The second oil overlord is coming.

[bamacre]

Of course this doesn't apply to gold/silver/corn/wheat, does it? Those are most of your kind's favorite benchmark for the "falling dollar".

Of course you failed to see my sarcasm. 😉

 

[LegendKiller]

Of course you failed to see my sarcasm. 😉

I'll have to go back and review the old oil threads where people were screaming about a falling dollar and how peak oil will drive it to $200/bbl immediately. You might have been one of those people.

 

[Darwin333]

Of course this doesn't apply to gold/silver/corn/wheat, does it? Those are most of your kind's favorite benchmark for the "falling dollar".

What does your kind say about the ramp in, lets see here, almost all commodities?

It sure doesn't look like money is fleeing from stocks or bonds and seeking safe haven in commodities considering their current pricing.

 

[Craig234]

This.

Oil is on the rise again not from dramatic uptick in foreign use of oil from China or India, nor from the 'collapse' of the US dollar. Rather, oil is rising again thanks to a resurgence in energy index speculation, which was primarily responsible for driving oil to $140/bbl back in 2008 while there were NO SHORTAGES anywhere.

The growth of energy index speculation starting in 2008 (before the bubble popped) was brought to you courtesy of Goldman Sachs, who as early as 1983, laid the groundwork by chipping away at long standing regulations (via 16 exception letters granted to them over 25 years IIRC) that prevented speculators from having too great an influence over actual producers in the commodities markets.

The energy bubble is starting to reflate again and it's not because of significantly more usage of oil globally. It's fvcking speculation...again.

The higher the concentration of wealth, the more artificial the economy, the more speculation and 'derivatives' and so on.

The idea of a buyer who will use money productively, and a financier who will make a modest profit, are obsolete in that case.

 

[LegendKiller]

What does your kind say about the ramp in, lets see here, almost all commodities?

It sure doesn't look like money is fleeing from stocks or bonds and seeking safe haven in commodities considering their current pricing.

Who says it has to be a "safe haven". Was housing a "safe haven" when the stock market hit a peak a few years back? No, the stock market was hot, the housing market hotter. Flavor of the week.

 

[iGas]

Sigh. I knew you guys would make the predictable replies you made about oil. So uneducated. You're just talking the entirely manufactured line from the oil industry about how awesome it would be to drill more in the US.

There are a mere 18 billion additional barrels of re of oil in all the currently restricted offshore oil regions in the US. Saudi Arabia on the other hand has 267 Billion barrels of oil. The US just doesn't have a lot of oil. Sorry to dash your fantasies of being the next Jed Clampett.
http://www.scientificamerican.com/article.cfm?id=can-offshore-drilling-make-us-independent

Now on the other hand, the US does have a lot of oil shale. Yes, if anyone can figure out how to cheaply extract that stuff, we would be energy independent. Of course, people have been trying to do that for the last 150 years and failing.
http://en.wikipedia.org/wiki/History_of_the_oil_shale_industry

According to IEA offshore oil cost 20X as much as OPEC oil to extract, and shale is being crack for natural gas hence they predict that there will be a glut in NG in the near term.

As for Canada oil sand, the cheapest field cost roughly $37 to extract a barrel, and the average field cost around $50~$55 to extract a barrel.

OPEC oil require 1 barrel of water to get 1 barrel of oil and very little to no NG usage.

Tar sand require 37 barrels of water & 1,200 cubic feet of NG to produce 1 barrel of oil.

That said, it is very expensive and high disaster potential for deep water oil, and it would be insanely expensive to extract oil out of shale. It would take exponential amount of water & NG to get a barrel of oil out of oil shale.

 

[llee]

I hope you realize that only a few years ago oil prices were up to $150 per barrel.

 

[Darwin333]

Who says it has to be a "safe haven". Was housing a "safe haven" when the stock market hit a peak a few years back? No, the stock market was hot, the housing market hotter. Flavor of the week.

Depends on who you are talking about. The housing bubble sure seems to have worked out well for those who helped fuel it the most. Not so much for the rest of the suckers.

My point is where is the speculative money coming from? If people are taking money out of the market to invest in commodities that should show up in the market, correct? If they are taking it out of bonds, the same?

Of course it could be added leverage but didn't that get us into trouble not long ago?

 

[iGas]

I hope you realize that only a few years ago oil prices were up to $150 per barrel.

That why the Saudi said that the market should be able to handle $100 a barrel.

The Chinese expects $130 by 2011~2012 that why they are pushing hard on making electric cars, hence the rise in rare earth demand.

 

[LegendKiller]

Depends on who you are talking about. The housing bubble sure seems to have worked out well for those who helped fuel it the most. Not so much for the rest of the suckers.

My point is where is the speculative money coming from? If people are taking money out of the market to invest in commodities that should show up in the market, correct? If they are taking it out of bonds, the same?

Of course it could be added leverage but didn't that get us into trouble not long ago?

Why would it?

Not all money goes into or out of the stock market. There are tons of pools of liquidity outside of stocks and tons of firms who don't even go into that market. They move in/out of other investment areas. Maybe they used to be in short-term investments like CP until they decided margins were too thin there. Maybe they were in securitizations that have paid off but there aren't enough new securitizations to take up the slack. Maybe they were in ethanol but now that market has declined and stopped being popular.

There are thousands of investment areas, not all take away from the stock market. It isn't a zero sum game between equities and everything else.

 

[LegendKiller]

That why the Saudi said that the market should be able to handle $100 a barrel.

The Chinese expects $130 by 2011~2012 that why they are pushing hard on making electric cars, hence the rise in rare earth demand.

Please show the research. Not all REEs go into electric cars, I don't buy that's 100% of the reason.

If they "believed" it was going to hit 130, they'd be plowing into the market like crazy and driving it up right now.

 

[iGas]

Please show the research. Not all REEs go into electric cars, I don't buy that's 100% of the reason.

If they "believed" it was going to hit 130, they'd be plowing into the market like crazy and driving it up right now.

There were an article last summer that said Chinese are expecting $130 a barrel. And, if you watch video that I linked in my original post, you will find the electric car answers as well.

True that not all rare earth going into electric cars but the demand is there, therefore the Chinese can't afford to export their raw mineral to the world market.

PS. If I remember correctly the IEA mentioned that over 800 out of a 1000 American own cars, while 20 out of 1000 Chinese own cars. Therefore a car is what they get the minute they make some money. India ratio is 17:1000 people own car.

 

[iGas]

Molycorp Minerals

Currently, Rare Earth Dependent Technologies are nearly 100% reliant on Chinese-sourced materials. While in recent years China has managed to supply the entire world’s demand for Rare Earths, a dramatic shift is beginning to take place. As global requirements for Rare Earths continue to grow considerably (fueled primarily by the development and deployment of green energy technologies like hybrid vehicles, energy efficient lighting and wind power), China’s own domestic use of its resources is also soaring—with internal consumption presently at about 60% of production and rising rapidly.

 

[zephyrprime]

True that not all rare earth going into electric cars but the demand is there, therefore the Chinese can't afford to export their raw mineral to the world market.

The whole rare earth issue is putting the cart before the horse for the time being. China is just taking advantage of the stupidity of the market to artificially raise the prices of their exports to make more money for the time being. This is wholly rational for them to do so of course and they have no compunctions about doing so since they do not make any claim to have any adherence to free market principles except for when it suits them. Currently, there are hardly any electric cars so rare earths are not being heavily taxed except due to speculation and paranoia. If rare earths ever really do become a supply bottleneck for automobile electrification, China would rationally lift exports caps because the price for rare earths at that point would be sky high and there would be more profit from selling them than there would be savings from lower oil consumption for China.

 

[zephyrprime]

Looking for and finding oil is very expensive and requires highly skilled people to do it. Even then you gotta actually drill a hole to make sure you are right.

Wanna know where oil companies do NOT spend many dollars looking for oil? Places that they can't extract it...

We continually find huge fields in the relatively small area we are allowed to drill for oil. We could easily end our dependence on ME oil if we wanted to, wouldn't do a damned thing for prices but it would increase national security in a big way and provide a ton of good paying jobs.

If we keep on finding huge fields, why do we produce half as much oil as we did in the 1970s? It's because we're not finding any big new fields in the US.

For the sake of argument, let's say that the US had more oil than was surveyed at the point of time when the coasts were closed off. Let's presume like the article in Scientific American that I posted mentioned that there was 5x more oil than was realized off those coasts because a modern survey of the Gulf of Mexico showed a similar 5x times increase.

That would put currently off limits oil reserves at 90B barrels. Total US reserves would then be 111B barrels (http://en.wikipedia.org/wiki/Oil_reserves). I think it's a stretch to think that the off limits areas would increase our total reserves by a factor of 5x. As I mentioned before, Saudi Arabia alone has 267 Billion barrels of reserves. The US consumes ~20 M barrals/day. The US consumes as much as the top 4 middle eastern countries produce.

Your dreams of oil independence are merely political lies promulgated by the oil industry. Personal, I think many of those off limits areas should be opened up if the dangers of deep water drilling could be handled. However, I hold no delusions that more drilling can create oil independence.

 

[iGas]

The whole rare earth issue is putting the cart before the horse for the time being. China is just taking advantage of the stupidity of the market to artificially raise the prices of their exports to make more money for the time being. This is wholly rational for them to do so of course and they have no compunctions about doing so since they do not make any claim to have any adherence to free market principles except for when it suits them. Currently, there are hardly any electric cars so rare earths are not being heavily taxed except due to speculation and paranoia. If rare earths ever really do become a supply bottleneck for automobile electrification, China would rationally lift exports caps because the price for rare earths at that point would be sky high and there would be more profit from selling them than there would be savings from lower oil consumption for China.

China forms electric vehicle association

BEIJING, Aug. 19 (UPI) -- China has formed an electric vehicle industry association aimed at developing electric cars.

The 16 state-owned companies participating in the alliance -- including China National Petroleum Corp., China's largest oil and gas producer -- are expected to invest $14.7 billion in electric vehicles by 2012.

The Beijing Times reports that the association wants to integrate technological standards and help Chinese companies master technologies necessary for the production of electric vehicles

"The (Chinese) government could easily underwrite or subsidize the development costs and do it at a time when the global car industry is still reeling," Oded Shenkar, a professor of management at The Ohio State University and the author of "The Chinese Century," told The New York Times.

China, the world's top emitter of greenhouse gases, aims for 500,000 energy-efficient vehicles to reach the market over the next three years.

In 2008, Beijing launched a national campaign aimed at putting 1,000 electric vehicles on the roads in at least 10 cities each year to encourage people to buy electric cars.

China overtook the United States as the world's biggest auto market in terms of vehicles sold in 2009.

 

[iGas]

If we keep on finding huge fields, why do we produce half as much oil as we did in the 1970s? It's because we're not finding any big new fields in the US.

For the sake of argument, let's say that the US had more oil than was surveyed at the point of time when the coasts were closed off. Let's presume like the article in Scientific American that I posted mentioned that there was 5x more oil than was realized off those coasts because a modern survey of the Gulf of Mexico showed a similar 5x times increase.

That would put currently off limits oil reserves at 90B barrels. Total US reserves would then be 111B barrels (http://en.wikipedia.org/wiki/Oil_reserves). I think it's a stretch to think that the off limits areas would increase our total reserves by a factor of 5x. As I mentioned before, Saudi Arabia alone has 267 Billion barrels of reserves. The US consumes ~20 M barrals/day. The US consumes as much as the top 4 middle eastern countries produce.

Your dreams of oil independence are merely political lies promulgated by the oil industry. Personal, I think many of those off limits areas should be opened up if the dangers of deep water drilling could be handled. However, I hold no delusions that more drilling can create oil independence.

The number speaks for it self.

Energy Statistics > Oil > Consumption (most recent) by country

# 1 United States: 20,680,000 bbl/day 2007

Lets say the US magically extract that 111 billion barrels instantaneously (that normally takes 10 years or more just to set up the rigs, and an additional 20+ years to extract).

111,000,000,000 / 20,680,000 = 5,367 days or roughly enough oil for 14.5 years if the US rate of consumption doesn't increase over time.

And, how accessible are these "supposedly" reserves?
If it is economically & environmentally accessible it would have been extracted by now.

 

[manimal]

change the entire long haul infrastructure to nat gas like Tbone wants....

 

[iGas]

change the entire long haul infrastructure to nat gas like Tbone wants....

Best idea I have heard so far, however CNG at maximum pressure (3600psi) is 3.8X the volume to energy ratio compare to gasoline, therefore you have to fuel up the vehicle regularly or reduce passenger volume.

 

[llee]

Oh noes, the OP is a prophet!

If the price of oil continues rising and alternative/renewable energy technologies become fiscally viable, disaster will ensue.

Our current energy policy dictates too much control to parties like OPEC and Russia. According to our l33t CIA intel, the oil producing nations on Earth will band together and decide to flood the market with cheap oil. The ensuing chaos will allow them to starve off and kill the demand for alternative technologies, ensuring a hydrocarbon prominence in the energy market.

And as the world becomes slowly choked upon hydrocarbons with no economically viable alternative in sight, countries will head into another world war. They will fight over the last oil reserves on the planet to obtain the 'black gold' at the expense of others.

It will lead to... Armageddon. You can either save the world by Chuck-Norrising the Arabs, or destroy it by pleading for peace.

 

[CycloWizard]

All oil equivalents are way more expensive than oil , yes even coal gasification cause if it was cheaper and easier they'd be doing it already.
We aren't running out of energy, we are running out of cheap energy and every time energy get above a certain threashhold it sh1tcans the economy.

I see that literacy isn't your strong point, or you would surely have realized that the only reason I brought them up at all is because they will become financially viable when the price of oil reaches a certain threshold.

 

[desy]

They never become financially viable because the economy craters long before any investment money can make it there, meaning it isn't financially viable because it won't be developed.
http://www.theoildrum.com/files/murphyfig_2.png


Even as such they aren't scalable to same degree as traditional oil and gas. I live a few hrs from the Oil sands and have neighbors on my street that work there.
After decades they produce about 2 MB per day , if they work super hard at it they might get it to 3.5 MB per day in another decade.
We consume 80 MB per day now

 

[bfdd]

More domestic production wouldn't even add a drop to the global oil bucket...

It would be to us importing. We would only have to increase our domestic production a rather small amount to stop importing oil from the ME. Our largest oil trade is Canada and Mexico. With what we produce domestically and our two neighbors we have like over 80% of our oil comes from North America.

 

[desy]

The point is, it might help energy independance a tiny bit bit but it won't change the global price anything significant and it's still money out to foreign countries 'trade imbalance'

BTW Mexico's production is falling fast so you will be propping up Chavez instead and even though I'm Canadian and thanks for the energy money BTW its going to cripple the US economy and 50% of our GDP is related to the US economy

 

[Darwin333]

If we keep on finding huge fields, why do we produce half as much oil as we did in the 1970s? It's because we're not finding any big new fields in the US.

For the sake of argument, let's say that the US had more oil than was surveyed at the point of time when the coasts were closed off. Let's presume like the article in Scientific American that I posted mentioned that there was 5x more oil than was realized off those coasts because a modern survey of the Gulf of Mexico showed a similar 5x times increase.

That would put currently off limits oil reserves at 90B barrels. Total US reserves would then be 111B barrels (http://en.wikipedia.org/wiki/Oil_reserves). I think it's a stretch to think that the off limits areas would increase our total reserves by a factor of 5x. As I mentioned before, Saudi Arabia alone has 267 Billion barrels of reserves. The US consumes ~20 M barrals/day. The US consumes as much as the top 4 middle eastern countries produce.

Your dreams of oil independence are merely political lies promulgated by the oil industry. Personal, I think many of those off limits areas should be opened up if the dangers of deep water drilling could be handled. However, I hold no delusions that more drilling can create oil independence.

I said we could replace our dependence on ME oil which is by far NOT oil independence. We import most of our oil from Canada and Mexico but that supply doesn't threaten our national security and economic stability nearly as much as ME oil.

1,000,000 BBLs a day of new domestic production get us off of Saudi oil. To put that in perspective the Thunder Horse oil field in the Gulf came online in 2007 and is currently producing 200,000 BBLs a day and that is a single field. The Tiber field is looking promising, Chevron plans to bring at least 100K BBLs online next year from the Hatti field and there are quite a few other deep water fields that were in the process of being explored in the Gulf. We lost a few ultra deep water rigs because of the moratorium which hurts pretty bad considering only a few dozen exist worldwide.

We would need roughly another 600,000 BBLs a day to get completely off of ME oil (Iraq, Kuwait, etc..) for a total of 1.6M BBLs a day. That is definitely obtainable in the very near future if we got reasonably aggressive.

As far as "5Xs the MMS's guess" it could be 50 times their guess or half of their guess. You won't really know until the industry starts actually looking but I would be willing to bet real money that it is more than 5 times what the MMS guestimated is out there. Worst case scenario is their aren't any big enough fields to really interest the oil companies considering they would have to make huge infrastructure investments to start drilling and extracting oil in most of those places.

To further the debate, if you combine an aggressive expansion of our oil production with an aggressive energy plan that moves a substantial amount the energy we use for transportation off of oil in the next 3 decades we can start working towards actual energy independence. Right now we are going backwards and that just isn't a good idea.

Just to add a bit of perspective on how little we know is out there, Brazil recently found a single field that could potentially double their existing known reserves. 1 field. Uno. Single. Who says we don't have one of those off the East or West coast? We sure as hell seem to keep finding large fields in the Gulf.