Oil hit $100/barrel today

[Bob Juch]

Get ready to pay a lot more at the pump.

BTW, do you know almost no oil is being exported from Iraq? That's because the insurance companies charge so much for ships to dock there that almost none do.

[ne1410s]

Did you know that the minimum pay workers behind the counters at the local "Fill-Up For Terrorists" control the price of gasoline????????

The guy in front of me yesterday thought as much...

[BackInTex]

This is all BS. The only reason it is so high is because of speculation that a shortage MIGHT occur. That same speculation has been going on for a couple of years. But, no shortage. Unfortunately, what the shortage scare has shown is that demanders will pay for $100 oil, so the pumpers now know this and just pump and smile.

Its not like the actual demand has spiked since Katrina and Rita. But gasoline went from 1.80ish to 3.00 during Katrina. I understood that, but after Katrina and Rita, it dropped slowly and only to 2.10, and now hangs at 2.80ish.

I am waiting for the charade that is the Chinese economy to fall, and we'll see what happens then.

[TheConfessor]

I am waiting for the charade that is the Chinese economy to fall, and we'll see what happens then.

I'm not sure how old you are, but if Chinese economic dominance lasts as long as American economic dominance did, I don't think you'll be around to witness its fall.

[tanstaafl2]

Each successive empire seems to rise faster and fall faster so maybe we will. But they still have a few years before we collapse completely and they take over so the clock hasn't started yet...

[Jeemie]

This is all BS. The only reason it is so high is because of speculation that a shortage MIGHT occur. That same speculation has been going on for a couple of years. But, no shortage. Unfortunately, what the shortage scare has shown is that demanders will pay for $100 oil, so the pumpers now know this and just pump and smile.

Its not like the actual demand has spiked since Katrina and Rita. But gasoline went from 1.80ish to 3.00 during Katrina. I understood that, but after Katrina and Rita, it dropped slowly and only to 2.10, and now hangs at 2.80ish.

I am waiting for the charade that is the Chinese economy to fall, and we'll see what happens then.

Actually, there is a shortage. WW demand is around 86 mbpd and production is about 84 mpbd.

Hence, crude inventories are falling to the low end of their historic range, and imports from oil-producing nations have fallen. There is some indication that the shortfall is rippling around the world as the major oil-producing nations put different sectors of the world on allocation.

There also has been a ton of demand destruction in the Third World that hasn't been reported. if that demand destruction hadn't taken place, we might have seen $100/barrel oil long before now.

[silvercamaro]

Actually, there is a shortage. WW demand is around 86 mbpd and production is about 84 mpbd.

Hence, crude inventories are falling to the low end of their historic range, and imports from oil-producing nations have fallen. There is some indication that the shortfall is rippling around the world as the major oil-producing nations put different sectors of the world on allocation.

There also has been a ton of demand destruction in the Third World that hasn't been reported. if that demand destruction hadn't taken place, we might have seen $100/barrel oil long before now.

Production efficiency also is increasing, however, both in new fields and old, once-abandoned wells. Stripper wells have reopened and are producing far more oil and gas than previously thought possible. Shale extraction techniques also are improving, making drilling far more feasible in areas that wouldn't have been profitable in past decades.

[Bob Juch]

This is all BS. The only reason it is so high is because of speculation that a shortage MIGHT occur. That same speculation has been going on for a couple of years. But, no shortage. Unfortunately, what the shortage scare has shown is that demanders will pay for $100 oil, so the pumpers now know this and just pump and smile.

Its not like the actual demand has spiked since Katrina and Rita. But gasoline went from 1.80ish to 3.00 during Katrina. I understood that, but after Katrina and Rita, it dropped slowly and only to 2.10, and now hangs at 2.80ish.

I am waiting for the charade that is the Chinese economy to fall, and we'll see what happens then.

I shouldn't argue this with someone who doesn't believe the oil is millions of years old, but it's not the demand that's increased, it's the supply that's decreased. The hurricanes took many drilling rigs and refineries offline and not all are back online.

[Jeemie]

Production efficiency also is increasing, however, both in new fields and old, once-abandoned wells. Stripper wells have reopened and are producing far more oil and gas than previously thought possible. Shale extraction techniques also are improving, making drilling far more feasible in areas that wouldn't have been profitable in past decades.

And even with all that, worldwide oil production has been level at ~83-85 mbpd since 2005.

Even in the face of increasing prices.

[mrkelley23]

So let's say that efficiencies continue to increase, to the point where they reach 100 percent! (Not possible, but I'm just saying.)

Let's also posit that those efficiencies are achieved without any increase in energy consumption by those "harvesting" the oil (also not possible, but still....)

Let's also say that consumption "only" continues to increase by about 7 % per year globally, which seems to me a bit silly, given what's going on and will continue to go on in India and China, but hey, we're being charitable here.

How much oil is left? Total? Globally?*

Let's even assume that all the oil that the oil companies say might be out there that hasn't even been discovered yet is really out there, and can be gotten at without too much difficulty. How much then?

Any students of history out there know what happens in the world when a vital resource becomes scarce?

That's the one thing the Nobel Committee got right in its award to Mr. Gore -- he might end up contributing significantly to peace, but only if this GW movement somehow convinces people to invest the time and resources to get us off the fossil fuel teat completely. And by us I mean all of us, worldwide.

*My best estimate is about 150 years. If you come up wiht more than 200, we're using different figures.

[kusch]

Actually, there is a shortage. WW demand is around 86 mbpd and production is about 84 mpbd.

Hence, crude inventories are falling to the low end of their historic range, and imports from oil-producing nations have fallen. There is some indication that the shortfall is rippling around the world as the major oil-producing nations put different sectors of the world on allocation.

There also has been a ton of demand destruction in the Third World that hasn't been reported. if that demand destruction hadn't taken place, we might have seen $100/barrel oil long before now.

Production efficiency also is increasing, however, both in new fields and old, once-abandoned wells. Stripper wells have reopened and are producing far more oil and gas than previously thought possible. Shale extraction techniques also are improving, making drilling far more feasible in areas that wouldn't have been profitable in past decades.

SC hits the nail on the head. Some of you might want to do some reading about the "Bakken Field". Some around here are calling ND the next Saudia Arabia, I would not go that far, but there is a lot of oil here, a real lot. Now if they could only find enough workers (rig workers) there would be more drilling. 3 of 4 are failing the drug test, sad. Oh, and the work is hard and dangerous but pays great.

[BackInTex]

Actually, there is a shortage. WW demand is around 86 mbpd and production is about 84 mpbd.

Not!

Those who have oil and are pumping are not pumping all they can. Its like saying there is a water shortage because you have a half full tub and have not turned the facet on all the way.

Add to it the sky is falling crowd about the 'impending' shortage that is driving current prices up. Take the traders out of the mix and prices fall. There are billions of barrels of paper oil, going unused therefore unneeded, sitting on trading desks creating a false demand.

Regarding the collapse of the Chinese economy, at some point (I predict within 10 years) the billions there will get tired of the lack of freedom, the pollution, and the poor standard of living and there will be a revolution and the economy will grind to a halt. The nice thing about this for us, is that unlike revolution in the Middle East, revolution in China will cause a shortage of crappy lead-tainted goods and cause those prices to rise rather than oil.

Or perhaps a major outbreak of one of the many flus will kill off a large portion of the Chinese population causing chaos and a fall in their economy.

The Chinese economy, while robust and growing, is built on sand.

[PlacentiaSoccerMom]

Or perhaps a major outbreak of one of the many flus will kill off a large portion of the Chinese population causing chaos and a fall in their economy.

The Chinese economy, while robust and growing, is built on sand.

Maybe it will be the lack of women to marry. Due to the one child policy, many girl babies were aborted and there aren't as many girls for the boys to marry.

[MarleysGh0st]

Regarding the collapse of the Chinese economy, at some point (I predict within 10 years) the billions there will get tired of the lack of freedom, the pollution, and the poor standard of living and there will be a revolution and the economy will grind to a halt. The nice thing about this for us, is that unlike revolution in the Middle East, revolution in China will cause a shortage of crappy lead-tainted goods and cause those prices to rise rather than oil.

Or perhaps a major outbreak of one of the many flus will kill off a large portion of the Chinese population causing chaos and a fall in their economy.

The Chinese economy, while robust and growing, is built on sand.

And this is your "the sky is not falling" outlook?

200-300 million Chinese have moved into the middle class; the same industrial revolution that took a century here happening in in a decade there. It's real, and a lot more of our economy is now dependent on Chinese-made goods than lead-tainted toys and trinkets. Where were your electronics made?

Yes, there a still a billion Chinese who have not benefitted from their booming economy and that may lead to growing internal tension. Perhaps even, someday, to the "Communist" government protecting the nouveau riche from a peasant revolt.

But don't think that any such thing could happen and be benign for the USA.

[earendel]

Regarding the collapse of the Chinese economy, at some point (I predict within 10 years) the billions there will get tired of the lack of freedom, the pollution, and the poor standard of living and there will be a revolution and the economy will grind to a halt. The nice thing about this for us, is that unlike revolution in the Middle East, revolution in China will cause a shortage of crappy lead-tainted goods and cause those prices to rise rather than oil.

Or perhaps a major outbreak of one of the many flus will kill off a large portion of the Chinese population causing chaos and a fall in their economy.

The Chinese economy, while robust and growing, is built on sand.

Perhaps, but if those "billions there ... get tired of the lack of freedom, the pollution, and the poor standard of living and" a revolution does break out, that will only put a temporary dent in the economy. Once they get themselves up and going again, their economy will be robust again.

[BackInTex]

And this is your "the sky is not falling" outlook?.

No, the sky is not falling. But we may have to duck our heads for a little while.

200-300 million Chinese have moved into the middle class; the same industrial revolution that took a century here happening in in a decade there. ?.

Like I said, built on sand. There is no foundation. You're comparing the strenth of a 100 year old oak and a 10 year old pine. The Chinese economy is built upon the wishes, desires and vanity of the communist party and not the people. Just like the Soviet Union's economy, it will collapse. The middle class you speak of is not based on economics, but what the communist government is allowing. It too is not real. Market forces of competition do not exist in China, internally or externally, and thus its economy is smoke and mirrors and brute force extracting pennies from billions to give dollars to millions. It can not be sustained long term. It is a huge engine feeding on its own muscle (a billion people) but not feeding that muscle.

If you believe in free enterprise how can you believe the current economic 'success' of China to be real and sustainable?

Where were your electronics made??.

Maybe in China now, but if the price of cell phones, HG T.V.s, etc. go up, they can be built here, where they are developed and designed, in a matter of months.

But don't think that any such thing could happen and be benign for the USA.

It may cause some pain, but we will recover easily.

[BackInTex]

Perhaps, but if those "billions there ... get tired of the lack of freedom, the pollution, and the poor standard of living and" a revolution does break out, that will only put a temporary dent in the economy. Once they get themselves up and going again, their economy will be robust again.

It will take longer than you think.

The people will have to learn how to live amongst themselves in a free society first. That, as we've seen in the former Soviet Bloc, 'freed' countries in Africa, our neighbors to the south, in the Middle East and others, is not an easy task. It takes years, decades, and even centuries to change the culture and morals of a populace to learn to live as free people and to be able to enjoy that freedom. Out of that freedom comes economic production beyond that necessary to survive.

China does not have the natural resources of the Middle East. If the Middle East had no oil, they would not be mentioned in any economic discussion. The only resource China has to offer is people. And right now the only reason those people are producing is because they are starving and their government forces them to work. They are working to survive, not to surpass their current state.

Historically, what economies have dominated the world that were not based on a free society?

[earendel]

Perhaps, but if those "billions there ... get tired of the lack of freedom, the pollution, and the poor standard of living and" a revolution does break out, that will only put a temporary dent in the economy. Once they get themselves up and going again, their economy will be robust again.

It will take longer than you think.

Perhaps, but not as long as you seem to think.

The people will have to learn how to live amongst themselves in a free society first. That, as we've seen in the former Soviet Bloc, 'freed' countries in Africa, our neighbors to the south, in the Middle East and others, is not an easy task. It takes years, decades, and even centuries to change the culture and morals of a populace to learn to live as free people and to be able to enjoy that freedom. Out of that freedom comes economic production beyond that necessary to survive.

FWIW the Chinese government has fostered a certain amount of entrepreneurial spirit. This will survive any revolutionary period.

China does not have the natural resources of the Middle East. If the Middle East had no oil, they would not be mentioned in any economic discussion. The only resource China has to offer is people. And right now the only reason those people are producing is because they are starving and their government forces them to work. They are working to survive, not to surpass their current state.

Not all of them are - there are people getting rich through capitalism, albeit controlled to some extent. These will form the nucleus of the economic system once centralized governmental control is lifted (by choice or revolution).

Historically, what economies have dominated the world that were not based on a free society?

Well, depending upon how you define "the world" I could name Macedonia under Alexander and Rome as being both militarily and economically dominant. Granted they didn't know about "the New World" but they certainly dominated where they were.

[BackInTex]

Not all of them are - there are people getting rich through capitalism, albeit controlled to some extent. These will form the nucleus of the economic system once centralized governmental control is lifted (by choice or revolution).

Not capitalism but cronyism. The government is allowing who they want to make money, make the money. Those making the money now are doing so with protection from open competition. It is not a free market there.

Sand

[earendel]

Not all of them are - there are people getting rich through capitalism, albeit controlled to some extent. These will form the nucleus of the economic system once centralized governmental control is lifted (by choice or revolution).

Not capitalism but cronyism. The government is allowing who they want to make money, make the money. Those making the money now are doing so with protection from open competition. It is not a free market there.

Sand

I'm not really disagreeing with you - a reckoning is coming and it's only a matter of time. However I do think that there is an entrepreneurial spirit that is at work, either with the consent of, or (more likely) in spite of the government. That spirit will survive the collapse and serve as the seed for the future.

[mrkelley23]

Not all of them are - there are people getting rich through capitalism, albeit controlled to some extent. These will form the nucleus of the economic system once centralized governmental control is lifted (by choice or revolution).

Not capitalism but cronyism. The government is allowing who they want to make money, make the money. Those making the money now are doing so with protection from open competition. It is not a free market there.

Sand

Sounds like the USA under Bushians

[BackInTex]

Sounds like the USA under Bushians

Acutally, the .com bubble, also built on sand, happened before Bush. I forget who was in office, but I'm sure you do.

[wbtravis007]

I'm pretty sure that it was Confucius who forecasted that the Chinese economy would end up "like naked woman flying upside down."

[Jeemie]

Not!

Those who have oil and are pumping are not pumping all they can. Its like saying there is a water shortage because you have a half full tub and have not turned the facet on all the way.

There is no evidence of this, save on the "say so" of countries who have no incentive to be honest about their production capacities. When you look at the production curves of many of these countries over the last few years, they look quite different from what you would expect from countries that were voluntarily keeping excess capacity offline.

Add to it the sky is falling crowd about the 'impending' shortage that is driving current prices up. Take the traders out of the mix and prices fall. There are billions of barrels of paper oil, going unused therefore unneeded, sitting on trading desks creating a false demand.

I have seen analyses of the current oil market, and again, they provide little evidence that speculators are having a significant impact upon prices. I will look for the links- but just because someone on CNBC says speculators are driving the price higher than it would be does not make it true.