svkoho

Oil: Despite Decline, A 'Must-Have' Profit Play

agree on the general thrust of your arguments except that your production figures are off. Crude production is 74 million B/D and all liquids + crude is 86 Million. Here is a link:europe.theoildrum.com/...

Geologist: In Terms of Supply and Demand, the Oil Peak Is Past

Nice article and some nice comments as well.Where are all the usual cornucopian whackos? No real new info here if you are a reader of theoildrum. Take a peek at the megaproject data which has been an ongoing research project for some time headed by some very smart folks. After you read it, please head to the laundry room and wash your underwear.

Gas Lines Coming This Fall

Some good comments. I will have to take some time to try to verify some of the efficiency numbers from nakedjaybird but if he is even close, the way forward seems clear enough if we can just try to get the lard bottoms in gear. Switzerland does have an amazing electrified transportation network. The oil drum website has a current article on electrifying rail by the way. Drilling may be necessary and I would like to see a deal cut to get the bulk of the profit going to electrified transportation. Oil is too valuable to be wasted in vehicles and we will need it for all its other products decades from now and leaving some in the ground for my grandkids seems essential. The misbegotten offspring of gargoyles who scream DRILL know very little about da bidness. We are short on drilling rigs and what we do have in inventory are old and rusty. Finding competent folks to organize and manage is hard. Look at the debacle still ongoing with the thunderhorse rig in the gulf which was to be BP's crown jewel.Hopefully Petrobras wont make the same mistakes in their Tupi field which poses even more severe engineering difficulties but I wouldn't count on it. We can throw up wind turbines pretty fast. Out here in high wide and windy Wyoming we are pushing up turbines as fast as we can pour the pads, and it's high time to start laying track everywhere. We'll need a lot of steel and maybe we can use domestic steel this time. Lets melt down all our useless Suv's for their steel. I'll even donate my old Suburban.

Gas Lines Coming This Fall

Bill James" comments are very unlike a lot of articles posted on Alpha, data heavy and chock full of insights and even concrete recommendations for survival and even making money in the process. Some of the above comments are poo poohing Bill's warning in the face of some jaw dropping graphs which he provided. Some of our nearby traditional suppliers like Mexico have decreased exports to the US not because they are playing hoarding games but because their oil fields are depleting...FAST. Cantarell, the biggest field has lost 34% of output in ONE YEAR and Mexico fits the export land model posted by Bill of Indonesia almost perfectly and we may see the end of imports from Mexico in 2 to 4 years and this deficit will be made up by whom? No one knows if KSA can increase output of oil the world wants but it appears they cannot. There is plenty of the heavier grades available from the Persian Gulf but the world doesn't want it and lacks capacity to refine it. This will improve in the next few years but we are talking about now and Bill is talking about a problem as early as this fall, and that is if we have no destructive Gulf hurricanes. It is the low inventory figures that are disturbing . I live in one of the richest communities in this country and I have a friend who works at the local airport and he says that the cost of jet fuel is not a topic of conversation to the folks filling up their Jetstreams. They will fill up their birds at $5 gallon just as painlessly when it hits $50 a gallon. Ditto their Bluebird motorhomes and SUVs. But at some price point the grumbling middle and low classes will not tolerate this sort of flagrant inequality and it is likely to go well beyond just a resentful keying on the shiny flanks of these sleek and monstrous dinosaurs. The current rogue's gallery in DC has had no contingency plans for anything which makes Bill's grim scenario even more likely and so you're on your own out there folks. Bill suggests food reserves. Most Mormons already have a years supply. Reluctantly, despite the obvious fire danger I would advise stocking up on at least 6-12 months of energy supplies now for your heating and transportation needs whether that be wood, coal, propane, gasoline, diesel or jet fuel for your Jetstream. GIve your bicycle a thorough tuneup while you are at it and lay in your canning supplies while you can still get them. this is not being panicky. It's being prudent living in a country run by clueless political nitwits. Adding to your positions in USO or USL or OIL seems almost too painfully obvious even to mention.

Yes, U.S. Gas Use Dropped; But So Did Production

Following Eric's ideas has cost you a lot of money lately and following some of his thoughts going forward will likely continue that trend. I would use him the way I'd use Henry Paulson.Good contrary indicator. Us drilling will increase supply? Sorry Eric. It may or may not and it takes years for that to happen, that's if you can find rigs and people. One of our main suppliers Mexico is in huge trouble. A year ago Matt Simmons(I think) said Mexico might be a net importer by 2014 or 2015. The Cantarell field is off a mind boggling 34% in the past year and one oil pundit said that Mexico may stop exports as soon as 2 years from now. That's more than 1 million barrels gone in 2 years. Do a google on the Wikipedia megaprojects work and be prepared to hang on to your hat. There is almost no new production coming on line of any consequence after 2013 or so. With the current gang of morons in charge in DC I would be very loath to be shorting OIL. The republican business model has brought the country to its knees and if the draft dodger in chief sends cruise missiles to Iran, I hope you have your 55 gal drums of fuel in your backyard topped off. Mine are full.

Nigeria: The Elephant in the Corner

Another thoughtful article by Jim and his suggestion that the current incompetent bushies should get involved in Nigeria is wishful micturition in the wind I'm afraid.I hope someone in the next administration is a reader of Kingsdale so we can get cracking on a rational energy and foreign policy ASAP. If we don't start to mount a Manhattan Project style electrification of our transportation network pretty soon, it will be too late to avert a major crash of our economy. Also,It is puzzling why Jim seems to attract so many panglossian comments.

1,238 Billion Barrels of Oil Reserves: Is This an Oil Price Bubble?

The question is fatuous as is the post. The issue is not reserves. It's production. It's supply and demand. The causes of declining or peaking production can be debated but I wouldn't waste my time with people calling it a bubble on the basis of reserve numbers, many of which are unverifiable and likely bogus.

That Crazy Day in Oil

Good posting and the above comments are also thought provoking. The world is well supplied with sour heavy crude.Until enough refineries are finished to process the crap we will be seeing what we have seen for a while. Sour heavy oil isn't a traded commodity on the Nymex, at least not yet.I do not see a serious downside to increasing margin requirements on the NYMEX but unless it's changed world wide, folks will just move to London or the ME to do their trades.Volatility will continue.

How $4 Gas Affects Rural Parts of the US

Such a fatuous article in the Times. How will they make it trying to fill up their pickemup trucks out there in the outback? They can't and they wont. Are we ready for the new Okies?

Oil: This Isn't a Bubble

Excellent post of the fundamentals, the microcephaliic deniers notwithstanding. The politicians and the unwashed rabble will just have to work through the 5 stages of grief, you know 1. denial 2.anger. bargaining, etc. Then maybe we can come up with a strategy on how to transition to some sort of society that will still function under an increasingly expensive energy scenario. We need a discussion on the core issues of transportation, food, housing and stop wasting time on trying to sustain the suburbs and the long car commuting model. I suspect the day may come when we will be drilling AK, Miami Beach and the Potomac River but by then oil will be way too precious to waste on car and truck transportation. If you think oil has gone up, try looking at other energy sources. My coal and natural gas positions have been blowing my oil positions out of the water. Times are a changin' out there folks. Suburbia accessed by your Suburban(great name eh?) is in it's death throes and please let's stop wasting time bitchin about $4 gas. IN 4 or 5 years when the SHTF, we had better be well along on an intelligent strategy of using energy parsimoniously. There is no going back to the 50's. Get over it.Think about cutting energy demand as fast as you can and becoming more self reliant. A large part of our country will soon be on the move as the distant suburbs depopulate their Mcmansions. And stop trashing Ron for his attempts at analysis that you don't like and can't understand.

What's Behind the U-Turn in Oil Prices?

excellent comment JIm. You as well as many others have seen the dynamics behind the rise in energy prices for a long time. The tragedy is that none of the political candidates get it and 2 out of 3 presidential nitwits have insulted the intelligence of my dog by pandering to the morons and cutting an 18.4 cent gas tax for the summer. Give me a reason to hope. Please put your name in as a vice presidential candidate and see if you can get Barak's ear!

Our Energy Future

Excellent column David but it does seem that you are preaching to the clueless.

Investing Into the End of the Hydrocarbon Age

No shortage of opinions here today from peakoilers to Panglossians. I do think Ernie Montague's comments were very pertinent concerning the GRID. For Jim's sunny view of a happy motoring public silently cruising our autobahns, we will need reliable electricity and a reliable grid.I have been researching electrical grids here and worldwide for the past few months. The shocking fact which I discovered is that the US does NOT have a coordinated national grid, hard as that is to believe. Many countries have national grids. WE
don't. We have a series of regional grids loosely linked to adjacent grids. There are different standards of connectivity, redundancies, back up systems, all different and largely uncoordinated. No national coordinated system. It set me into looking at systems theory, network theory etc. For example, when you devise a system or network, you decide at the outset what
is most important. Do you want robustness and redundancy or do you want efficiency, economy, speed etc. It appears that our networks have favored economy and efficiency and speed over stability and reliability. Leipigs Law of the minimum,
deals with zoological populations and states that whatever necessary resource is least abundant sets the limit for the population of any given species. This was formulated by a 19th century German scientist and it predates modern system and chaos theory but the principles are similar I think if extended to any complex system, not just zoological systems. If for example, your grid has aging or inadequate transformers, then that is where the failure point or the bottleneck will lie. I personally see no way out of this grid morass without a nationally coordinated restructure and rebuilding of the grid.That's right! Nationalizing the grid! Shutting down and nationalizing unregulated, partially regulated and regulated monopolies which are the crux of the problem. Shades of Hugo Chavez!! Simply adding input from nuke plants, windmills, solar panels and coal plants etc to provide the capacity necessary to supply all those Chevy Volts wont work without a total redesign. God knows where the money will come from to do it. I suspect the money just wont be there any more that it will be there for Medicare, SS , or rebuilding our transportation infrastructure unless we tax the living bejesus out of our corporations and our citizens. However if we don't try, you are witnessing the beginning of the end of our automotive suburban military empire. Let us pray for a leader with the brain power and judgment to grasp the enormity of the issue. WE have certainly wasted the last 8 years. If we or he can't start a national dialog on this pretty soon, we are toast. For a preview of the next decade I would suggest the readers to take a look at Mark Buchanan's book "Ubiquity, why catastrophes happen."

Has Oil Production Reached a 'De Facto' Peak?

Jim Kingsdale's thoughts are almost always worth listening to. This is an excellent practical analysis of the current oil market. It is likely that we are at a practical production peak, more or less. If so, prices will soon go thru the roof. If not, cheap oil could go on for a while longer. Jim could be off a year or so but it is unlikely to last much longer, national recession or global recession not withstanding. Jim has helped me to make a lot of money on his predictions so far. I would say ignoring his ideas is potentially financially foolish.

Peak Oil, Crude Price and Equity Correlation

Shorting crude is risky behavior and the idea that crude could ever return to $50 is preposterous. For a good part of the world $200 crude is still a bargain and exports from almost 90% of the world's exporting countries is still falling despite the price rise. I'd say that you can only draw one conclusion. Investing is frequently a zero sum game and one man's ceiling is another man's floor.