Posted on 12/05/2005 4:28:23 PM PST by Born Conservative
NEW YORK Hold on to your gas guzzlers: Cheap oil may once again be just around the corner. Even as consumers worry about high gasoline prices and rising heating bills, oil executives in London, Texas and Saudi Arabia seem to be concerned about a prospect of falling oil prices.
In a recent speech in Singapore, John Browne, the chief executive of BP, spoke of a possible sharp drop in prices and called current levels "unsustainably high."
John Hofmeister, head of Shell Oil in the United States, said during an interview, "This high price cycle is artificially inflated."
The notion of a steep falloff in energy prices may seem far-fetched.
After all, in the past year, the market has experienced crude oil prices that touched $70 a barrel; huge disruptions in the Gulf of Mexico; strong demand from the United States and from the world's fastest-growing market, China; continuing problems in producing Iraqi oil for export; and mounting tensions with Iran, a large OPEC exporter.
If anything, most of those situations would point to a sustained period of high energy prices. Most analysts said they expected crude oil prices to remain above $40 a barrel for the foreseeable future.
But the oil business has witnessed a succession of booms and busts, and oil companies have found it impossible to balance their future production with the world's need for oil. Too much capacity, and prices fall; too little, and they rise.
Today, producers are again under pressure to step up production and refining, and to increase investments to get more oil to the markets quickly. But oil executives and government ministers are concerned that if demand slowed down, even a little bit, those investments might create a large oversupply in two to three years, pushing prices down again.
(Excerpt) Read more at iht.com ...
Funny. Today on CNN I was reading an article how energy analysts (or whatever they called them) anticipated prices had reached bottom and would begin to rise again. :-)
Lets just call it even when gas hovers around $1.75 for a year.
Wrongo. God decreed gas should not exceed $1.10/gal.
God said it, I believe it, that settles it. ;0)
Gasoline prices are down, but I must say the crude oil charts look bullish enough at the moment.
Oh, puleeze. The moment the cold weather hit the northeast, gas prices rose in Texas. Nothing to do with supply and demand, now days if Cher trims her hair or Clinton blows his, um, nose, gas prices go up.
It all depends on Cheney giving the go ahead to his buddies at Haliburton to raise the price again!
"John Hofmeister, head of Shell Oil in the United States, said during an interview, "This high price cycle is artificially inflated.""
They fear the hedge fund money is going to be warehoused in a place other than oil futures?
Man are you in for it from the Free Republic,market price Capitalists can make it any price they want crowd.
But you are correct, The moment the call came in for bad weather the price went up over $60 dollars. Had nothing to do with demand.
If gas had been $1.10 a gallon when I first started driving, in 1971, it would probably have been the equivalent of $4 a gallon nowadays.
Funny, but I was watching a Three Stooges episode from around the late 1930s, where the Stooges were operating a service station. The gas in that short was priced at 30 cents a gallon--just a few cents under where it was in '71.
That would be disaster. The only worse one would be if the "upward pressure on wages" came back.
In the 1950s and 1960s Gas hovered around 25 to 30 cents a galleon with occansional(sometimes frequent) gas wars that dropped it to around 15 cents. Oh, for the good old days:)Of, course I was only making about 3 bucks an hour in 1962, but still I supported my family on it and my wife didn't have to work either.
"In the 1950s and 1960s Gas hovered around 25 to 30 cents a galleon with occansional(sometimes frequent) gas wars that dropped it to around 15 cents. Oh, for the good old days"
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.......
yep and you could drill on dry land at low depth to get oil now days it takes 100 mil to drill in 5000 feet of ocean..the good land based oil wells have gone dry and we drill wells to 20,000 feet where in 50's we were drilling to 2000 feet or so. Peak oil is here
bimp
i believe they will fall. and if they price in euros, they'll become cheaper as the euro falls.
... and you believe this guy?
1.) Shell had to admit last year that its "reserves" were overstated.
2.) The world's oil producers have not been replacing "reserves" on a yearly basis [on the basis of additions net of yearly production.]
3.) The last time OPEC had big reserve additions was the consequence of a reserve upgrade competition to preserve their then current production quotas which were / are based on each countries relative share of "reserves".
4.) The last time that there wasn't a swing producer capable of managing production to maintain or cap prices was either during the pre Standard Oil or maybe the pre Texas Railroad Commission era. Loosely translated: Oil prices have been manipulated at least as long as you have been alive ... but there is some possibility that they might not be now!!!
5.) All models of increased production over the next few decades rely on Saudi Arabian production as a massive plug number between expected demand and non Saudi production ... however beyond some non refinable offshore "reserves" the Saudis have not got much of a cushion even now and no other super giant fields identified to offset current depletion curves. All "new" Saudi production slated to come into production over the next few years will come from fields that have not been notably productive until now, but were discovered decades ago.
6.) In spite of a massive infusion of technology, why hasn't another another Cantarell [sp?] leave alone another Ghawar been discovered in the last 35 years?
Peak oil? Maybe or maybe not, but it ain't gettin any easier in the oil patch.
BTW, I repeatedly placed "reserves" in quotes because nothing is certain at least until the oil is in the tank.
Seems like a delayed reaction considering the price of gas has already gone down from $3 to $2.
"but I must say the crude oil charts look bullish enough at the moment."
Pay no attention to the "crude oil charts". We are currently buying Saudi Light Crude Oil and Nigerian Bonny Light Crude Oil at a discount of $10.00 to $14.00 per barrel below Brent pricing. $45.00 to $47.00 bbl delivered is the going rate. Anticipate a slight increase over the holidays (Nigerians celebrate from Dec 12 to Jan 2, 2006 and shut down terminals)then a slow decline in pricing again. Look for unleaded at the pump to be $1.50/gal by March 2006.
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