kebu77

http://www.theoildrum.com

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    • Paulson's Plan is About Marking to Market [view article]
      Paulson used to own $500m in GS stock before becoming Treas. Sec. Don’t know how much he really did sell off but this story was back in June 2006 - -

      www.marketwatch.com/Ne...

      NEW YORK (MarketWatch) - Former Goldman Sachs CEO Henry Paulson filed to sell about $500 million worth of Goldman Sachs stock late Thursday shortly after the U.S. Senate voted to confirm his appointment as U.S. Treasury Secretary.
      Sep 30 02:10 PM
    • Demand for Oil Starts to Falter [view article]
      "... these are 12-month totals, which don't fully capture recent drops in consumption which have been relatively larger than those of several months ago. For example, you have to go back to 2002 to find June numbers lower than those of 2008, suggesting 12-month rolling totals will continue to fall."

      And the data for the summer discretionary driving period is not even in yet. When the Sept. data is in, plot this graph on the monthly data, vs. the 12-mo. avg., and you are likely to see a very substantial trend toward reduced driving.

      Sep 18 05:43 PM
    • Saudi Talk and Production Bring Down Oil Price [view article]
      Jim said, "One reason might be to help the Republicans win the White House in November."

      paulk8756 said, "I was simply parrying that ridiculous notion with another..."

      If you pretend that political factors don't come into play, go back to early 2004 and look at what the Saudis did. They increased production massively over quota and kept it there thru the election. This was before the huge price spikes we've seen in recent years (over $70 in 2006, over $90 in 2007, plus 2008). You can pretend politics didn't factor in to that if you want, but at least articulate an alternative theory to explain the behavior.

      I think the KSA holding hands with Bush at the ranch says it all.
      Sep 18 05:14 PM
    • Will the Saudis Break Ranks with OPEC? And Will It Matter to Oil Pricing? [view article]
      There is also a political factor at work re Sunni-Shiite tensions in the Middle East. My comments on a related post on yesterday seekingalpha - -

      Are the Saudis re-doing 2004? OPEC may 'set' a $100 floor, but it is up to KSA to comply. My guess is they won't because their shot-term political interest is in keeping the party in power. KSA sees the US as a check on a growing Iranian threat. McCain may not intend to stay in Iraq for 100 years, but clearly intends to stay longer than Obama. KSA opposed the US invasion, but once in, they wanted Bush to stay in office in 2004.

      So, in spite of OPECs announced intent to reduce production, look for the Saudis to continue its high level of production thru the Nov. election, in its second attempt to decide a US presidential election. (The case can be made that KSA succeeded in 2004 when it produced WAY OVER quota beginning several months before the election and Bush won by a hair - - compare KSA actual production to quota, April-Oct 2004.) This time, they will fail due to the political fundementals (Google: lichtman + 13 keys). Even so, if I was Obama, I'd be pissed for the next 4 to 8 years.

      So Kerr, Rubin and other (temporary) bears may find, when the dust settles that the avg. oil price in '08 is closer to $100 than $115. Then, in 2009, geology oil fundementals replace the geopolitical issues and oil starts its march to the Maxwell-Pickens-Simmon... $200 level. Things happen, like KSA lets its wells rest, Iraq fails to settle down, the North Sea and Mexico continue their precipitous declines, the engineers running China continue their massive capital expansion, and 2009 marks the fourth straight year of declining oil exports (Google: "Jeffrey Brown" + "Export Land Model").

      More bullish views will return as it, again, separates itself from the herd. "Just my opinion, I could be wrong," but for starters watch the next eight weeks.
      Sep 12 03:28 PM
    • OPEC Sets $100 Floor for Oil [view article]
      YogiG: "The Saudi Oil Minister, in a separte comment, said that they would 'keep all customers well supllied, quota or no quota'... that comment was not publicized along with the main statement... Hmmm..."

      Deja Vu all over again: Are the Saudis re-doing 2004? OPEC may 'set' a $100 floor, but it is up to KSA to comply. My guess is they won't because their shot-term political interest is in keeping the party in power. KSA sees the US as a check on a growing Iranian threat. McCain may not intend to stay in Iraq for 100 years, but clearly intends to stay longer than Obama. KSA opposed the US invasion, but once in, they wanted Bush to stay in office in 2004.

      So, in spite of OPECs announced intent to reduce production, look for the Saudis to continue its high level of production thru the Nov. election, in its second attempt to decide a US presidential election. (The case can be made that KSA succeeded in 2004 when it produced way over quota beginning several months before the election and Bush won by a hair - - compare KSA actual production to quota, April-Oct 2004.) This time, they will fail due to the political fundementals (Google: lichtman + 13 keys). Even so, if I was Obama, I'd be pissed for the next 4 to 8 years.

      So Kerr, Rubin and other (temporary) bears may find, when the dust settles that the avg. oil price in '08 is closer to $100 than $115. Then, in 2009, geology oil fundementals replace the geopolitical issues and oil starts its march to the Maxwell-Pickens-Simmon... $200 level. Things happen, like KSA lets its wells rest, Iraq fails to settle down, the North Sea and Mexico continue their precipitous declines, the engineers running China continue their massive capital expansion, and 2009 marks the fourth straight year of declining oil exports (Google: "Jeffrey Brown" + "Export Land Model").

      More bullish views will return as it, again, separates itself from the herd. "Just my opinion, I could be wrong," but for starters watch the next eight weeks.
      Sep 12 02:55 PM
    • Interview: Kevin Kerr On the Commodities Pull Back [view article]
      Kerr: ". . . the Middle Eastern countries - Saudi Arabia being the biggest one - could just instantly cut production. They don't want us to have more oil, they want us to have less oil."

      Maybe not between now and November. Kerr's comment parallels views recently expressed by CIBC, which "cut its 2008 target for average oil prices from $125 per barrel to $115 and from $150 to $130 in 2009."

      In spite of OPECs announced intent to reduce production, look for the Saudis to continue its high level of production thru the Nov. election, in its second attempt to decide a US presidential election. (The case can be made that KSA succeeded in 2004 when it produced way over quota beginning several months before the election and Bush won by a hair - - compare KSA actual production to quota, April-October 2004.) This time, they will fail due to the political fundementals (Google: lichtman + 13 keys). Even so, if I was Obama, I'd be pissed for the next 4 to 8 years.

      So Kerr, Rubin and other (temporary) bears may find, when the dust settles that the avg. oil price in '08 is closer to $100 than $115. Then, in 2009, geology oil fundementals replace the geopolitical issues and oil starts its march to the Maxwell-Pickens-Simmon... $200 level. Things happen, like KSA lets its wells rest, Iraq fails to settle down, the North Sea and Mexico continue their precipitous declines, the engineers running China continue their massive capital expansion, and 2009 marks the fourth straight year of declining oil exports (Google: "Jeffrey Brown" + "Export Land Model").

      More bullish views will return as it, again, separates itself from the herd. "Just my opinion, I could be wrong," but for starters watch the next eight weeks.
      Sep 12 02:01 PM
    • CIBC Analyst Cuts Price Targets on the TSX, Oil and Gas [view article]
      "The firm cut its 2008 target for average oil prices from $125 per barrel to $115 and from $150 to $130 in 2009."

      In spite of OPECs announced intent to reduce production, look for the Saudis to continue its high level of production thru the Nov. election, in its second attempt to decide a US presidential election. (The case can be made that KSA succeeded in 2004 when it produced way over quota beginning several months before the election and Bush won by a hair - - compare KSA actual production to quota, April-October 2004.) This time, they will fail due to the political fundementals (Google: lichtman + 13 keys). Even so, if I was Obama, I'd be pissed for the next 4 to 8 years.

      So Rubin may find, when the dust settles that the avg. oil price in '08 is closer to $100 than $115. Then, in 2009, geology oil fundementals replace the geopolitical issues and oil starts its march to the Maxwell-Pickens-Simmon... $200 level. Things happen, like KSA lets its wells rest, Iraq fails to settle down, the North Sea and Mexico continue their precipitous declines, the engineers running China continue their massive capital expansion, and 2009 marks the fourth straight year of declining oil exports (Google: "Jeffrey Brown" + "Export Land Model").

      I suspect there's tension within CIBC that will resolve itself early in 2009. More bullish views will return as it, again, separates itself from the herd.

      "Just my opinion, I could be wrong," but for starters watch the next eight weeks.
      Sep 12 01:48 PM
    • Maxwell's Oil Analysis [view article]
      Barry and Jim: Will panic set in too late to make the radical changes needed to smooth the energy transition? Electric cars will come too late and cost too much. On the other hand, a rapid expansion of railroads and rail electrification would introduce the massive efficiencies needed to save liquid fuels "in a hurry" (the IEA's term).

      Electrified rail moves freight about 20X more efficiently than trucks. Pickens' plan to burn CNG in trucks and cars means burning more coal and spending money we don't have on increased road maintenance (as the depleting highway trust fund collides with tax resistance).

      Alan Drake recently made such a proposal, in detail, on The Energy Drum - - www.theoildrum.com/nod...
      Electrified Railroads

      Excerpt: "Electrifying our freight rail system will provide a Non-Oil Transportation alternative in an oil emergency, whether acute or chronic. Regardless of oil prices or availability, there would be a backbone of essential long distance transportation that requires no oil. And the USA, with Peak Oil arriving, appears to be moving rapidly towards a chronic oil price and affordability emergency."
      Sep 10 11:39 AM
    • Remember Those $200 Oil Predictions? [view article]
      Look for the sector to remain depressed past the election. Even though OPEC voted yesterday to reduce actual production by adhering to their existing quotas, the Saudis will likely continue to produce several hundred thousand barrels over their quota. They are playing the same game they played in 2004, producing way over their quota for several months before the election.

      What happens after the election depends on whether their current production levels have stressed any of their fields and whether they see it in their political as well as economic interests to have the oil price rise rather than fall.

      This political factor may be part of the reason why Charles Maxwell believes oil has further to fall, but will eventually go up to $300.

      The Saudis are exceptionally good at keeping secrets; guessing is aided by heeding what they do, not what they say.       Sep 10 10:42 AM
    • S&P Energy Sector Can't Catch a Break [view article]
      Look for the sector to remain depressed past the election. Even though OPEC voted yesterday to reduce actual production by adhering to their existing quotas, the Saudis will likely continue to produce several hundred thousand barrels over their quota. They are playing the same game they played in 2004, producing way over their quota for several months before the election.

      What happens after the election depends on whether their current production levels have stressed any of their fields and whether they see it in their political as well as economic interests to have the oil price rise rather than fall.

      This political factor may be part of the reason why Charles Maxwell believes oil has further to fall, but will eventually go up to $300.

      The Saudis are exceptionally good at keeping secrets; guessing is aided by heeding what they do, not what they say.       Sep 10 10:36 AM
    • Rough Seas Ahead? [view article]
      "To those who think OPEC will do something to support oil above $100, I suggest you consider the likelihood that the Saudis - the most powerful OPEC member - will be happy to drive oil down before the U.S. election if they think that will elect another Republican administration."

      While this is an investing site, I'm glad to see a recognition that political factors can throw us curve balls. The above is an entirely realistic view as can be seen by two prior Saudi production shifts - first, the massive increase above quota before the 2004 election (ensuring a continued Republican administration - don't take my word for it, look at the data re KSA actual prod. vs. quota) and second, production cutbacks contributing to a Democratic Congress in 2006 (that threat, along with a call to Cheney to get on a plane, ensuring the surge versus a pull-back from Iraq).

      The Saudi's miscalculation was to supress production too long, leading to the 2008 price spike, due I believe in part to their (and others') failure to realize that flat overall world production was leading to declining world exports from 2006 into 2008 (Jeffrey Brown's Export Land Model).

      Some analysts, by ignoring the possibility that the Saudis were intentionally withholding production into 2007, jumped on Matt Simmon's "Twilight in the Desert" theme a little prematurely and, by crying Chicken Little a little too early, compromised the credibility of peak oil theory. All we can really say about the Saudis is that they are very good at keeping secrets. Thus, by definition, anything they say is unreliable.
      Sep 09 11:55 AM
    • Charlie Maxwell to Barron's: $300 Oil is Inevitable [view article]
      $300 oil is quoted as $250 in current dollars - - isn't it a little optimistic to assume that in the next 7 years, inflation will be kept to 20%? Assume some fall in the dollar over the period, and a little more price inflation, $300 is just not that hard to believe.

      The WSJ recently reported that world oil exports declined in 2006 and 2007. It that trend continues, $300 may be cheap, air travel will be severely reduced and poor folks everywhere will be in a world of hurt.       Sep 08 02:49 PM
    • Whither Oil Prices? [view article]
      The analysis is skewed to show a low price floor. Fitzman is right. Those 1.26% upper and lower curves are entirely made up. They're cute, but what's the meaning? Where's the analysis?

      9/11 had almost no impact on the oil markets, unless you want to factor in the reduced demand from reduced air travel for a short period. The Iraq war on the other hand was a big deal, including the way the Saudis since then have either over-produced (way over quota in 2004 in the months leading up to the election, and under-producing in 2006 as a warning to Bush not to go along with the prevailing electoral sentiment to back off the war and get out - - msg delivered when KSA has Cheney get on a plane - - all of a sudden there's to be a "surge").

      The EROEI on deepwater is so bad that fields like Jack may never be developed.

      Ike to Houston, "We have a problem . . ."
      Sep 08 01:58 PM
    • The Most Important Fact To Know About Oil Investing [view article]
      This is nihilism at its finest. We don't have to know with certainty to get the idea that the general direction is up. And we don't have to predict a date certain for a peak in production to get the idea that there's is likely to be a peak sometime soon.

      A year ago when oil was trading in the '70s, Boone said it would go over $80 dollars by his 80th birthday (this July, IIRC). Would we be so sanguine about the current price if the recent two-month price spike hadn't happened (only 4 days / $140)?

      The current oil price, in real dollars matches the high triggered by the loss of 3.5 mb/d of Iranian production during the Iran-Iraq war. What is going on now in the markets that in any way equates to that event?

      Given the record share of production controlled by govts and nat'l oil companies, state secrecy by the two largest producers, and rising mercantilism, high price volatility is expected.

      We are in a business-as-usual environment with record oil prices. That alone should and does indicate the future price.       Sep 05 03:15 PM
    • The Reality of Real Estate and the Economy [view article]
      Amend the bankruptcy code to allow principal homeowners to get the same treatment that owners of second homes and investment properties can get. The shock to the system will get the servicers to get with the program on effective loan mods like they should have been doing for the past year or more. Servicers are cheating lenders by stonewalling borrowers in default who could make it with loan mods. Hundreds of thousands of borrowers walked away who could have kept their homes with respectable loan mods.

      For the future, the regs should require not only a fudiciary responsibility by lenders/brokers to borrowers but also a fudiciary responsibility by BROKERS and SERVICERS to lenders. How many borrowers got under water because brokers closed deals in a hurry on the hoods of cars and sold crappy paper? How many borrowers already under water walked away because servicers made more money from foreclosures than loan mods?
      Sep 05 02:32 PM
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