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Bill James  

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  • Crude Oil Supplies Are Enormous [View article]
    Salmo trutta, there are two poles so long as oil is cheap and only if you think there will be world peace, debt will continue grow without collapse, and money printed without consequences.

    $4 gas by May is a guess, but fragility is very great. I hope I am wrong.
    Nov 1, 2015. 12:46 PM | Likes Like |Link to Comment
  • Crude Oil Supplies Are Enormous [View article]
    Ref: "the world is awash in crude oil"

    There is one huge condition on this being true, that we have world peace. The oil companies are likely the best run companies in human history at "just-in-time" delivery. The current 30.7 days supply (EIA) is well above the 5-year average of about 24 days. What is extremely fragile is that is takes about 21 days of supply to fill pipelines, trucks, refineries, etc....

    We have a 365-day food cycle being energy supplied with only 10-days spare operational inventory. Any war or debt crisis, such as Sept 2008, can crack the long and fragile oil supply chain.
    Oct 26, 2015. 11:40 AM | 6 Likes Like |Link to Comment
  • Oil: $20 Or $70 [View article]
    Great article. The Fundamentals section is excellent and I like the "factory" analogy towards fracking.

    I have a wild guess I would like your opinion on. If frackers see the price of oil rising reliably, will they slow their output to get a better price so long as they cover the financial obligations?
    Oct 17, 2015. 01:43 AM | Likes Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    There would be no need to tax foreign oil if the cost to defend access to it were capitalized into the price of foreign oil. Capitalism would cause use to end our dependence on foreign oil. But the cost of oil-wars have been socialized into national debt instead of capitalized into gasoline prices.

    Taxes will make less of something. Foreign oil is going to end. It is better that American end that dependence by intent than by a debt collapse.
    Oct 4, 2015. 08:31 AM | Likes Like |Link to Comment
  • Shale Boom, Shale Bust: The Myth Of Saudi America [View article]
    Hi Mark_A, if the the 474,000 barrel per day drop in US oil production since July 2015 continues for 200 days the "glut" inventory will be depleted and the price of oil will rise rapidly.

    Here is a summary:

    My guess is that as oil prices start to steadily rise, pumping rates may decrease based on the expectation of depleting a resource slower and selling more of the product at higher prices.

    I like your understanding of this issue.
    Oct 3, 2015. 11:59 AM | Likes Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    Good comments. The Saudi's will keep pumping. Iran will make a difference. Slower growth as indicated by the Job Report and China may impact inventory reductions. But my guess is the 474,000 barrel per day reduction in production will continue for several months. If this holds true, US prices will increase as inventories approach the 5-year average.

    If people can afford to shutter them, I think they will delay pumping until oil is stable in the $90+ range; but this is just a guess based on how I would act. Once the price reaches $90 a barrel, the momentum of inventory depletions could carry inventories below the 5-year average price.

    The typical 23 days of supply of the 5-year average is an accounting number. About 19 days of supply are needed to fill pipelines, trucks, ships, refineries, etc.... So there is only about 4 days of operational spare capacity on a normal basis (current inventories are at 28.3 days supply). On a normal basis people drive with their gas tanks about half full. When they start to see gas lines, they tend to fill their tanks, sucking 1.5 days supply out of the inventories. This occurred in the fall of 2008, here is an article from July 2008,
    Oct 2, 2015. 03:00 PM | Likes Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    I am sorry Carl but Peak Oil was in 1970. Here is the US Government Crude Oil Production Chart. You can see Peak Oil was in 1970.

    Very high oil prices and near zero interest rates (economic issues) caused some people to be attracted to seeking returns from fracking oil. The current spike is that combination of economics and geology. It is still questionable if the bond holders will be hurt.
    Oct 1, 2015. 08:06 PM | Likes Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    Thanks Ben. I agree that the world production capacity adds upward pressure on oil prices. The Net Energy is also adding great upward price pressure.

    My personal opinion is that EIA's forecasting based on geological risks is the least risky aspect. Political and economic risk factors far exceed the slow pace of geological risk. This is what makes the July Peak Fracking so critical. EIA forecast that this would not occur for another few years. If it has occurred, my guess is political instabilities will be amplified.

    I have no foundation for these guesses. One, fracking will collapse very fast as diesel prices rise and add costs to transporting the oil. The Net Energy is so poor. Two, capital will not continue to invest if we have passed Peak Fracking.
    Oct 1, 2015. 01:58 AM | Likes Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    Carl: Relative to "Production will go up again, as soon as the price does, and continue to break records for many more years or decades."

    Logistics takes time and effort. It is not easy to align all the needed resources.

    Peak Oil is an economic/geological event. Vast oil fields will remain untapped if there is no return from drilling them. The best parts of the tight oil formations have been tapped. Some remaining very good wells might be found, but in general, the most profitable locations are tapped first.

    My best guess is something will break in the economy as gasoline goes over $4 a gallon. Last time it was foreclosures. We will like see with 36 months what is at risk this time.
    Sep 30, 2015. 03:09 PM | 1 Like Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    You are correct Carl. I had intended for it to be well, not field. I have submitted an edit change. The shale fields are vast and deplete only as wells are drilled.
    Sep 30, 2015. 02:26 PM | Likes Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    Do you have better sources that show a traditional rate of decline for fracked wells? There are several sources that confirm the approximate 68% rate of depletion in the first year.
    Sep 30, 2015. 12:35 PM | 1 Like Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    An action I think all American can agree on is a $30 a barrel tax on foreign oil increased every Memorial Day. American soldiers sacrificed to give the nation time to get off foreign oil for the last 25 years. The nation needs to honor that sacrifice by actually getting off foreign oil, a 45% cut in oil use. Here is a paper on this:
    Sep 30, 2015. 12:30 PM | Likes Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    Recommend reading

    You can also look up comments by the CEO of Chevron.
    Sep 30, 2015. 11:39 AM | Likes Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    It is a guess at what the national average will be. The future is hard to know, but the momentum is obvious. If that momentum continues, and there is world peace, the 45 year history of ratcheting higher gasoline prices seems likely to continue. War or political instability in several places in the world can send oil prices radically higher at any moment.
    Sep 30, 2015. 10:35 AM | Likes Like |Link to Comment
  • $4 Gasoline By May 2016 [View article]
    I am sure frackers will try. But logistics have mass, momentum, and a tail. It takes time, effort, and capital to drill more wells. Fracked wells deplete at 68% the first year, so the current wells seem unlikely compensate as fast as inventories drop.
    Sep 30, 2015. 10:20 AM | 1 Like Like |Link to Comment