Forget $100 a Barrel - Oil Will Plummet to $30 175 comments
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UPDATE: On August 20, I was interviewed on Fox Business News regarding this article. The video appears below:
Remember all those times OPEC tried to tell us that they didn't want high oil prices and we didn't believe them? Well, they meant it. They knew that technology was available to crush oil demand but they hoped that the low price of oil would keep the technology buried. The cat's now out of the bag. The commodity run is over. The talking heads are trying to temper the recent selloff in oil by saying that it will settle around $100 a barrel but that is not what happens when a bubble bursts. Oil is headed back down to historical levels between $30-$50 a barrel. Consider the following evidence:
1. Oil consumers quickly adjust to high gasoline prices. June data from the IEA reports a 4.7% drop in miles driven by Americans year over year. That equals a loss of 12.2 billion road miles of oil demand in just one month. The adjustment has come without a hitch. Staycations have replaced vacations. Honda (HMC) Civics have replaced Chevy (GM) Tahoes.
Not only are we driving less, we are using less gas while we drive. Everyone was shocked at the gigantic $6.3 billion loss reported in GM's latest earnings announcement. What has happened to automobile demand in just two months is astounding. You only have to go through that type of pain once to never let it happen again. The gas guzzling SUV market has collapsed overnight. Americans have proven how easy it is to adjust to high oil.
3. The next President of the United States will implement alternative energy on a grand scale like never before. John McCain wants to build 45 new nuclear reactors by 2030 and ultimately wants 100 new nuclear plants in the U.S. He also proposed a $300 million prize to the auto company that develops a next-generation car battery that will help America become independent from oil.
Barack Obama wants to create a $7000 tax credit for purchasing advanced vehicles and mandate that all new vehicles be 'flexfuel' by the end of his first term. He also wants to require U.S. utilities to get 25% of their electricity from renewable sources like wind and solar.
Oil tycoon T. Boone Pickens has been traveling around the country touting his wind plan. He claims that the Great Plains states are the Saudi Arabia of wind. North Dakota alone has the potential to provide power for a quarter of the country. A Stanford University study found that there is enough wind power to satisfy global demand 7 times over-even if only 20% of wind power could be captured.
We are also seeing technological breakthroughs in geothermal energy. Raser Technologies (RZ) can now produce energy from just 180 degree heat through portable mini-power plants. The plan to replace oil is now the top concern of U.S. citizens. Government subsidies will keep the alternative energy trend alive even as oil prices fall.
4. The last piece of evidence for a decline back to historic oil price levels is actually a secret that neither the green people nor the oil people want us to know about. The secret is that new oil is plentiful. Oil drilling rigs are booked until 2012. Recent finds include Brazil, the Gulf of Mexico and Africa.
To illustrate what's happening - we're invested in a small company called Freedom Oil and Gas which is preparing to drill in Southern Utah just north of the recent Wolverine discovery well which represents the largest U. S. onshore discovery in the past 30 years. Wolverine has drilled 10 out of 11 successful wells in its field, and is currently producing in excess of 6,000 barrels of high gravity, crude oil per day. Freedom estimates that a new discovery will provide as much as 150 million barrels of oil reserves, with each well producing as much as 1,000 to 2,000 barrels per day per well.
The conclusions are obvious. If you are thinking that the oil drop in oil to $115 a barrel is all we're going to see than you haven't connected the dots. This oil spike was a bubble fueled by a group of deceived investment speculators who failed to account for adaptable demand destruction from consumers. The technology to replace oil already exists and high oil prices merely provide the necessary motivation to bring these products to market.
The United States is leading an alternative energy charge that will spread throughout the globe and cause a major shift of power away from the Middle East. I'll save the ramifications of such a power shift for another article but simply stated, OPEC's greatest fear has been realized. Short oil.
Disclosure: Short USO, Long DUG.
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This article has 175 comments:
Nitpicking aside, your point is well taken. Some adjusted driving habits in America don't mean we've stopped driving altogether, or that India and China can be ignored. Oil won't go to $30 until there are a helluva lot of electric cars on the road. That will be awhile.
$100 on the other hand....
Like everyone else who promotes a hydrogen economy, you have overlooked the complex storage and transport infrastructure issues. Hydrogen not only has a negative EROI but has many infrastructure and storage issues. Not only does its small atomic size cause it to leak very easily, it is very reactive with most metals. It low density makes it very uneconomical to tranport by truck. A tractor trailer that can carry 22 tons of gasoline, can only carry 1000 lbs of hydrogen in liquid state. Conventional pipelines cannot be used due to leakage and corrison by hydrogen gas.
Both Obama and McCain have no energy policy at all and are pandering for votes. Obama is promoting corn ethanol and imposing windfall taxes and removing E&P tax credits. This will cause food prices to continue to rise as well as reduce oil production and drive oil prices even higher (remember Jimmy Carter in 1980). McCain with his ANWR and USC drilling plan will only provide 4 yrs of oil at most, certainly not a long term solution.
The only thing I agree with you in your article is the potential of T. Boone Pickens's wind farm project.
bigpicture.typepad.com...
2) Go buy a futures contract. Then tell me that on settlement day that your loss was not set by supply and demand.
3) $20 of the move from $52 to $115 since Pelosi became speaker was from change in currency valuation.
4) Pickens isn't all wrong but NG is the current peak demand solution and wind is the least predictable at the peaks of dusk and dawn!
5) You and the Messiah ignore the fact that gas and diesel are but two end products from crude and demand for crude will continue to increase for resin for windmill turbines, plastics for electric car batteries, asphalt for highways etc. And, refiner's ability to adjust the output mix from a barrel of crude is limited.
6) Putin vs. Georgia was not a tennis match. Russia accounts for 9.7 of 61.5 million BBL per day world production and much is exported.
Get a grasp on the volumes. Every drop helps including the Utah finds but they are just a drop compared to our 33 million BBL/day demand! The 499 Billion BBL Bakken field in ND/MT/SK that are being developed while Congress stonewalls and pontificates.
$30 crude and you're smoking something. $100 crude may be a brief reality. Alternatives are necessary and will happen but you cannot legislate technology or time and I don't plan to stop driving or eating until 2030!
Actually, the article started my day with a good laugh.
To put the idea of alternative energy in perspective, in order to replace gasoline with nuclear powered electric cars, the U.S. would need to increase its current number of reactors from just over 100 to several thousand, depending on size. To put that in perspective, imagine if every Taco Bell in America was a nuclear plant. That's roughly how many we need to get rid of oil.
I especially give kudos to you-can-call-me-al, inventories will continue to drop until a new equilibrium is reached which reflects the demand destruction.
This will probably be reflected first in stability in the refining arena. Thereafter, the old supply/demand will again arise BUT any future Oil Shocks will be exacerbated by the reduced inventory levels.
PS the populations of the world have not stopped growing and they have not stopped eating.
But this is a short-term movement (6 months to a year) down to maybe $80 or $60, and we'll never see $30/barrel oil again, for two reasons:
1 - Demand is permanently higher than it was, because China and India are now in the picture. The USA and Europe are no longer the only big oil consumers in the world.
2 - New-found oil is expensive to extract. Yes, there is plenty of oil, but the days when you couild just drill a hole and watch oil gush out are gone. The Utah discovery (150 million barrels) is small; we need oilfields with billions of barrels. They exist, but under deep water, or in harsh climates.
The alternative energy sources are there but not in the next 5 years. Do you really see 45 new nuclear reactors in the USA by 2030 - which means starting to build them in the next 5 years? It might be a sensible plan, but have you heard of the environmental movement? Have you heard of the Sierra Club? Have you heard of Three Mile Island? It just isn't going to happen.
Finally, if a lot of people get the idea that oil is going down to $30/barrel ... they'll start buying SUVs again. Thereby preventing it from going down to $30/barrel.
And the fact that oil consumption is down in the US is true. The problem is, you don't put the real reasoning behind this. It isn't ONLY that oil prices are high, it is that peoples HOME prices fell. Their ATM is now cracked... thus less trips, less stupid purchases of SUV's when a standard car will do. When the economy begins its recovery from the financial bust, Oil will follow -- likely sooner due to the demand in developing nations.
Also... do you think the Oil companies will LET this happen? Hardly. Many wells that have been brought online aren't productive at $60/barrel. Thus, when the price drops, they will go offline causing supply shortages again which naturally will push the price back up.
In short, oil will go down a bit (maybe settling around $100 a barrel), but not to the extremes we've seen in the past.
Too bad oil can't be profitably extracted at $60 a barrel at most drilling sites. Oil producers shut down production at these sites when the cost of producing exceeds the sale price... thus cutting off supply and pushing up demand.
Did you go to college or do you even understand economics?
Short of this, we're not going to see $30 oil again, my friends.
To the poster who said:
"If all these alternative energy solutions are so great, why haven't the Europeans done them already, since they've been paying much higher prices for gasoline (due to taxes) for many, many years. "
...let me encourage you to visit Germany, as I did last year. You'll find a super-efficient and very nice nationwide rail network with fares that are cheaper than gas (even at American prices) and service to small towns. You'll also see wind turbines everywhere. Seriously, they dot the landscape. Nuke and hydro are big too.
All this is very old technology, which makes me wonder why we are trying to accomplish the same thing with wonder batteries, ethanol, and experimental hydrogen fuel cells.
Also, their economy is not hostage to wildly fluctuating commodity prices like ours is. We have a recession and inflation at each price blip! The Saudis can literally schedule our recessions and inflation if they want. Energy independence is a choice people make just like it is a choice to buy a big truck or live 50 miles from work. We in the US are still in denial about this.
I read an article the other day on why not to buy US refiners. Seems demand predictions for 2H08 and all of 09 are down for refined products.
Here in PA., a solar project was announced and will start production soon. Not a large project. Only 100 acres of land to be used. But it is a start and two small hydro dams are being proposed.
I thought oil was headed down...and it is below $113.00 today. If I was to tell you I think we could see $60 or 70 in 6 to 9 months...most of you would disagree with me. We'll see.
The ultimate short term solution:
The ample energy source exists, the manufacturing process exists, the delivery infrastructure exists, the storage facility exists, the vehicle technology exists, the price competitiveness exists - all things exist, that's why it's called short term. It's even been successfully tested.
1. Ample energy source = Coal. 100 years known energy reserves.
2. Manufacturing process = Fischer-Tropsch, coal to clean diesel..
3. Delivery = same as existing pipelines, tankers, trucks.
4. Storage = same existing refiner tanks & gas station tanks.
5. Vehicle technology = ships, plans, trains, trucks, cars run on
diesel.
6. Competitiveness = cost equivalent to $30±. per barrel of oil.
7. Successfully tested = German army, Second World War.
Probably the solution is too easy to accept. Sorry I wasted your time.
Stay righteous Man, and get yourself some help.
Peace
online.barrons.com/art...
Nice scoop, Jason.
The evidence you give is (1) reduced driving demand by us consumers as evidenced by moving towards hybrid vehicles (2) easy recent oil finds outside the US and (3) some rinky dink 150 million bbl find in Utah
Lets tackle these one at a time (1) I agree US driving demand is decreasing. However, you have yet to indicate what's happening with US industrial demand? If we have an economic pickup in activity in a year or so, will that increased demand overcome the recent declines in consumer consumption? No evidence I have seen says that the consumer decline is enough to offset future higher industrial prod (2) You do realize that the marginal cost of production for all these new discoveries you are touting range between $65 to $80 per bbl right? Its incredibly expensive to drill in these areas and on top of that, the production facilities needed are ghastly expensive. That alone will keep prices higher as any price declines cause shut-ins that then lead to price increases (3) 150 mm barrels, pls - when you start talking about US onshore finds of 150 BILLION bbls, I will take notice, but until then, that's just a drop in the bucket (or approx 7 days of US imported oil)
Regards
Obviously, you did absolutely no research on this as you would know that petroleum fuels produce less than 1.6% of all power from power plants in the US. This will have absolutely no effect on the world oil price.
www.eia.doe.gov/cneaf/...
Regards
Does this guy know that the rise of oil had nothing to do with rising demand in the US? Wow.
Lol...
Right, and we got a war in Georgia threatening an important pipeline and et Voila -- DOWN another $3 at a three month low.
Laughing out loud... no really... LOL...
His bio says "He has managed successful PR campaigns..." and I'm thinking that's all he's doing now: taking some kind of over-the-top conclusion and trying to come up with bogus arguments why it could happen, all to garner some attention. Looking at his other pieces you'll see he's got a lot of other pieces like that with wordings such as "new era", "revolutionary", "unbelievable".
Take investment advice from PR people at your own risk.
Wind and Solar will help then some really smart people will have to figure out a way to motor this country around cheaply...Dude you gotta stop smoking that stuff.
If you do not understand if oil goes below $65 per bbl then a lot of new production will not be brought on line.
There is a very REAL possibility we will see $50 (not sure about $30) and we may never go above $150 before mankind departs from the oil paradigm. War is the outlier that nobody can predict.
i don't know how valid or correct the price levels you mention will or can be, but w/a viable alternative, no denying the potential for both price and power changes
i'd begun to wonder, as many have, where the heck american gumption had gone; but we knew, it'd been bought by big money
now the money's more on the other side of the argument
nice to see it coming - i hope :-)
money.cnn.com/2008/06/...
"The United States is leading an alternative energy charge that will spread throughout the globe and cause a major shift of power away from the Middle East."
shows the authors ignorance. Brazil leads the world in developing ethanol, Denmark in wind power, Germany in solar power. The US does not lead the world in any kind of economically viable alternative energy.
Cam Hui, as oil was at its top wrote an article here titled Oil $100 before $150, but $200 before $50. At the time, oil was hitting $147.00/barrel.
I am not as optimistic (I don't have any position other tahn as a consumer of its derivatives) as Jason is, I don't think oil will be at $30.00/barrel ever again but I believe it has more downside to it.
Fundamentally, Jason is correct, the oil producers do not have free reign to raise prices. Raise prices too much and you spur innovation to find other energy sources. Demand is being destroyed for a number of reasons. Many people say it is because the economy is tanking, but what causes what? I suspect high energy prices are causing the economy to tank rather than the economy causing oil prices to tank.
We should be generating all US electricity from nuclear, which will increase fossil fuels supplies for other areas where they are best suited. Why are we burning up fossil fuels to generate electricity? Mainly because the environmentalists screwed the rest of us and while Europe was building reactors we were not building anything. All thermal power stations should be nuclear powered as this would be a great start at keeping dollars in America and out of OPEC
Congresswoman Giffords Holds Briefing at the University of Arizona
By University Communications
August 11, 2008
U.S. Rep. Gabrielle Giffords held an energy policy briefing at the UA
on Monday afternoon to talk about the myths and realities related to
energy costs across the United States.
The panel of experts included former regional geologist with the U.S.
Geological Survey Wesley Ward, UA Eller College of Management Dean
Paul R. Portney, and Joaquin Ruiz, dean of the UA's College of
Science.
“Right now, there are a lot of myths and misconceptions about oil and
oil prices," UA College of Science Dean Joaquin Ruiz said to a packed
room. While noting that some believe that the U.S. has reached its
peak consumption, Ruiz said the time of “$40 for a barrel of oil” will
not return.
He even emphasized that no indicators exist that the cost will drop
below $100 per barrel
uanews.org/node/20905
Mangolfer, so you've made a ton since early July shorting oil? Does that mean you've been losing your shirt for the last couple of years?
Hahahahahaha! Yes, old chap. Back in the day, the stuff in print was always DEAD ON.
No agendas. No propaganda. Just the facts.
What a gullible old fool.
I must correct the author on one thing: T. Boone Pickens is touting his GAS plan, not his wind plan - if you listen carefully to his congressional testimony, you'll notice that he has sizeable gas fields right outside his office window. He'll make a LOT more money if Congress mandates converting our nation's transportation energy needs to NATURAL GAS as he suggests, and is using wind as a cover for spin artists like yourself. Not that I'm against T. Boone Pickens making another billion...it's capitalism at its finest.
And why is everything underlined in this page??
1) The global economy does not stop consuming when Americans stop consuming.
2) new transportation technology is not the solution unless the path to develop these new technology is a net energy gain process. Are you saying that mining iron ore + transporting the iron to japan from australia + refining iron into steel + assembling the steel parts into toyota hybrid is energy free process? If you argue it is then I would like to see some numbers
3) I think close to every leader of every nation said IDEALLY they wanna implement alternative energy on a grand scale since the last decade. If one can develop an efficient transport that does not rely on oil, the profits from such a patent will be close to at least $10billion. Ask Mccain to try rewarding a trillion because it seems billion dollar profits did not motivate those car makers enough in the past.
4) I agree new oil is plentiful, but they do not flow into your gas tank automatically do they? If you argue that new accessible oil is plentiful, then Im very surprised why the saudis did not short oil and dump oil on
the heads of "deceived investment speculators who failed to account for adaptable demand destruction from consumers"
On Aug 15 07:30 PM tylakewalker wrote:
> The comment:
>
> "The United States is leading an alternative energy charge that will
> spread throughout the globe and cause a major shift of power away
> from the Middle East."
>
> shows the authors ignorance. Brazil leads the world in developing
> ethanol, Denmark in wind power, Germany in solar power. The US does
> not lead the world in any kind of economically viable alternative
> energy.
"After skyrocketing above $147 a barrel in July, crude oil prices also have been declining rapidly. Experts say falling crude prices will likely continue in coming weeks, and might even test the price resistance at $100 a barrel.
“The United States, Europe and Japan are all flirting with recession,” said Brian Milne, editor of the DTN Refined Fuels Newsletter. “That's a key reason why you're seeing lower demand.”
With demand collapsing in the United States, “the price of crude oil could drop below $100-$110, said Jim Welsh of Welsh Money Management in Carlsbad. “But once this global slowdown is done, the next growth phase in all probability is that oil prices will once again return to their peak, or higher.”
This author's prediction for $30 per barrel might come true only if we had a disastrous global economic meltdown. Then we would all be screwed.
The market collapsed because no one could afford to buy the cars...where last year they could lease them, this year they have to buy them...
China and India are building an oil economy; $30 oil with 2 Billion new customers?
I'm more than willing to listen to a $30 oil argument, but this article does nothing to convince me as it leaves the biggest factors in the price of oil.
Oil went up to far to fast and it's time for a breather. As the price drops demand will pick up and off we go on the next bull run.
The future average price of oil will be found and it will be higher than $30.
NEW YORK/LONDON, Aug 15 (Reuters) - The pace of global oil demand growth should increase in 2009 as rising consumption in emerging markets outweighs declines in developed nations hard hit by the high fuel costs and mounting economic problems.
Worldwide demand should rise by 950,000 barrels per day (bpd) in 2009 to 87.5 million bpd, according to a Reuters poll of 10 analysts, banks, and industry groups, up from projected growth of 760,000 bpd this year.
(Click [ID:N1563661] to view a table of the forecasts)
"We think demand will be slightly lower in OECD countries, but substantially higher in the developing world. That trend is set to continue," said Kevin Norrish, analyst at Barclays Capital.
www.guardian.co.uk/bus...
He has convinced me that I want nothing to so with Lone Peak Acceptance Management.
I am surprised that no one has questioned why he is "pimping" Freedom Oil and Gas? Could it be that he, and/or, LPAM has a position in this stock?
I see nothing in his background that would indicate he knows anything consequential about energy, especially oil and gas.
Years ago, Boone Pickens was touting natural gas. He acquired a lot of gas properties via Messa LP, which offered a fairly new concept for investors avoiding taxes at the time. I bought some shares at $15 per share on the advise of a gentleman who was privy to Rice University's endowment fund activities. Anyway, he was way ahead of his time, and the stock went through a reverse stock split (one share for every original eight shares), and I ended up getting $34 for each 100 shares I purchased. All the while, Boone was drawing a large salary and receiving a big bonus every year, while enjoying all of the perks CEO's often have. I've been tempted to call him T. Boone "Pickpocket" every since.
One aspect of electrical generation, you can not effectively store excess electrical generation via nuclear plants or wind turbines. It has been suggested that excess electrical generation be utilized to generate hydrogen. (School science classes had classic experiments where by hydrogen and oxygen were generated at the negative and positive poles of electrodes submersed in the water when electrical voltage was passed through water in a beaker). Hydrogen is hard to contain, so means to store it and/or transport it need to be improved. In addition, it is a very hazardous substance. Just ask those who remember the Hindenburg. Perhaps it could be stored on site, and used to generate additional electricity during peak demand hours.
An engineering friend of mine has also pointed out that the lighter the fuel, the lower the BTU output generally is. Therefore, hydrogen will not provide as much energy as natural gas at a given volume.
"OTTAWA — A new study says Canadians have been slow to change their driving habits, in spite of higher gasoline prices.
Statistics Canada reports Canadians drove their vehicles 332 billion kilometres last year; that's 5.2 per cent more than in 2002.
The number of vehicles on the road also rose 9.4 per cent in six years and the agency reports that new motor vehicle sales in the first five months of this year have continued at a record pace.
The retail sales volume of gasoline rose 7.2 per cent from 2002 through 2007.
Another sign that driving habits have changed little: demand for urban transit has barely kept pace with population growth since 2002.
StatsCan says higher incomes and lower prices for other goods have partially offset the cost of higher consumption rates and gasoline prices.
That combination raised the portion of income consumers allocate to gasoline to 3.8 per cent in the first quarter, from 2.9 in 2002.
"People see it in the news every day that U.S. gasoline consumption is down and it clearly is," said Philip Cross, chief of economic analysis for Statistics Canada. "They tend to assume that it's happening in this country and it's not the case. It's a different country with a much different economy and a different housing market. All these things contribute to different behaviour by Canadians."
Canadian driving and commuting habits have been slow to change since 2002, partly because people are earning more money and paying less for cars and other goods overall, Statistics Canada says. Although gasoline prices have gone up, so have incomes. At the same time, the price of automobiles has gone down..."
Someone should explain him that extraction cost for oil today are not less than 40-45 $ for barrell (add about the same amount for exploration cost), and only for the most efficient companies.
Moreover all the oilsands and deep water oil, even a lot of the oil in actual producing fields, would be gone with the price under 65-70 $, becoming uneconomic to extract.
Oil at 30 $ would mean just one thing: no oil in the market!
Another guy with no knowledge of that constant of our contemporary life: inflation!
(passing over all his other groundless assumptions)
Time to look fore better sources for my afternoon reading.
After reading this piece I honestly think Mr. Schwartz should be removed from the Seeking Alpha list of authors. This piece was so poorly researched and thought out that it is an insult to the entire site, and it's readers. I am only going to point out the most glaring flaw in Mr. Schwartz' argument.
New oil is NOT plentiful. If you had any knowledge of the off-shore rig market, you would know that many of the rigs are being commissioned by big oil companies for EXPLORATION purposes, not production. This is a direct result of high oil prices (big oil is looking in places where it is very expensive to extract oil). Beyond this, while there have been some large new fields discovered, but they lie in harsh environments which result in very technically challenging drilling conditions. As a result oil is prohibitively expensive to extract from these areas. Many of these fields come online only with oil over $100 per barrel. With oil at $30 a barrel, there is almost no new oil coming into the market. With the megafields in significant decline, there will be a net loss in oil production, resulting in a higher oil price.
No matter how you cut it, $30 oil is an impossibility which will never be realized. I feel sorry for the investors in your fund if that piece is what you guys consider "due diligence".
My advice: stick to options trading. You seem to be excellent at that.
That's funny. Horses say "neigh". Try "naysayer".
This guy has spent to much time in the benzene. It costs min $60/barrel to bring current production online. And big oil didn't become big by selling at cost.
Care to elaborate?
Throwing around statements as above without producing a single tangible piece of evidence to back this up detracts from the article's credibility.
Some working projects, not promises that are years away, or perhaps an analysis calculating net energy gain combined with numbers and figures in relation to overall consumption would be useful. Fantasy and fiction have no place in the very real world of investing. Save it for Hollywood.
As an aside, any alternative energy that does not deal directly with transportation will have little impact on oil consumption over the next decade or two. Solar energy projects may have some effect on coal somewhere down the road, but not oil. A little basic research can go a long way.
Almost forgot...if you get excited about a 150M barrel discovery (actually still an unproven discovery!) which is equivalent to less than two weeks U.S. consumption, then perhaps you shouldn't be writing about energy related topics.
CrossProfit (consensus)
July gasoline data show week over week increases in demand as the price fell. Demand has been suppressed and is returning with marginally lower prices.
New technology is exciting, but irrelevant to oil demand until that new tech is deployed commercially.
The next president will face a number of daunting challenges. One of those will be grasping the math of oil demand and production. You also face that challenge.
Oil is not plentiful, thus the exploration in difficult and expensive places like offshore Brazil, the deepwater Gulf and offshore Africa. These new finds will take years to bring into production and those will be the most expensive barrels ever produced. The rigs that PBR is mobilizing lease for 700k per day.
Buy RIG and NOV. They are minting money and will continue to do so for years.
How many of the guys here talking about India and China have ever been to these countries?
----------------------...
You are assuming that you can trade commodities 100% on technicals like stocks. You are wrong, commodities have to be actually produced . As other people stated it costs $60 - 70 to produce oil rigth now , it could change in 5 year, but for now you will never see oil below $80 for this reason. Sometimes you can buy stocks, though, much lower than their fair vaue because it is paper, and in panic selling, people sell without any regard for cost. When you are buying commodities, it is not a scared retail investor you have on the other side, it is a producer of the commodities. Of course, with all the hedge funds, the moves are magnified to the extremes, but in the end, you cannot go below cost on commodities.
Even with all the taxes they will still buy cars. I am always amazed to see so many expensive cars in Moscow. Especially since you have to pay twice as much for them as in the US. I am sure China is not much different.
As for Oil being plentiful, you might be the only one with this opinion....
breaks
"...How do we afford to buy the foreign oil?" he asked rhetorically.
"The fact is we can't afford not to. That is why efficiencies are
critical."
He said the federal government has failed to address these problems,
choosing instead to ignore them. He added it is time for the country
as a whole to start listening more. When asked how much stock he put
into Peak Oil theories - a belief that the world has reached the peak
of its oil production and will soon face severe shortages - Brown said
it's better to think ahead than remain skeptical.
"(Peak Oil) is certainly a risk," Brown said. "If you totally ignore
it you'll be caught with your pants down it will be pretty bad. So you
have to pay attention. Oil is going to get harder to get and more
expensive. That's a fact."
www.legalnewsline.com/...
My personal expectations are for a 10-year average (2007-2016) in the $100-120 area; we may see $60-70 along the way but anything much lower than that would require outright global collapse. Worth noting is that many of the major oil producers are already priced as though oil is at $60-70. I sold most of my position in STO at 40 but will consider any move below 25 an opportunity to accumulate. There are other healthy producers starting to look very cheap as well and further deterioration in oil shares will present long-term investors with solid long opportunities.
I'm curious about one thing, though. The author claims to be short USO. Are you really, or are those fictitious shares? USO has been on the reg SHO threshold list for 289 days and in my experience has been impossible to borrow. It was quite interesting to watch the SEC vigorously attack hypothetical naked Fannie shorts (despite the issue never appearing on the reg SHO list) while ignoring the longstanding USO fails. I'd be outraged but frankly who is surprised? Official manipulation is the name of the game these days. Wouldn't surprise me if the USO fails were coming from the US Treasury itself.
The Better Business Bureau Warns Drivers of Gas-Saving Gadgets
8/1/2008 1:28:33 PM
BBB Warns Drivers of Gas-Saving Gadgets
InsideINdianaBusiness.... Report
The Better Business Bureau (BBB) of Indiana is advising consumers to stay away from gas saving products and parts and modifications that sound too-good-to-be-true. The Environmental Protection Agency has tested more than 100 gas-saving devices and hasn't found any that significantly improves gas mileage. The BBB recommends reliable ways to conserve fuel such as staying within the speed limit, avoiding jerky starts and stops, using overdrive gears and cruise controls, removing excess weight from the trunk and keeping the car maintained.
www.insideindianabusin...
SCAM ALERT: PICC (Pre-Ignition Catalytic Converter) and Dennis Lee
7/23/2008 5:00:00 PM
Not-so-funny business
"Better Business Bureau puts out a Hot Topics list every month in
which they post 10 'crooks' who recently came on their radar are
perceived as threats or have many complaints filed against them
through the bureau. People can find the list at indybbb.org."
"...Another business is the Internal Tesla Electric Co., dba Hi-Tech.
Seven attorneys general have taken action against Dennis Lee, one of
the principals, for advertising fuel-saving devices which are supposed
to create 50 percent increase in gas mileage.
"The Better Business Bureau went to him and said if you're saying it,
you have to prove it," Carmody said. Lee didn't respond to these
requests."
www.shelbynews.com/mai...
YouTube - Con Artist Dennis Lee Scam - PICC HHO ...
10 min -
www.youtube.com/watch?...
Dennis Lee has a long history as a con man bilking millions from
gullible investors. He has been convicted of fraud relating to free
power scams.
www.csicop.org/si/9707...
Check the site:phact.org/e/dennis.htm...
"..NEWS: Since March of 2007, Dennis Lee has been claiming to ship
kits doubling car mileage He ignores my offer to arrange independent
confirmation and spends millions for full page adds, Dennis has been
trying to get Churches to recruit people for him and has dropped the
NUAF. Dennis's former partner, Paul Pantone has been in jail and now is in an asylum. Dennis broke his promises of free energy delivery by March and July and Dec 28 in 2002. He took out a full-page ad in
Newsweek to promote his 50 state tour. In addition to having people
pay between $5 and $20 to sign up for free electricity, he's having
people pay $1000 to have their cars get over 100 mpg . Dennis was
arrested in Kentucky and released on bail. In 2006, Dennis is being
pursued by the Attorney General in Washington. (other states that have made efforts against him have been AR ME ID KY TN VT OR CA WY NM) Dennis started a MLM group called BWA...."
(Video) 2 month investigation on CNBC by Allen Levine on the Scam
Artist Dennis Lee and his bogus free energy devices:
www.phact.org/e/z/denn...
Judge blocks 'free electricity' offer
Attorney general says man seeking investors is charlatan
spokesmanreview.com/ne...
Dennis Lee and *F R E E * E L E C T R I C I T Y * ?
www.nmsr.org/denislee....
Certain investors think there is money to be made from perpetual
motion machines. Evidently there is one of these characters born every minute.
www.forbes.com/free_fo...
"This is a huge Scam. They guy behind this, Dennis Lee, has duped
people out of millions over the past 20 years. Do a search on Google
for Pre Ignition Catalytic Converter, and you will find multiple
references to this guy and his companies. He has never shown a working model of any of his inventions. Buyer Beware, Run don't walk from this scam."
www.autogeekonline.net...
the GDP of this countries is around 7-8% which is likely to be sustained.
Sginficant drop in oil prices as commented would put siginficiant doubt on profitability of new oil exploration companies and blocks where cost of production is quite high.
also significant is the fact that the oil companies of india and china are aggresively hunting for new blocks, rigs world wide to secure more and more oil which points to only one direction
Agreed, they shouldn't let this guy post anymore.