Monday, Sep 22, 2008
Ouch
CNN: Here comes $500 oil
If Matt Simmons is right, the recent drop in crude prices is an illusion - and oil could be headed for the stratosphere. He's just hoping we can prevent civilization from imploding.
Posted by mark @ 04:05 PM (1090 views) Add Comment
16 Comments
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1. rickyb said...
When you consider that a barrel of oil contains the energy equivalent of 5 agricultural labourers labouring for 12 hours a day for one year, then $500 does not seem a bad price. Perhaps we need to ask ourselves whether pushing heavy metal objects for thousands of miles along our roads is a good way to use this valuable resource.
2. planning4acrash said...
Matt Simmonds is right, but for the wrong reasons. Oil is up solely because our currencies are being devalued by the bail outs, as a result of the the increased money supply. OPEC are reducing supply, because supply is down. Inflation adjusted, oil producers are finding it hard to invest and make money because they can't get the rigs out on the dollars they get in. Oil rigs are short in supply, the infrastructure is creaking. Saudi Arabia just left OPEC in support of the USA, because more supply is needed to counteract currency devaluation, so far as the American's are concerned, but in the long run, we need stable currencies and a better flow of cash to oil producers so that they can provide.
3. Phdinbubbles said...
OPEC is reducing supply because supply is down???
If I was OPEC or anyone else with a huge pile of oil I'd try and hang on to it for a few years until It'll be worth a damn site more. Maybe this is why supply is down.
4. micasasucasa said...
If the OPEC countries didn't use the US dollar for trading, would this be less of a problem (and isn't that why the US hate Iran)?
5. drewster said...
Matt Simmons has a long and distinguished career as an oil expert, so I generally heed his words.
However there is an interesting contrary viewpoint, also from a respected oil expert:
6. Eternal Sceptic said...
I will stick with the interpretation of Matt Simmons. After 35 years in the business, I can understand there is a lot of smoke and mirrors involved in reserve calculations. But the simple story is that most non opec fields are declining, opec reserve figures are unreliable, and the new fields coming on stream of any size are deepwater and expensive. As are oilsands.
Oil is finite and the last time the majors replenished their inventories in a significant fashion was 40 years ago.
We had the wake up call in the 70's when oil supply was purely a political problem, now it is a physical problem as well. And humanity still has it's head in the sand.
7. japanese uncle said...
This guy most probably bet on oil the oil price future, thus desperate to rig the market, as he would have to hung himself, as oil price is destined to get to back to the trend price of 60drl/brl.
8. Fred56 said...
Oil is finite but there is still a lot of it around. They only count the easy stuff in the reserves and they deliberately misreport it a matter of course for political ends. There's enhanced oil recovery, tar sands, oil shale and heavy oil all still to exploit. Of course the oil business will promote fear to push up the price - it's not a benefit gig. The thing is we can do without most of it if we only just take the leap of faith. There's no reason to be enslaved by OPEC. We have the knowledge and many countries in the west have the resources. The USA is groaning with resources and I just don't understand why its people put up with being held to ransom. Well actually I do, their politicians are all in the pay of the oil business.
9. enuii said...
JU, what currency is the drl?
10. Will said...
Of course he believes that oil is running out, he is investing in alternative energies.
11. planning4acrash said...
drl is JU's way of saying dollar !!
12. japanese uncle said...
Take it easy. Just a minor typo, isn't it?
13. Stevie Dee said...
Well.. what a day.. Oil $26 up! Well someone has to pay the $700 bln. Or was it because of the weak dollar, because of the $700 bln? Who cares? These clowns are making things so obvious.. anyway keep your eye on this stuff guys.
http://64.233.183.104/search?q=cache:E-_RHu4Qvk8J:www.stratfor.com/analysis/20080917_u_s_naval_update_map_sept_17_2008+u.s.+naval+update+map:+17+sep&hl=en&ct=clnk&cd=1&gl=uk
14. Whostolemyendowments said...
Supply and demand....pinch off supply by high prices, will reduce demand and economies shrink.....prices will have to fall.....unless the world HAS gone totally mad, in which case please stop I want to get off!
15. Stevie Dee said...
And as for markets.. well, this oil hike, should have had the DJIA, going down around 800, but it hasn't, market is not making any sense. It is an illusion in itself.
16. p. doff said...
Pity the oil speculators, what with free energy and water powered cars just around the corner!!!