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A Traceback To $80 Oil Likely


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http://en.wikipedia.org/wiki/Oil_shale_economics

According to the survey conducted by the RAND, a surface retorting complex (mine, retorting plant, upgrading plant, supporting utilities, and spent shale reclamation) is unlikely to be profitable unless real crude oil prices are at least US$70 to US$95 per barrel. [5] Once commercial plants are in operation and experience-based learning takes place, costs are expected to decline to US$35–US$48 per barrel after 12 years. After production of 1000 million barrels, costs are estimated to decline further to US$30 – US$40 per barrel.

That's shocking, if those figures are true then it seems the oil companies are deliberately holding back supply to keep prices high, Saudi Arabia are the only country that are aggressively increasing supply and Iraq is meant to have as much oil as Iran undiscovered so that's also being held back.

Second source:

http://www.marketoracle.co.uk/Article4793.html

If this is true then it looks like this could just be a propaganda fueled bubble (re: speculative bubble). Oil prices have doubled in a year so it's not unrealistic if prices fall back to $80, as real demand growth isn't even above 3%/ year.

Edited by Saberu
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The dollar has fallen slightly in the past year but I doubt it's fallen by more than 20% let alone halved in value over the year!

Ok. Halved was probably a slight exaggeration by IRS :P but the devaluing of the dollar has played a big part in commodity price increases. Most of the rest of the increases are more likely down to speculation than fall-off in supply. This is obvious because demand is falling as oil prices go up, but oil prices are still going up! Mike Whitney wrote a great article recently on this. It's well worth a read - here

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Most of the rest of the increases are more likely down to speculation than fall-off in supply.

Sure supply isn't causing the current bubble in prices but it's definitely a factor in the overall upwards trend which could easily be addressed if the oil companies weren't so greedy.

I mentioned in my OP that it's a propaganda fueled bubble and I was alluding to speculation there.

Edited by Saberu
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Sure supply isn't causing the current bubble in prices but it's definitely a factor in the overall upwards trend which could easily be addressed if the oil companies weren't so greedy.

I mentioned in my OP that it's a propaganda fueled bubble and I was alluding to speculation there.

No no you have all got it wrong.

Its peak oil wots dun it.

Oil prices will go up an up forever and ever cos oil is running out.

I have it on good authority that it may all completely disappear next week .

peak oil yeah thats it

PEAK OIL I TELL YA

PEAKY WEAKY OIL.

...hello...

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The hint is in the article -

"Saudi Arabia, the world's biggest oil exporter, has pledged to boost production from a recent 9.5 million barrels a day to about 9.7 million in order to reduce prices. The Saudis are hosting a summit of oil producers and consumers on June 22."

You don't PRODUCE oil, you EXTRACT it. I'm suspicious of any bit of journalism or market comment that fails to note this. And there are lots of good reasons to doubt the Saudis' promises.

As for oil shale/tar sands - yes, it's well known that there are billions of barrels of the stuff and that you can get hydrocarbons out of it that you can then burn as fuel. But the EROEI is pitiful and the environmental damage caused by the processes devastating. And that's not limited to atmospheric pollution but to polluted water courses, deforestation, etc etc. If you don't know what EROEI stands for, please google it before talking up oil shale/tar sands.

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http://en.wikipedia.org/wiki/Oil_shale_economics

That's shocking, if those figures are true then it seems the oil companies are deliberately holding back supply to keep prices high, Saudi Arabia are the only country that are aggressively increasing supply and Iraq is meant to have as much oil as Iran undiscovered so that's also being held back.

Second source:

http://www.marketoracle.co.uk/Article4793.html

If this is true then it looks like this could just be a propaganda fueled bubble (re: speculative bubble). Oil prices have doubled in a year so it's not unrealistic if prices fall back to $80, as real demand growth isn't even above 3%/ year.

This site really reminds me of the movie Chicken Run. :lol:

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I'd say oil is certainly on the way down... $100 by the end of the year wouldn't be a bad bet.

Short term

1/ Usage of petrol down by considerable degrees in major economies.

2/ Chinese and indians cutting fuel subsidies.

3/ Inventories being built up

4/ More supply

5/ High political focus on delivering more supply especially from "hazardous" regions

And longer term

1/ greater renewables

2/ new sources

3/ greater usage efficiency

4/ alternative fuel sources

5/ continued erosion of pricing support

I reckon $100 before the year is out... longer term price is going to rise but whats happened has massively overdone it

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Guest mSparks

not even going to bother reading the first few posts:

latest oil stats:

as a world market we currently consume five Barrels of oil for every barrel we extract from the ground.

a "traceback to $80 oil" is about as likely as Heir Hitler winning a Jewish Beauty pageant.

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

Refiner Insiders Buy Most Stock Since 2000 on Oil Bet (Update1)

By Michael Tsang and Eric Martin

June 23 (Bloomberg) -- Refinery executives are buying more of their own stock than at any time since 2000, prompting investors to bet that a retreat in oil will boost profits and reverse the biggest share decline in a decade.

Basically if you're a refiner and you're buying your own stock, you think your margins are going to increase rapidly soon and your profit reports to the market are going to skyrocket.

They do say that you should "do as they do", not as they say. This could be the best indicator yet that oil doesn't have long at these prices.

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http://en.wikipedia.org/wiki/Oil_shale_economics

That's shocking, if those figures are true then it seems the oil companies are deliberately holding back supply to keep prices high, Saudi Arabia are the only country that are aggressively increasing supply and Iraq is meant to have as much oil as Iran undiscovered so that's also being held back.

Second source:

http://www.marketoracle.co.uk/Article4793.html

If this is true then it looks like this could just be a propaganda fueled bubble (re: speculative bubble). Oil prices have doubled in a year so it's not unrealistic if prices fall back to $80, as real demand growth isn't even above 3%/ year.

The Market Oracle article is so poor in so many ways...the writer doesnt actually know what peak oil is, and he has jumped on the speculators bandwagon which is complete nonsense.

The price might fall back, but oil is going to 250-300 USD a barrel in the next decade. There too many reasons to go into it that it is not a speculative bubble. Price per cup, oil is still the cheapest liquid in the world. 22 cents per cup. Thats 80 percent cheaper than water and coffee. Oil is cheap still, relative to what it will be.

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not even going to bother reading the first few posts:

latest oil stats:

as a world market we currently consume five Barrels of oil for every barrel we extract from the ground.

a "traceback to $80 oil" is about as likely as Heir Hitler winning a Jewish Beauty pageant.

Glad someone knows whats going on...also due to the inelasticity in the price of oil, a 1% increase in demand or a 1% decrease in supply leads to a 7% price movement. One useful thing to come out of econometrics.

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The Market Oracle article is so poor in so many ways...the writer doesnt actually know what peak oil is, and he has jumped on the speculators bandwagon which is complete nonsense.The price might fall back, but oil is going to 250-300 USD a barrel in the next decade. There too many reasons to go into it that it is not a speculative bubble. Price per cup, oil is still the cheapest liquid in the world. 22 cents per cup. Thats 80 percent cheaper than water and coffee. Oil is cheap still, relative to what it will be.

I couldn't agree more.

And that's without taking into account what might happen if the Bush/Israel Axis of Evil launch an attack on Iran. Straits of Hormuz blocked off . . .

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Guest mSparks
Glad someone knows whats going on...also due to the inelasticity in the price of oil, a 1% increase in demand or a 1% decrease in supply leads to a 7% price movement. One useful thing to come out of econometrics.

yeah, pretty much.

I would also like to point out this has nothing to do with 'peak oil' or any particular amount of 'reserves', they are an entirely separate issue, its just decades of under investment in oil platforms and geological surveys have left the oil companies unable to extract the oil they know exists.

Those who don't want to believe in the 'conspiracy theories' obviously believe the fact that these reports came out two or three months before the whole world went 'global warming crazy' is merely coincidence.

the recent jumps are very attributable to a few shocks in oil fields not containing as much oil as was expected, with some degree of speculation of escalating war in the middle east ($10 and $5 jumps coincided within the hour of Israel getting fruity with Iran), but this speculation only seems to be lasting about a week or two before the majority close their positions.

But as an example, in the US they don't even have any offshore rigs (regulation), but getting those rigs built will take at least 4-5 years.

EDIT: ^^ $10 after Israel said an attack on Iran was 'unavoidable' $5 after it was reported they had run a simulated attack.

Edited by mSparks
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This data, I think, is the most significant factor in the increasing price of oil:

2539971459_7436b0d7d2_o.jpg

Exports - that is the only oil that means anything to 'us' - has been falling for the last couple of years. We've lost 1.5mbpd, that's almost as much as the whole UK uses! The fall in 2007 was larger than the fall in 2006.

Although global oil production hasn't fallen, this is irrelevant as Saudi oil, through a Saudi refinery, burnt in a Saudi car means nothing to 'us'.

For all practical purposes our oil supply has been falling for two years now - leading to exponential price rise.

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