retired358

Crude Oil Demand and the Quick Recovery Hoax

The major issue with renewables (and unconventionals) is that crude prices are unstable and no financially responsible company can risk the major capital costs with this level of volatility.

Those renewables (wind and ethanol) being expanded are due to the result of gov. subsidies - and the unintended consequences are often ignored. Ethanol is not very efficient (from corn) and it is socially and morally wrong to starve people elsewhere to make fuel from food. Wind is installed (that is where the subsidy is) but the cost of maintaining is sometimes greater than the elect. value generated (notice how many older fields have many non-working turbines).

Crude Oil Demand and the Quick Recovery Hoax

The Gretes...:

I am not sure that the recession/depression, or whatever the world is digging out of, was caused by the 2008 energy spike. The energy spike reduced demand and did not help the situation but the "hole" was caused by the subprime mortgages and "speculation" in the related insurance swaps/derivatives.

Crude Oil Demand and the Quick Recovery Hoax

And the word "Hoax" used in the title of your article is used because:

1) You really believe it? You have not convinced me with your "factual support"

2) You are trying to incite others against the industry?

3) You are trying to sell your services?

Crude Oil Demand and the Quick Recovery Hoax

Dennis: For those of us who have been in the industry for decades, the facts do not appear to support the thesis that we cannot see a crude oil price spike in the future.

As others have pointed out, just to maintain current production levels requires that the industry find and produce an additional 4-5% of current production each and every year - just to replace natural field declines. If one looks at the data on new finds, one will see that the average size of fields discovered is decreasing and the production cost is increasing (harder to find and necessary to go deeper and/or colder). And, ultimately, the cost of crude oil will be the cost of the most expensive bbl produced to meet demand.

With respect to demand, it is difficult to assume that the people in India and China will not want to increase their standard of living (which requires energy). Even if their energy usage increases to just 1/4 that of Japan or Europe (over time) times the differences in population, demand will increase significantly.

I fully support unconventionals and renewables - they will be needed - but they cannot be developed fast enough or in sufficient quantities over the next decade to meet all of the increased demand. And, to the degree they are developed, their cost is much greater than that of producing crude oil and their price will then set the cost of energy.

So, I am placing my investments in crude oil over the next decade.

Big Oil: Dark Skies Ahead?

Rolex18 - to be entirely risk free, would you not have to take receipt of crude currently? Do you have a storage tank somewhere?

Big Oil: Dark Skies Ahead?

I am not sure how cash flow was calculated but, without explanation, the comparisons do not make a lot of sense. One example - in 2007 with an avg crude price on the order of $70, Shell had a cash flow of about 34B. What would make it about 2.2B (according to this article)?

Without further info., not sure I can put much into this analysis.

Is Cheap Oil Compatible with Growth?

TomF: The pure stats of per capita consumption are misleading in that GDP and climate (e..g., Canada) are a major component.

One needs to look at the consumption of the developing world (China, India, others are a tiny fraction of OEDC - Industrialized countries consumption). What is really scary about those numbers is that they are so small - and does anyone think they do not want to improve their standard of living?

Having spend years in the industry, I do not see where this supply will come from short term (next 20 years).

Crude prices will go up.

The US needs a comprehensive energy policy and congress is incapable of understanding or doing anything constructive in this area.