Why is oil below $50 right now?

[Wild Cobra]

85 with 100 in sight.

DUN DUN DUN!!

Even if supply and demand remains constant for oil on the world market, we can see $100 soon just because the way out dollar is dropping vs. other currencies!

I think $100 will happen realtively soon, and possibley stay there.

[RandomGuy]

Even if supply and demand remains constant for oil on the world market, we can see $100 soon just because the way out dollar is dropping vs. other currencies!

I think $100 will happen realtively soon, and possibley stay there.

Try probably stay there.

The phenomenon is easy to grasp with a couple of easy analogies.

Imagine someone in a hot air balloon dumps a bag of $100 bills over your house and you get to keep all that money.

You would pick up the bills that are nearest to you on the ground as they would require the least amount of effort to get, and then you would work your way around to the stuff on top of your car, then get up on a ladder and get up on the roof and up in any trees. The stuff that takes the least amount of effort gets picked up first, then you will gather the stuff that is harder to reach after you can't find any easy stuff.

The same is true for oil exploration and exploitation on the part of our oil-using civilization. We picked up the cheap, easy to get stuff and it is running out.

Now imagine that you are a person trapped on a deserted island. You need 2000 calories to live and the only food on the island is in the form of some fruit trees in the middle of the island that drop fruit regularly on the ground. You can walk over, pick up and eat a fruit at a cost of say, 10 calories, and get 500 calories from each fruit.

You will need 4 fruits (plus a very small fraction) to survive per day.

Now imagine that the easy fruit on the ground is gone, and you have to climb up the tree, go out onto a branch and laboriously saw the fruit off the tree. This takes 200 calories for EACH fruit.

You will now need 6.67 fruits per day to survive and your total caloric intake has gone from 2040 calories to over 3300. Your body still only needs 2000 calories, but you had to spen 1300 calories to get that.

The same is true for oil energy. The "return" on each new barrel of oil gets slimmer, so even if the world's economy/energy needs weren't growing our energy consumption would.

BUT

The world economy IS growing. For each 1 percent of GDP growth, we need 1 percent PLUS X percent with the X percent being determined by the efficiency of our energy sources, i.e 1% GDP growth = 1.1% energy requirement growth

SOOOO....

If supply is constant or shrinking, and overall demand is going up, where does the "price point" go?

You guessed it, UP.

High enough that competing energy sources will eventually become more cost-efficient. I think faster than the oil companies expect, but they seem to be aware of the problem.

[RandomGuy]

Yikes. Break time is over. Back to work.

[xrayzebra]

Yikes. Break time is over. Back to work.

RG, we import I believe only about 20 percent of our oil.
And most of it is from Canada, Mexico and Venezuela. One
reason that the OILCO's are reaping such profits is that
the oil they have from their domestic wells was drilled
when it was easy to find. And of course they are charging
it off and charging us at the current market rate. But
there is oil to be found in our coastal waters off of
CA and in the Gulf that would be easily obtained, especially, with today's technology. If our politicians had
any backbone and stood up to the environmentalist.
I know everyone says we must have an alternative fuel,
yeah right, there is none on the horizon that I can see.
And any we do find must be cheap and abundant to
sustain our economy. People are always pointing to
Europe, I wished you could see their cost of living. It
is unreal. Like a ticket on the subway in London will cost
you about $20.00 bucks round trip. And gasoline, you
really don't want to know what it cost them. And it
is by the liter not gallon.

[RandomGuy]

RG, we import I believe only about 20 percent of our oil.
And most of it is from Canada, Mexico and Venezuela. One
reason that the OILCO's are reaping such profits is that
the oil they have from their domestic wells was drilled
when it was easy to find. And of course they are charging
it off and charging us at the current market rate. But
there is oil to be found in our coastal waters off of
CA and in the Gulf that would be easily obtained, especially, with today's technology. If our politicians had
any backbone and stood up to the environmentalist.
I know everyone says we must have an alternative fuel,
yeah right, there is none on the horizon that I can see.
And any we do find must be cheap and abundant to
sustain our economy. People are always pointing to
Europe, I wished you could see their cost of living. It
is unreal. Like a ticket on the subway in London will cost
you about $20.00 bucks round trip. And gasoline, you
really don't want to know what it cost them. And it
is by the liter not gallon.

Bla bla bla... it's the environmentalists' fault.

Bullpuckey. Worse than that, it is a useless genralization, because it is TOO simple to accurately reflect reality.

Answer this one question:
Which costs less, a $100,000 land based pump, or a $1,000,000,000 oil platform?

Argh. I did it again. Back to work, have to wait for lunch.

[xrayzebra]

Bla bla bla... it's the environmentalists' fault.

Bullpuckey. Worse than that, it is a useless genralization, because it is TOO simple to accurately reflect reality.

Answer this one question:
Which costs less, a $100,000 land based pump, or a $1,000,000,000 oil platform?

Argh. I did it again. Back to work, have to wait for lunch.

Okay, what you are saying is that it isn't the environmentalists' fault? You consider that a
generalization. How so? If it isn't the environmentalists
fault, who's fault is it that the coastal waters off
CA and FL remain closed to drilling or in Alaska?

And your question, how does that fit into the picture.
I don't think it cost any $1,000.000.000 to build a
platform in the coastal shelf. Deep water drilling, yes.
And they are doing it.

[RandomGuy]

Okay, what you are saying is that it isn't the environmentalists' fault? You consider that a
generalization. How so? If it isn't the environmentalists
fault, who's fault is it that the coastal waters off
CA and FL remain closed to drilling or in Alaska?

And your question, how does that fit into the picture.
I don't think it cost any $1,000.000.000 to build a
platform in the coastal shelf. Deep water drilling, yes.
And they are doing it.

Try the billion-dollar fishing industries, the multibillion dollar coastal real estate industries, the tourism industries, and everybody else with a stake in the effects of oil spills. All of these stakeholders have a great deal to lose in the event of a large oil spill. They are STILL cleaning up after the Exxon Valdez spill, two decades later.

Costs for a platform range from 100 million to around 500 million per platform from what I could easily research. Newer, advanced ones needed for deep sea drilling will probably cost more than the 500 million, as that figure was in 1998 dollars. Simple costs have been the prohibiting factor for over a decade, as I am sure Scott can attest to.

Close in deposits of oil will likely not be the solution, and oil companies have pretty free reign in deeper waters, if my understanding is correct.

It is not "environmentalists" but accountants, fishermen, and millionaires that are really keeping a lot of drilling from happening.

(shrugs)

I would simply say, from an economic standpoint, that good, sound environmental policies have a profoundly positive net economic effect.

It might benefit a particular company to dump their lead and mercury by-products in your local resevior/aquafer, but the economy as a whole loses when you and your neighbors get million dollar cancers.

I have always been puzzled by your and others' knee-jerk dislike of environmentalists. To be sure there are a share of nuts in any poltical movement, but don't throw the baby out with the bathwater here.

We CAN balance resource extraction with sound environmental policy. It WILL cost the companies that do the extraction more, but if one steps back and looks, those costs are simply where they belong, instead of being passed on to others in the form of lost health and jobs.

[Oh, Gee!!]

85 with 100 in sight.

DUN DUN DUN!!

it hit $88, but settled down at $86 and some change

[xrayzebra]

Close in deposits of oil will likely not be the solution, and oil companies have pretty free reign in deeper waters, if my understanding is correct.

It is not "environmentalists" but accountants, fishermen, and millionaires that are really keeping a lot of drilling from happening.



(shrugs)

I would simply say, from an economic standpoint, that good, sound environmental policies have a profoundly positive net economic effect.

It might benefit a particular company to dump their lead and mercury by-products in your local resevior/aquafer, but the economy as a whole loses when you and your neighbors get million dollar cancers.

[/COLOR]I don't think anyone with common sense wants any company or person to dump lead and mercury by-products into any waterway, wether it be resevior/aquafer or whatever. The argument that the economy as a whole loses is a different argument altogether when someone gets cancer.




I have always been puzzled by your and others' knee-jerk dislike of environmentalists. To be sure there are a share of nuts in any poltical movement, but don't throw the baby out with the bathwater here.

[/COLOR]I do not have a knee-jerk dislike for environmentalists. I do have a dislike to the militiant environmentalists who e trees and care more for snail darters and beatles than human life. Environmental issues have caused much pain and suffering among the poor. Why you ask. Look at what they have cause just here in San Antonio and the Edwards Aquafer. Water prices have gone up and will continue to rise because they made an abundant water supply into a rationed water supply.




We CAN balance resource extraction with sound environmental policy. It WILL cost the companies that do the extraction more, but if one steps back and looks, those costs are simply where they belong, instead of being passed on to others in the form of lost health and jobs.

What do you call balance? Not being able to drill where the oil is. The OILCO's have paid the price and will continue to pay the price to drill and extract oil. Look at what the environmentalist said about the Alaskan Pipeline. It would upset the whole eco-system. Guess what, it didn't. Wildlife has flourished. You speak of lost health and jobs. Oil companies are noted for their high wages and jobs they create. I know of no jobs they have caused to be lost. Some claim to have been harmed by bad health and court cases have gone for and against OILCO.

[RandomGuy]

What do you call balance? Not being able to drill where the oil is. The OILCO's have paid the price and will continue to pay the price to drill and extract oil. Look at what the environmentalist said about the Alaskan Pipeline. It would upset the whole eco-system. Guess what, it didn't. Wildlife has flourished. You speak of lost health and jobs. Oil companies are noted for their high wages and jobs they create. I know of no jobs they have caused to be lost. Some claim to have been harmed by bad health and court cases have gone for and against OILCO.

Here is an article of people who lost livlihoods as a result of the Valdez oil spill

Here are about 20 million people that have had farms and fishing that they depend on for a living effected.

Here is a guy who died a "horrible and painful death" from colon cancer after working in a refinery in the US

Here is another bit:

Brain Cancer in a Residential Area Bordering on an Oil Refinery

I personally knew a guy who lived near an oil refinery growing up near huston, who had to, for his entire life, take seizure medication, and knew that almost all of his high school class had similar brain-related ailments, if not outright brain cancer.

My point is that oil production and refining all have rather nasty, and costly side effects.

Yes, oil companies have good jobs, and employ people and I am with you on the snails. snails. There is such a thing as being too militant.


BUT

You can't just look at the company itself. If you want to formulate decent public policy, you HAVE to look at a wider society.

In essence industries that pollute are stealing from others to make the money that they make.

Going back to our semi-hypothetical mining company, the company might make an extra $5M per year, but if the health costs, lost wages and so forth of the surrounding community add up to $10M per year, the economy as a whole is $5 WORSE off than it was if the company had not polluted.

[Nbadan]

World oil production has already peaked and will fall by half as soon as 2030, according to a report which also warns that extreme shortages of fossil fuels will lead to wars and social breakdown.

The German-based Energy Watch Group will release its study in London today saying that global oil production peaked in 2006 - much earlier than most experts had expected. The report, which predicts that production will now fall by 7% a year, comes after oil prices set new records almost every day last week, on Friday hitting more than $90 (£44) a barrel.
...
The results are in contrast to projections from the International Energy Agency, which says there is little reason to worry about oil supplies at the moment.

However, the EWG study relies more on actual oil production data which, it says, are more reliable than estimates of reserves still in the ground. The group says official industry estimates put global reserves at about 1.255 gigabarrels - equivalent to 42 years' supply at current consumption rates. But it thinks the figure is only about two thirds of that.

Guardain

[RandomGuy]

Bump. For the sheer irony, mutha as.

[PixelPusher]

"Oil at $200 a barrel" is the new benchmark thrown around internets now.

[Clandestino]

Bump. For the sheer irony, mutha as.

ironic that the price of goes up??? not really.

[Nbadan]

Going up...



Gas economics for Republicans:

Start needless war for oil...pay for war by printing billions of dollars and putting the rest on the world's credit card, including our own kids....
Value of dollars go way down because too many dollars...price of barrel of oil go way up because greedy Arabs want return for useless investment in US securities to finance war.....so, price of barrel of oil go way up...price of gas go way, way up...

[PixelPusher]

Going up...



Gas economics for Republicans:

Start needless war for oil...pay for war by printing billions of dollars and putting the rest on the world's credit card, including our own kids....
Value of dollars go way down because too many dollars...price of barrel of oil go way up because greedy Arabs want return for useless investment in US securities to finance war.....so, price of barrel of oil go way up...price of gas go way, way up...

...and Americans have an ever increasing incentive to get serious about changing our energy policy. Works for me.

[Nbadan]

...and Americans have an ever increasing incentive to get serious about changing our energy policy. Works for me.

Where do you think you live? Socialist Europe? This is suburban America..cities designed for cheap gas...not cost-efficient transportation....

[AFBlue]

Where do you think you live? Socialist Europe? This is suburban America..cities designed for cheap gas...not cost-efficient transportation....

The first step to getting real energy policy reform is for the American people to get involved and get behind it.

If the American people are engaged and are willing to change their habits, I suspect they would vote for increased government spending to build more accessible and efficient mass transit.

Until then, Americans will have to adjust incrementally by making their next automotive purchase a hybrid, or taking advantage of solar energy in their homes...stuff like that.

Bottom Line: It may take a while, but if the cost of oil continues to balloon eventually there will be a requirement levied by the American people to change our energy policy for the better.

[boutons_]

"If the American people are engaged and are willing to change their habits"

Socialism, even Communism. Will be slimed as such by the right winger and Repugs.

The American Dream is Total Freedom with No Responsibility.

Barring some kind of shock that forces adjustments, even pain, it will take a once-in-a-century leader to lead the Americans where they must go.

I don't see any such leader, unless Obama is hiding his light, for now, under a bushel basket.

[xrayzebra]

"If the American people are engaged and are willing to change their habits"

Socialism, even Communism. Will be slimed as such by the right winger and Repugs.

The American Dream is Total Freedom with No Responsibility.

Barring some kind of shock that forces adjustments, even pain, it will take a once-in-a-century leader to lead the Americans where they must go.

I don't see any such leader, unless Obama is hiding his light, for now, under a bushel basket.

You are something else. Responsibility! You wouldn't
know responsibility if it hit you in the face.

We have the oil and resources to go after the oil and
what do we have, the global warming hoax and
all the environmentalist worried wanting to go back
to the dark ages.

God help all you young folks. Learn and live. Obviously
you are getting what you wished for.

Quit crying about prices, queue like the folks in Europe
to pay through the nose for transportation and learn to
love nature in all its beautiful splendor.

[Viva Las Espuelas]

i wish we had the "oil crisis" during carter's watch right now. wasn't oil something like $25 a barrell?

[PixelPusher]

Where do you think you live? Socialist Europe? This is suburban America..cities designed for cheap gas...not cost-efficient transportation....

Supply and Demand isn't just a catch-all Republican euphemism for whoring our polity to corporations, it's an observation of human behavior. Gas is more expensive, consumer seeks out alternative. It's already happening.

U.S. Use of Public Transportation Highest in 50 years

And I wouldn't worry about our cheap gas/car centric infrastructure impeding progress; it wasn't built to last anyway, and we haven't exactly been doing our damndest to keep it up.

[MannyIsGod]

@ the le of this thread now.

[E20]

Gas is nearly 4 dollars a gallon here.

[smeagol]

Oil closed at $111