Danny/The Digger

Analyst: Oil Prices Inflated by 50%

I concur with Claude's observation that the price of oil is tied directly to the perceived value of the US dollar. If someone has a graph that shows the correlation, or lack thereof, I'd appreciate if you would share it with
SA readers.

Oil Inventories

Oil trades for U.S. dollars. When the dollar is "worth-less", those who sell oil require more dollars per barrel. The reverse is also true.

Betting on the price of oil is betting on the future value of the U.S. dollar.
With record federal budget deficits, record trade account deficits, subprime residential and commercial property mortgage losses, frozen residential equity, increasing employment losses (not related to outsourcing), increasing federal "bailouts" of financial institutions, etc., I'm not betting that the dollar will either maintain or increase in value.

Whither Oil Prices?

Fear is a great motivator. I suspect fear, more than anything else, has driven the US State Department to negotiate with Libiyan strongman Omar Khadaffi for rights to drill onshore for "his" sweet crude. Will he then nationalize the industry (like Chavez) after multinationals establish
"his" wealth? I understand that he has negotiated to receive 85-90% of the revenues from "his" wells ... so what does he realistically have to gain by later "nationalization"?

Khadaffi still hasn't funded the "repayment of loss" account that was established to compensate victims of his terrorist acts. Is that money to come from his cut of the hoped-for oil wealth?

China has successfully negotiated and corralled southern Sudan's limited oil reserves. Now the US has done likewise in Libiya. Who can truly understand how "superpower" economic hegemony impacts the present and future price of oil? Fear is the driving force and behavior based on fear is often irrational.

Megaprojects Predict Decline of Oil Production

Jim, your analysis adds alot to my comprehension of the international energy "predicament". For others trying to get a grasp of what we (the world) is facing, I recommend the following:

Plan B 3.0 "Mobilizing to Save Civilization" by Lester R. Brown, Earth Policy Institute, published by W.W. Norton & Co - Chapter 2: Deteriorating Oil and Food Security

"The Coming Economic Collapse - How You Can Thrive When Oil Costs $200 a Barrel" by Stephen Leeb, PhD, published by Business Plus, Hachette Book Group USA

As a small retail energy sector investor, I look forward to researching your archives and to receiving your e-mail energy alerts.

Despite Lower Oil Inventories, Dollar Surges

Like you, I believe the increasing cost of extracting the remaining reserves of oil from old producing fields, will drive the cost per barrel upward to $200+ /barrel.

That "goal" will be slower to reach now that the huge Bakken reserve is (Montana, N Dakota, Manitoba & Saskatchewan) is now online.

Events in Russia Could Push U.S. Toward a Clearer Energy Policy

Consider the effect of urban sprawl upon the demand for energy.
As long as it takes 45 minutes to an hour to commute to/from work,
there will be an excessive demand for energy.

What are the forces that drive urban sprawl? One is the desire for
our children to attend "better" schools. That, to me, implies there
is more than ample "racism" (racial discrimination). Or should I
call it "values discrimination".

If we can't/won't stop urban sprawl, we won't get control of our
excessive use of energy. Thirty minutes to drive to a hardware
store (WalMart) because all the mom&pop hardware stores have been driven out of business! Absurd, but true.

WalMart accomodates the principle of urban sprawl by having every
thing one "needs" in one central location. Perhaps we need vertical
residential communities sitting atop of a groundfloor WalMart. The lower floors would be for the "undesirables" with the uppermost
floors reserved for the wealthy. Schools would be online.

Events in Russia Could Push U.S. Toward a Clearer Energy Policy

Plan B3.0 "Mobilizing to Save Civilization" by Lester R. Brown of the Earth Policy Institute (published by W.W.Norton & Co. addresses the subject of energy in:
Part I. Chaper 2. Deteriorating Oil and Food Security
Part II. Chapter 11 Raising Energy Efficiency, and
Part II. Chapter 12 Turning to Renewable Energy
As an investor (since early '60s) I've found this resource very
informative (and exceptionally well documented). I recommend
that everyone read at least the chapters mentioned above, to get a grasp of where we are, where we will likely be in a few years, and
what can be done by individuals, corporations and governments
to change the trends and not-so-pleasant predictions.