. The world is sitting on the brink of regional war in the ME, Bush may be intending further military adventures in Iran, the world distrusts the US and is organizing against it, the American way of life is "non-negotiable" despite the fact that such uncaring arrogance will further AGW and impact those least able to mitigate or respond to those impacts. And you believe Hussein posed a threat comparable to this?
I believe in terrorists and revolutionary states. I respect the terrorists of Lexington and Concord Bridge, the rag tag army that took on the greatest military power on earth and sent its members home in humiliation and body bags.
Sadly, those terrorists had no descendants and the constitution they proclaimed goes unread by every living American. You, and every contemporary American, are a dishonor to your own history and to the liberties and freedoms that your forefathers named as self-evident and proclaimed to the world.
I have no problem with the idea that Saddam was not complying with WMD inspectors, that it was believed he had WMDs, and that he needed to be dealt with on this topic.
I have no problem that he was a nasty dictator that killed hundreds of thousands of his own people, attacked multiple countries in the region, and in general was making himself a threat to the worlds most precious resource.
I have no problem that Saddam flaunted multiple UN resolutions, and treaty arrangements from Gulf War I and that his flaunting needed to be dealt with.
I have no problem that he was suspected of harboring terrorst (Al Qaida or otherwise is irrelevant) and that as such he was in violation of the doctrine on the War on Terror.
I have no problem that we are trying to spread freedom and democracy to this region of the world in an effort to not only topple this regime, but several other hostile and dangerous regimes in the area.
And ultimately I have no problem that at least part of the reason for this war was that the oil in that country and the surrounding region needed to be secured away from a despotic and repeated aggressor.
I know the liberals in this country believe its all about the oil, and I know many of the conservatives believe its about spreading freedom. And I'd tell both sides, its about both reasons, and that neither one of them are a bad thing.
We won't go to Darfur, and places as such because it has no/little value to US interests. This isn't some charity after all.
But what he did have was lots of projected reserves which if the west(the US) could produce, then the west could control the price of oil strategically by opening up the pipelines acting as a swing producer in a manner like SA. The western oil companies, shrub's buddies, would get a profitable piece of the action. WMD's and Freedom for the Iraqi's were a cover story for an oil grab.
Next after this was accomplished, Iran would be next to be subverted by the neo-cons. "Democracy" in Iran would entail western interests developing their gas and oil for long term profits and seal the US's hegemony in the area.
It was a play to militarily dominate the oil and gas producing regions by force. Any other interpretation of the events is outside of historical trends.
Because it is untrue. There were no WMD. Saddam could Not pose a threat to other oil producers anymore. Conservatives gave not a whit for the freedom of people's whom they overthrew their democratically elected governments. Their was no Al-Qaida support and camps in Iraq.
I have big problems when facts and truth is distorted to fit neocon fantasies. Lies are lies. The facts are not open to "interpretation" because it makes you feel good.
please CLICK link to see 2005-2007 and y-axis: http://trendlines.ca/economic.htm#Gasoline