Saudi Arabia mtg: some see $200/barrel

[boutons_]

"the promise of a modest increase in Saudi oil production that is unlikely to stem the most-rapid run-up in oil prices ever. Beyond that, participants called for both more transparency and more regulation in energy markets, more investments in both production and refining capacity, and more cooperation between producers and consumers."


"an expected increase in Saudi production by 200,000 barrels a day"

(it was 500K a couple days ago)

"One thing is clear: You are not going to wake up tomorrow and find that oil prices have dropped 20 or 30 dollars.”


“This means we will have $200 a barrel oil,” said Mohammed H. A. Abudawood, a prominent businessman and member of the Jeddah Economic Forum, after the speeches were finished and the delegates began drifting out of the room.


http://www.nytimes.com/2008/06/23/world/middleeast/23saudi.html


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Doesn't sound like a very useful meeting.



What will $200/barrel mean in $/gallon?


I'm sure the oil producers will keep the barrel price as high as they can without reducing demand due to world recession. Even if demand goes down, selling few products at higher price, a great business deal. They won't pass it up. Nobody would.

[scott]

What will $200/barrel mean in $/gallon?





At an absolute minimum, I'd say $5.28/gal. That would be with a gas crack (refinery margin - diff between wholesale gas price and oil price) of zero (not unheard of, in fact has happened a few times this year, sometimes even goes negative), you standard 12 cent transportation costs and retail margin, and ~40 cents of taxes. Add another 12 cents per 5 dollars of gas crack, so realistically $5.50.

[Anti.Hero]

Who cares. We can all pay $5.28 for a couple months until Obamassiah gets in office. Then we can get back to 1.fittyfi again!

[pawe]

taxes man, its all about taxes imposed on gas that drives the prices all the way up. I mean, what's the reason for the sudden gas price increase? yeah, china and india suddenly became oil mongers but the usa and the rest of the world started to lower their consumption..that would balance things out right?

[Don Quixote]

So ... let's assume boutons, for once, is right. And we're looking at $200/barrel oil, or so.

Anyone willing to put $$ on it? If I were, then I'd be buying oil stocks and mutual funds right now, no?

Lemme see ... at $140/barrel right now ... that would be a handsome 40% profit, give or take.

[PixelPusher]

So ... let's assume boutons, for once, is right. And we're looking at $200/barrel oil, or so.

Anyone willing to put $$ on it? If I were, then I'd be buying oil stocks and mutual funds right now, no?

Lemme see ... at $140/barrel right now ... that would be a handsome 40% profit, give or take.

Many speculators already have.

[Don Quixote]

True. Speculators seem to be betting that the price will go up. Some are, anyway. But how high can oil go? Really.

As they say, $$ talks. And for all this talk from people here, is oil where their portfolios are in right now? If they're really convinced that this bubble oil is in is nowhere near bursting, then that's where their $$ ought to be, no?

Hell ... if I were convinced that I could get a 35-40% profit in a matter of months, I'd consider a short-term loan in order to buy in.

[ElNono]

True. Speculators seem to be betting that the price will go up. Some are, anyway. But how high can oil go? Really.

As they say, $$ talks. And for all this talk from people here, is oil where their portfolios are in right now? If they're really convinced that this bubble oil is in is nowhere near bursting, then that's where their $$ ought to be, no?

Hell ... if I were convinced that I could get a 35-40% profit in a matter of months, I'd consider a short-term loan in order to buy in.

The bubble will explode by the end of the summer. It will have little to do with demand-supply. The reason is that by the end of the summer we'll be in full swing for the election campaign, and if the democrats have any advantage, Oil Co's will need to start playing nice to them. This collusion shit ain't going to fly with a Dems government. Campaign wise, this is probably the best Cheney could put together for McCain. I say if Dems can hold on past the summer without giving in into the domestic drilling permits, they will be in good shape, and prices will come back down (might not go all the way down, but there should be a noticeable decrease).

[RandomGuy]

But how high can oil go?

We will see.

As underlying demand expands at the same time the supply curve is shrinking, I fully expect to see it go much higher in my lifetime.

Scott was talking about comparative advantage, and as the price of oil goes up, competing energy sources become that much more profitable, helping to mitigate the demand to some unknown degree.

For some perspective:

If the price of oil creeps up at a 7% rate consistantly and year-on-year for 30 years, that will make the price of oil about $1000 per barrel in 30 years.

A consistant 10% increase over the same period of time would yield $2,600 per barrel.

Over the last few years, the price increases have been on the order of 20%+.

If THAT rate continued (highly, highly unlikely) you would see $51,000 (no that is not a typo, it really is fifty-one thousand dollars) per barrel by 2038.

I expect to see price increases to the much lower end of the scale, probably in the 5%-10% range over that time period, or about 2%-8% over the rate of inflation for the same time period.

[xrayzebra]

Hey, alternate fuels will rule in near future. I understand they are working on a windmill that fits on top of a car that will power it with electricity and when the wind is not blowing you wind up the prop connected to a giant spring that will power it till the wind returns. Or sun comes out to make the solar panels activate. I am working on a alternate fuel using jalapeno's. It works great on BM's. So there has to be lots of gas in them.

[RandomGuy]

The bubble will explode by the end of the summer.

For oil? I wouldn't but on it. Best projections I have seen are simply price stabilization.

We'll see.

[RandomGuy]

Hey, alternate fuels will rule in near future. I understand they are working on a windmill that fits on top of a car that will power it with electricity and when the wind is not blowing you wind up the prop connected to a giant spring that will power it till the wind returns. Or sun comes out to make the solar panels activate. I am working on a alternate fuel using jalapeno's. It works great on BM's. So there has to be lots of gas in them.

Heh, you might be surprised at what is fertilizing golf courses (http://www.poconorecord.com/apps/pbcs.dll/article?AID=/20080610/NEWS04/806100310)these days...

Google the term "biosolids". :wow Amazing what they can do with worms these days.