Price of oil continues to slide

[zephyrprime]

The idea that only 1-2% of reserves have been used is pretty far fetched.

Just look at oil production in the US. It's been going down ever since the mid eighties. The cost of pruducing oil has gone up around the world during that entire time. That doesn't sound like only 2% has been consumed to me.

(Interestingly, growth in oil consumption is much less than population growth in the 1980-2001 timeframe.)

The USGS page 17 estimates that about ~13% (judging from the chart) of the world's supply has been consumed so far. Of course, oil reserve predictions are notoriously unrealiable.

It's widely assumed that oil companies underreport their reserves. I suppose these opinions are probably right. But underreporting would only have a modest effect on increasing oil prices. It's how much is produced that really matters in the supply/demand equations. Also keep in mind that the OPEC nations wildly overreport their reserves because a nations reserves determine how much it is allowed to pump in OPEC. After the US occupied Iraq, it was found that Iraq's reserves were much less than expected.

Personally, I think the recent rise in the price of oil is more due to investor speculation than to real changes in supply. Maybe the supply was hurt a little by Iraq being down and the demand was hurt a little by China's rapid growth but I don't think any supply/demand change in the last year is enough to account for the huge rise in the cost of oil as of late.

 

[CycloWizard]

Originally posted by: zephyrprime
It's widely assumed that oil companies underreport their reserves. I suppose these opinions are probably right. But underreporting would only have a modest effect on increasing oil prices. It's how much is produced that really matters in the supply/demand equations. Also keep in mind that the OPEC nations wildly overreport their reserves because a nations reserves determine how much it is allowed to pump in OPEC. After the US occupied Iraq, it was found that Iraq's reserves were much less than expected.

I agree that underestimating reserves would only lower the price a little. However, this puts less pressure on the oil companies to produce as much as they can - basically, gives them a method to drag out the reserves that they do have while getting the most money out of them. If people think we're going to run out sooner than we really are, then they're not going to call for the oil companies to jack up production. That's how I read it, anyway.

 

[Genx87]

Are you going to deny based on how the price of Gas shot up from around $1 a gallon to $2 a gallon when Oil went from $25 barrel to $35???

Based on that $50 a barrel should net a minumum of $4 a gallon.

Plain and simple they have been holding back strictly because Politically $2 is all the Country (especially transportation) can handle.

Well it is after the election and I dont see any 4 dollar a gallon gas anywhere around here.
So this is your excuse for your gurantee????

Thank you for the priceless quote. When I read it I had to keep it. And now that you are still trying justify such a silly quote is even more comical.

 

[dmcowen674]

Originally posted by: Genx87

Are you going to deny based on how the price of Gas shot up from around $1 a gallon to $2 a gallon when Oil went from $25 barrel to $35???

Based on that $50 a barrel should net a minumum of $4 a gallon.

Plain and simple they have been holding back strictly because Politically $2 is all the Country (especially transportation) can handle.

Well it is after the election and I dont see any 4 dollar a gallon gas anywhere around here.
So this is your excuse for your gurantee????

Thank you for the priceless quote. When I read it I had to keep it. And now that you are still trying justify such a silly quote is even more comical.

Of course people that benefit from the doubling of the price of Gasoline would feel that it is "comical", I wouldn't expect anything less from the FLL's.

Prices did just came just shy of $3 a gallon as panic began to set in (especially from Trucking Industry) and the Oil Barrons moved the price back down towards $2. Nothing like Bribery and Force.