200 plus oil [Archive]

Dymanic

20th May 2008, 01:19 PM

You must admit Water injection in to an oil field is not a good sign.
By itself, no. Not really. Significant increases in the extent to which this practice is being implemented would be another matter. I don't know if Gawar has peaked or not. Even those who know the exact output numbers would have a hard time making the call, and that even in the face of a clear decline, because it's something that can be influenced by a number of factors besides the size of the remaining reserves. Hubbert predicted that US domestic production would peak in 1970, and from this vantage point in time it is very obvious that it did exactly that; but a month or two after that peak, or even a year or two after, it might have been possible to view it as a temporary trend. The nature of peaks is that they are hard to see until some time after they have happened.

People are going to have to take a good hard on how they are living.Yes. A great many will wait until the last possible moment to do this, but that's just the way people are. Announce that a major hurricane is headed toward a low-lying city, and there will be significant numbers of people who will not only wait until the last possible moment to evacuate, there will even be some who will stubbornly refuse to acknowledge that a threat exists at all. A few days later, those hard cases will be standing on rooftops waving their arms at the news helicopters (but by that point, yes, they will be taking a good hard look at how they're living).

The Central Scrutinizer

20th May 2008, 01:22 PM

Yes. A great many will wait until the last possible moment to do this, but that's just the way people are. Announce that a major hurricane is headed toward a low-lying city, and there will be significant numbers of people who will not only wait until the last possible moment to evacuate, there will even be some who will stubbornly refuse to acknowledge that a threat exists at all. A few days later, those hard cases will be standing on rooftops waving their arms at the news helicopters (but by that point, yes, they will be taking a good hard look at how they're living).

What "last possible moment"? People act like the world oil supply will suddenly run out one day. It ain't gonna happen. It will never run completely out. We will still be pumping oil 100 years from now.

Dymanic

20th May 2008, 02:00 PM

What "last possible moment"? People act like the world oil supply will suddenly run out one day.I agree that most people's understanding of the peak oil threat is so lacking that they take this mistaken position. Due to the nature of oil drilling, the peak production point for any source tends to be at about the point when roughly half of the oil has been extracted. But once you're past that point of peak production, then by definition, you will never produce that much again, no matter what you do. It's not so much about the amount of oil that's left as it is about the rate at which that oil can be extracted. The consequences are primarily economic.

The "last possible moment" will be different for each person. You might call it the point just before all of the remaining options become dead-ends; if your job ceases to exist in the face of skyrocketing energy costs, or you can no longer afford to commute to work, and you can't change jobs, or move, because you can't aquire the resources you'd need to do that; if every vehicle in your driveway takes two thirds of your paycheck to fill with gasoline, and a trip to the grocery store would cost the same, then you have about as many options as did those people in the photos from NOLA, the ones with the big hand-lettered signs reading "HELP US".

If you happen to be among the few so privileged that doubling or even tripling fuel costs wouldn't put much of a ding in your budget, then hey... party on.

Francesca R

21st May 2008, 03:14 AM

I think $200 barrel oil within the next year is a safe bet. I have made that prediction elsewhere on this forum.Congratulations, but it's a punt not a "safe bet".

Actually I think it is a good thing because about the only things that can stop it are a downturn in USA, China or Japan.And . . . investors selling oil futures because they don't want so many of them any more.

130 oil is going to start with wiping out airlinesSensationalism, not critical thinking.

If the public gets on the oil band wagon, now thats a scary thought.. 300 to 400 dollar oil in just months.Congratulations, another punt.

Gurdur

21st May 2008, 03:20 AM

... Sensationalism, not critical thinking.

No, actually. Not at all. These days, in the era of privatisation and dereglation, Western airlines are often teetring on economic catastrophe anyway. I do assume you have been following the news about airlines in the USA, and Air Italia, just for examples, over the past 2 months?

When oil climbs to a significantly higher price, it does indeed add a significant burden to many airlines (albeit not all), and is another factor in the clump of factors affecting airlines badly at this time.

Francesca R

21st May 2008, 03:20 AM

I agree that most people's understanding of the peak oil threat is so lacking that they take this mistaken position. Due to the nature of oil drilling, the peak production point for any source tends to be at about the point when roughly half of the oil has been extracted. But once you're past that point of peak production, then by definition, you will never produce that much again, no matter what you do. It's not so much about the amount of oil that's left as it is about the rate at which that oil can be extracted. The consequences are primarily economic.Er. there is no shortage of oil today. In 1973 there was an oil embargo by OAPEC and the world lost an eighth of its crude supply overnight. There is no such thing this time.

Some people think that it is actually global expansion that is driving oil up, not that oil going up will kill the global economy.

I think it will damage developed economies' growth but nothing like as much as the sensationalist claims I have seem some places.

Gurdur

21st May 2008, 03:23 AM

Er. there is no shortage of oil today.

.....Some people think that it is actually global expansion that is driving oil up, not that oil going up will kill the global economy.

Francesca, there is a reply of mine to you just above the post of yours which I now quote and also reply to.

Pardon me, but I think you are contradicting yourself here. Demand is driving the price of oil up, and supply is not making up for the increased demand. Relatively speaking, and relative to only 2 short years ago, there is indeed a shortage of oil -- which is why oil has climbed from $25 a barrel to $130 a barrel in quite a very short time.

Francesca R

21st May 2008, 03:26 AM

No, actually. Not at all. These days, in the era of privatisation and dereglation, Western airlines are often teetring on economic catastrophe anyway. I do assume you have been following the news about airlines in the USA, and Air Italia, just for examples, over the past 2 months?Like Delta/Northwest? I don't consider a merger to be a wiping out at all. More the result of competition, finally.

And despite privatisation and deregulation, aviation is one of the most protected industries from genuine competition. That is why so many carriers are unfit IMO. Not fuel costs.

When oil climbs to a significantly higher price, it does indeed add a significant burden to many airlines (albeit not all), and is another factor in the clump of factors affecting airlines badly at this time.Yes. A much more measured statement.

Nogbad

21st May 2008, 04:15 AM

I think we need to have a measure of calm here. Oil is $130 a barrel and the price at the pumps is hurting. We are paying $8.35 a US gallon and I don't smile when I fill the tank.

However, it is not the end of civilisation as we know it. It is a pain though and recessions are made on the back of this sort of thing. Recessions colour our political perspective and we associate politicians and eras with tightening belts and foreclosures. Is this to be GW's legacy rather than far flung wars of dubious merit?

Francesca R

21st May 2008, 05:46 AM

Recessions hurt because we are used to economic output expanding faster than population, which means that living standards rise on a sustained trend. And that seems to have been true since the 18th century industrial revolution (in Britain anyway). Prophecies of doom ever since have been false ones, starting with Thomas Malthus.

Dymanic

21st May 2008, 08:30 AM

I think it will damage developed economies' growth but nothing like as much as the sensationalist claims I have seem some places.I can't think of a single threat that is not subject to being sensationalized, regardless of how valid the concerns over it may be. Somewhere between chicken little and the ostrich, there must surely be something like an appropriate and rational response, whatever the threat. If it involves the challenging of some deeply entrenched notions, well, we've seen that before.

Ultimately, the concept "growth" does not merely mean taking natural resources and using them to create wealth; indigenous peoples the world over did this for millennia, and some of them remained relatively stable for long periods of time. No, it means doing that at an ever increasing rate.

Initially, the resource is plentiful, so increasing the rate of harvest is just a matter of how many boats and nets are available to haul in the fish, or how many saws and railcars are available to get the logs to the mills, or how many gold pans and rockers are available to separate the gold from the gravel. But as more of these tools are introduced, a point of diminishing returns is reached where it starts getting more expensive to maintain the same rate of increase in the rate at which the resource is being harvested. This represents a fundamental limit to the economic growth that is possible from that activity. You can pay the price for the continued increase, but as the price increases, you gain less and less by doing that.

Eventually, you encounter another limit: the point at which the resource begins to decline. If the resource was a renewable one like timber, then as long as you were harvesting it at a rate below that at which it recovered, everything was jake, and you could have kept doing that forever. If the resource was a non-renewable one like gold, or oil, then it was in decline from day one, so it was really just a matter of how long you'd be able to enjoy the glory days when what you were basically doing was skimming the cream.

If you didn't realize that that's what you were doing, and if you planned the rest of your life on the assumption that things were just going to keep getting better and better, then by ignoring the inevitability of an encounter with the point where your returns would begin to diminish, you were setting yourself up for a very rude shock. The way I see it, this is essentially what we have done. We're not yet at the point where it's even a problem with economics, or with resources. It's a thinking problem.

Dymanic

21st May 2008, 08:58 AM

We are paying $8.35 a US gallon and I don't smile when I fill the tank.Out of curiosity, just how big is that tank, and how often do you fill it? My casual observation is that where I live (Northern California), something like a third of the passenger vehicles on the road are trucks or SUVs. This suggests that a "measure of calm" has not been seriously lacking for some time, though the owners of those vehicles are increasingly making efforts to unload them in favor of something more fuel efficient (and finding the trade-in values to be far less than what they expected). Most of these vehicles have a fuel tank with a capacity of about 25 US gallons (I'm guessing), which, at that price, would take more than $200 US to fill. I'm also guessing that the average person around here probably fills up about twice a week. Would you say that that is comparable to how things are where you live? I looked at some statistics, and it looks like maybe seven percent of the people in LA use public transportation, and in some US cities, it's well below one percent. They're saying that in Edinburgh, it's just under thirty percent. Does that sound about right to you?

However, it is not the end of civilisation as we know it.Here again, I think that's going to vary a lot from one individual to another, and from one place to another, depending on just what "as we know it" means to that person, in that place.

diggy70

21st May 2008, 08:59 AM

And . . . investors selling oil futures because they don't want so many of them any more.

Sensationalism, not critical thinking.

UR kidding me , what kind of critical thinker are you??? you seem to be very closed minded to make coments like that. Do some research on oil.

They can sell oil futures all day at $130 and people are buying them.. cause if people where not buy they would go down.

As for the airlines, they hedge fuel 6 months in advance.
Here's the thing they will have to raise prices huge in a few months and they will go under because people can pay more at least in the FOMC.

Nogbad

21st May 2008, 10:03 AM

Out of curiosity, just how big is that tank, and how often do you fill it? My casual observation is that where I live (Northern California), something like a third of the passenger vehicles on the road are trucks or SUVs. This suggests that a "measure of calm" has not been seriously lacking for some time, though the owners of those vehicles are increasingly making efforts to unload them in favor of something more fuel efficient (and finding the trade-in values to be far less than what they expected). Most of these vehicles have a fuel tank with a capacity of about 25 US gallons (I'm guessing), which, at that price, would take more than $200 US to fill. I'm also guessing that the average person around here probably fills up about twice a week. Would you say that that is comparable to how things are where you live? I looked at some statistics, and it looks like maybe seven percent of the people in LA use public transportation, and in some US cities, it's well below one percent. They're saying that in Edinburgh, it's just under thirty percent. Does that sound about right to you?

Here again, I think that's going to vary a lot from one individual to another, and from one place to another, depending on just what "as we know it" means to that person, in that place.

My tank capacity is 13 gallons (I think) so that is about 16 US gallons. It is a Nissan and does about 38 miles to a UK gallon and I fill up about once a fortnight so while painful it is not crippling. I couldn't countenance filling up twice a week or only getting 20 miles to the gallon. :eek:

Public transport tends to pretty busy and I see rail lines that were closed in the 60s are being re-opened. I am about to change jobs and my new post is best reached by train as it is in Glasgow city centre. I live close to a train station so that is my intended means of transport. I guess I am likely to only be filling up with petrol once a month very shortly. Just wish the train fares were a bit cheaper.

The Central Scrutinizer

21st May 2008, 10:46 AM

UR kidding me , what kind of critical thinker are you??? you seem to be very closed minded to make coments like that. Do some research on oil.

They can sell oil futures all day at $130 and people are buying them.. cause if people where not buy they would go down.

As for the airlines, they hedge fuel 6 months in advance.
Here's the thing they will have to raise prices huge in a few months and they will go under because people can pay more at least in the FOMC.

How old are you? Seriously.

Francesca R

21st May 2008, 01:44 PM

Texastwister

21st May 2008, 02:02 PM

Nogbad

21st May 2008, 03:45 PM

The price of oil today is all politcal. how often have you gone to the pumps and they were dry? Happened all the time in teh 80's.

Supply and demand are influenced today by the Chavez and Ahkmenijad's, and they know it very well. Every time they speak about global war, the price goes up. The price will go down.

It has a political element but there are demand issues with India and China now major buyers and supply issues with Iraq performing well below par and Nigeria having difficulties with rebels, thieves and infrastructure. On top of this the market has got itself into a speculation bind. Apart from demand all of the problems could be resolved and the price could come down to half of what it is today.

Ironically countries like Iran are doing rather well out of this mess.

Dymanic

21st May 2008, 03:56 PM

The price of oil today is all politcal. how often have you gone to the pumps and they were dry? Happened all the time in teh 80's.I wonder if you've taken any more care in thinking this issue through than you did in composing that post, but I'm glad you did post it, because it nicely illustrates what I see as the heart of the problem. In a society where everything built in maybe the last five decades was built on the assumption that there would continue to be endless supplies of cheap oil, it's treated as a matter of entitlement. Rather than seeing themselves as participants in the process that drives the price of oil, as bidders in a sort of ongoing global auction, the response to sharp increases in price is to look for somebody to blame. Specifically, somebody else.

Corsair 115

21st May 2008, 03:56 PM

130 oil is going to start with wiping out airlines...There will be likely losses and mergers, but in the end there'll still be at least a few airlines. The time premium offered by air travel as compared to road or rail travel will still be worth it to many travellers.

At this point I'd say Boeing's bet on fuel efficiency in its next-generation aircraft was a better choice than Airbus' bet on capacity...

Puppycow

21st May 2008, 09:01 PM

EEK! (http://www.bloomberg.com/apps/news?pid=20601087&sid=a5eIZ7qh9xII&refer=home)
$135 today. It's gone up almost $10 in the space of the last couple days.
May 22 (Bloomberg) -- Crude oil rose to a record above $135 a barrel in New York on concern that supplies are inadequate after U.S. stockpiles unexpectedly dropped last week.

U.S. crude inventories fell 5.32 million barrels to 320.4 million barrels last week, the biggest drop in four months, the Energy Department said yesterday. Gasoline supplies plunged by 755,000 barrels when analysts expected an increase.

``The price was roaring before the inventory report and was going up regardless, but that gave it the extra push,'' said Rowan Menzies, head of research at Commodity Warrants Australia Ltd. in Sydney. ``I'm beginning to think that this is a serious macro event, with oil at these levels, and it's going to have some serious consequences.''

Crude oil for July delivery rose as much as $1.87, or 1.4 percent, to $135.04 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $134.85 a barrel at 9:30 a.m. Singapore time.

Oil for prompt delivery has surged 8.5 percent in the past week while futures contracts for 2016 gained $20 to $142 a barrel.

Puppycow

21st May 2008, 09:10 PM

At this point I'd say Boeing's bet on fuel efficiency in its next-generation aircraft was a better choice than Airbus' bet on capacity...

Definitely. Although, isn't the A-380 efficient per passenger?

diggy70

22nd May 2008, 01:15 AM

It has a political element but there are demand issues with India and China now major buyers and supply issues with Iraq performing well below par and Nigeria having difficulties with rebels, thieves and infrastructure. On top of this the market has got itself into a speculation bind. Apart from demand all of the problems could be resolved and the price could come down to half of what it is today.

Ironically countries like Iran are doing rather well out of this mess.

Stop importing oil in to the US and Europe,
Well you cant. Energy independence is impossible. Why? The US uses 23 million barrels of oil a day, and produces 7 million. Europe is in the same boat. So 135 dollar oil is still cheep. Independence means 30 gallon gas. That will curb demand to 7 -10 million barrels a day.

Wait till opec realize they can charge 1000 a barrel and we will still buy it.

diggy70

22nd May 2008, 01:32 AM

The price of oil today is all politcal. how often have you gone to the pumps and they were dry? Happened all the time in teh 80's.

Supply and demand are influenced today by the Chavez and Ahkmenijad's, and they know it very well. Every time they speak about global war, the price goes up. The price will go down.

We are short. The free market is offsetting the shortages…’135 oil’. The poor countries feel the pinch first. Energy is the blood an economy. So when you get energy problems and governments involved in free markets… ie .. Price controls, wind fall profits taxes and what ever other crap the government can think of to control free markets. That’s when you will see shortage in the US or Europe.
Tex buddy hate to be the one to break it to you the price oil will never be cheep again. Not saying it won’t be volatile. But never cheep again.
Everything we spend money will go higher for a long time. And you can also add a little more because of monetary inflation cause of the FED. That will add to the price too.

AndyD

22nd May 2008, 08:17 AM

If anyone knows where to find and how to chart the figures, I'd like to see a comparison between the price of oil, the value of the Australian Dollar and the Australian price "at the pump" over the last ten years.

For years as our dollar fell (to around US$0.50 in 2001), it was blamed for the rising cost of fuel. But, once our dollar began to recover (almost US$1.00 now), the barrel price was blamed for the rising cost of fuel and to a layman observer like me, it seemed the rising dollar had no impact whatsoever on the price we pay to fill up the car.

I would have expected a near-100% improvement in our dollar within seven years to be noticeable at the pump but it hasn't been, imho.

The Central Scrutinizer

22nd May 2008, 08:28 AM

The price of oil today is all politcal. how often have you gone to the pumps and they were dry? Happened all the time in teh 80's.

Huh? I'm not sure where you live, but I lived through the 80's. In the US. The pumps were never dry.

The Central Scrutinizer

22nd May 2008, 08:30 AM

I wonder if you've taken any more care in thinking this issue through than you did in composing that post, but I'm glad you did post it, because it nicely illustrates what I see as the heart of the problem. In a society where everything built in maybe the last five decades was built on the assumption that there would continue to be endless supplies of cheap oil, it's treated as a matter of entitlement. Rather than seeing themselves as participants in the process that drives the price of oil, as bidders in a sort of ongoing global auction, the response to sharp increases in price is to look for somebody to blame. Specifically, somebody else.

Well said.

diggy70

23rd May 2008, 04:08 AM

tbrdlvr88

25th May 2008, 04:13 PM

I could see oil hitting $200 a barrel by spring of 09' and we can thank our own people for that. It is being completely controlled by the commodities market and people holding back pumping until the prices are high. I converted my truck to E85 and I try to push as much oil back to other countries as possible.

diggy70

25th May 2008, 11:13 PM

let move this thread to 300 dollar oil any one disagree?
The Central Scrutinize what are you doing with you money ?? long housing?????? long bank stocks??? since he hates oil and gold lets ask him! I know he is long SPAM.... he sure like to bs, but give noe real alternative!

diggy70

25th May 2008, 11:20 PM

Let all get on the same page a nge get rich..... check out this bloomberg story
http://www.bloomberg.com/apps/news?pid=20602099&sid=apxEb37QYykU&refer=energy

Francesca R

26th May 2008, 01:17 AM

Yes, read bloomberg news. It is full of insightful information that the market at large does not know. It will make you rich :rolleyes:

tbrdlvr88

26th May 2008, 08:24 AM

First off I in no way will put money into the commodities market. By people placing money into the market it is raising food prices and fuel cost. I know people that can hardly afford to drive to work. So you can go make yourselves rich by making other suffer. That is what the problem is with the world today not make a living but make so much money that you can buy anything you want and worry about no one but yourself. I make enough money to survive on and I am happy with it.

The Central Scrutinizer

26th May 2008, 08:53 AM

DavidS

28th May 2008, 02:06 PM

You must admit Water injection in to an oil field is not a good sign.<bolding mine>
As a professional petroleum reservoir engineer involved directly in exactly such depletion planning decisions and designs, I admit nothing of the sort. In fact, I assert that implementation of appropriate subsurface energy augmentation and/or displacement mechanisms is in fact a very good sign of active efforts to increase recovery of a fixed resource. From the perspective of ultimate recovery, implementing such a pressure maintenance program -- waterflooding or otherwise -- earlier is almost always better than later. A good bet is that water injection into an oil field today is a better sign than putting it off until tomorrow.

Selection of waterflooding over other pressure maintenance and improved recovery technologies, and the economic and operational optimizations involved, are left as case-specific exercises for the reader.

diggy70

28th May 2008, 09:02 PM

dave is this not just putting a bigger straw in the milk, how much extra oil do you recover? From what i underdate this just helps increase the extraction rate!
If you are in the business, are we close to peak oil?? or we there now?

Puppycow

28th May 2008, 10:59 PM

A reason you can never be too sure that a product like oil will always go up, is the possibility of a "black swan," such as the invention of a new alternative fuel.

If this turns out to work (http://www.latimes.com/business/la-fi-greencrude29-2008may29,0,1053218.story), or some other new-fangled thing, it could replace oil and then people who overpaid for oil on the assumption that it would go up a lot higher will lose their shirts.

A San Diego company said Wednesday that it could turn algae into oil, producing a green-colored crude yielding ultra-clean versions of gasoline and diesel without the downsides of biofuel production.

The year-old company, called Sapphire Energy, uses algae, sunlight, carbon dioxide and non-potable water to make "green crude" that it contends is chemically equivalent to the light, sweet crude oil that has been fetching more than $130 a barrel in New York futures trading.

Chief Executive Jason Pyle said that the company's green crude could be processed in existing oil refineries and that the resulting fuels could power existing cars and trucks just as today's more polluting versions of gasoline and diesel do.

"What we're talking about is something that is radically different," Pyle said. "We really look at this as a paradigm change."

I'm not saying this will pan out. But it, or something else, might.

JoeEllison

28th May 2008, 11:09 PM

Francesca R

29th May 2008, 03:38 AM

"Speculative" demand is still demand. Unless you pass a law that says nobody is allowed to buy oil unless they burn it themselves.

rjh01

29th May 2008, 04:51 AM

Where is all this oil the speculators are buying? If they were responsible for the price there would be a huge stockpile.

Francesca R

29th May 2008, 04:59 AM

Where is all this oil the speculators are buying? If they were responsible for the price there would be a huge stockpile.I don't know whether to read that question as serious or not, but it is not the physical amount of oil available that matters, just how many people want to own it. If their number increases (pure speculators or commercial end-users or anything in between--it doesn't matter), then the price goes up until the commitments to own oil balance the obligations to provide it.

rjh01

29th May 2008, 05:41 AM

A speculator may buy oil but where do they store it? You would need very large special purpose containers for oil. A speculator would therefor want to get rid of the oil quickly. So any price increase due to speculators will be short lived. The price has been going up for several years.

No the reason for the rise in price of oil is that China is buying heaps more than what it used to. It must do because it is rapidly developing. Many Chinese are now buying their first car, which of course needs oil and lots of it.

Darat

29th May 2008, 05:46 AM

I've not seen anything that indicates the price has risen in line with either a decrease of supply or the increase in demand.

To me that indicates that a lot of the price increase is simply "what the market will bear".

JonnyFive

29th May 2008, 06:11 AM

A reason you can never be too sure that a product like oil will always go up, is the possibility of a "black swan," such as the invention of a new alternative fuel.

If this turns out to work (http://www.latimes.com/business/la-fi-greencrude29-2008may29,0,1053218.story), or some other new-fangled thing, it could replace oil and then people who overpaid for oil on the assumption that it would go up a lot higher will lose their shirts.

That's pretty cool.

I think the primary (only) reason that alternative fuels haven't taken off yet is that they still aren't, despite all the bitching about gas prices, cheaper than simply continuing to use gas. Eventually we're going to hit a tipping point where either the alternatives get cheap enough, or the current solution gets expensive enough that more and more people will want to switch.

So maybe now, with oil under $150 a barrel, it wouldn't make sense to use some crazy algae oil that costs, I don't know, $300 a barrel to produce. But hey, if oil gets to $500 a barrel suddenly that crazy algae oil starts looking mighty good.

drkitten

29th May 2008, 07:43 AM

I've not seen anything that indicates the price has risen in line with either a decrease of supply or the increase in demand.

I'm not sure how to interpret this. Does "in line with" mean that you expect a 15% increase in demand to correspond to a 15% increase in price?

Because that's not how supply/demand curves work. The key concept is "elasticity" of demand; the idea that demand is more price-sensitive for some goods than for others. If apples get more expensive, I can always eat oranges instead. If beef gets more expensive, I can switch to chicken or pork. If wine gets more expensive, I can drink beer or cider. If printer paper gets more expensive, however, I can't really find a substitute; I just have to print fewer documents. If airline flights get more expensive, I really don't have an alternate way to get from Toronto to Amsterdam. So there is less "elasticity" in demand for paper than for wine.

I don't even really have the option (short-term) of using less gasoline. My house is where it is, my job is where it is, and I need to get from point A to point B. I suppose I could move (either closer or somewhere better served by public transit), or change jobs (ditto), or buy a new and cheaper car, but those are all major lifestyle changes that aren't going to happen overnight, the way I could decide (overnight) not to fly to Amsterdam this month.

Oil has one of the most inelastic demands there is. Therefore, a minor increase in demand will result in a huge price increase (and the other way around, of course). This is one reason that oil has always been a very volitile good compared to, say, pork futures.

Darat

29th May 2008, 07:56 AM

I'm not sure how to interpret this. Does "in line with" mean that you expect a 15% increase in demand to correspond to a 15% increase in price?

...snip...

No - and I do understand the inelastic argument however from the data I've seen (and that is limited to graphs and reports from the likes of the BBC) oil supply has been keeping up with oil demand. Of course there is the issue of refining capacity which adds a layer of complication (and results in weird blips like Iran increasing production but then having to store a lot of its high-sulphur content crude oil since not as many refiners can deal with it) but again as far as I have seen refining capacity is also keeping up with demand.

Francesca R

29th May 2008, 09:14 AM

Oil has one of the most inelastic demands there is. Therefore, a minor increase in demand will result in a huge price increase (and the other way around, of course). This is one reason that oil has always been a very volitile good compared to, say, pork futures.This is a bit tangential but the volatility of pork belly futures is persistently significantly above that of crude oil.

Darat

29th May 2008, 09:16 AM

I'd always wondered about the soaring price of pork scratchings.

DavidS

29th May 2008, 10:02 AM

dave is this not just putting a bigger straw in the milk,
Not really. It's more like squeezing the bottle, but that's a poor analogy unless you're willing to accept a pretty abstract generalization of "bottle". A better analogy is not sealing the bottle around the straw, so air flows in to replace the milk you suck out. Even better is pushing one fluid into a sponge to displace whatever was there before, and/or to keep it full while you drain fluid out.

"Putting a bigger straw in" is more analogous to drilling more producing wells, which will still only recover whatever oil has the energy and mobility to flow through the rock to get to them. However many wells you've got, you're done when the pressure differential from the reservoir to the bottom of the well is too small or the "oil" saturation is too disconnected to produce at paying rates. (I quote "oil" because the same concept applies to both reservoir liquid and vapor, either or both of which contribute to the surface separator's output where we call the liquid "oil" and the vapor "gas").

Injecting water can reduce the amount of oil left behind when that time comes. With enough injection (or influx from an aquifer, or expansion of a gascap or gas evolved below bubblepoint pressure, or compression/compaction of the reservoir rock itself), the pressure might never decline so far you can't produce something at reasonable rates. However, when the local hydrocarbon phase ("oil" [reservoir liquid HC] or "gas" [reservoir vapor HC]) saturation drops, so does the permeability of that phase.

Injecting water (or gas, or aquifer influx) can displace oil toward wells to keep it flowing longer. Even if the trapped residual saturation is the same number of barrels in the reservoir, trapping reservoir oil at near-bubblepoint pressure leaves what would be fewer "stock tank" barrels behind. (smart guys will notice that trapping reservoir gas at high pressure leaves more hydrocarbon behind than would be trapped at low pressure)

how much extra oil do you recover?
Like my grandfather's haberdasher advised: Depends. How long is a piece of string?

The answer depends strongly on many details of each particular field. How permeable is the reservoir rock? Is it well-connected like one big slab of sand, or is it shattered into discontinuous faultblocks, separated into non-communicating layers, or a collection of more-or-less disconnected blobs? Is it a nice uniform porous medium through which water will flow uniformly, or does the permeability vary manyfold from place to place? Is the porosity more or less evenly distributed, or is most of the volume tied up in tombstone-tight blocks around which most of the flow capacity exists in thin fractures? Is the reservoir more or less level, or is it tipped at severe angles? Is the oil thick and viscous, or light and fluid? Is it oil in the reservoir? Gas? Neither and both (e.g. supercritical fluid)? How does that change when pressure declines? Is there a lot of dissolved gas to slow pressure decline as it bubbles out of the oil, or will it take its compression energy with it by squirting quickly out of the wells, or is the oil just too "dead" for gas to matter much? How squishy is the rock? Will it fail mechanically and pinch off the wells if we let pressure fall too far? Is there a large aquifer that will contribute water as we remove oil? A big gas cap that will expand as pressure declines?

Considering that you've only "seen" the reservoir through a few goop-filled boreholes inches wide and miles long, or by the functional equivalent of farting in the ocean and listening to the bubbles echo, how confident are you that you're right about these things? As one UT professor said about core analyses: "Congratulations! You now know all there is to know about a part of the reservoir that isn't part of it anymore."

And a big question... How much more money are you willing to invest *today* to have another barrel to produce in the distant future? You won't see those "extra" barrels for a long time, typically decades. Your contractors and suppliers cling to that old-fashioned business model and expect to be paid promptly after drilling your well or delivering your pipe. Wimpy customers seem reluctant to pay today for oil you'll be giving them in April 2019.

Working that stuff out is what's been buying my beans for a long time. Evicting old ladies and drowning kittens are just hobbies ;)
From what i underdate this just helps increase the extraction rate!
Sure, maintaining pressure might allow for more reservoir->wellbore pressure differential to drive higher production rates, and can also keep reservoir liquid viscosities low by keeping "gas" in solution with the "oil". The displacement effects can greatly increase ultimate recovery, too.
If you are in the business, are we close to peak oil?? or we there now?
Alas, I'm not sufficiently competent and informed to pick a date (and I suspect the same is true of most people claiming otherwise). It's hard enough to estimate the ultimate recovery and producing lifetime of a specific field with specific data; guessing at recovery from other fields, including those that haven't yet been discovered, is a really dirty business.

How close we are depends strongly on how much you're willing to pay. Seriously -- nobody's going to spend several billiion dollars to develop an oilfield under a mile and a half of ocean a hundred miles from land unless they're fairly confident the oil it will produce can be sold for enough money to make it worth doing. Don't forget that all that income will be spread out over decades, but nearly all the investment has to be made up front -- including a fair chunk of change that has to be spent before you can really decide whether it's worth doing.

Besides, does it really matter whether production truly hits a peak or simply gets outrun by demand? Either way, somebody who wants grease ain't gonna get enough.

diggy70

29th May 2008, 10:12 PM

1 billion barrels oil every 10 days are used.. .. how much longer can this last???
The US uses 25% of that 10 day supply. Not only that oil supply something like 80 to 85 % of the world energy... and there is no alternative to replace 80%... lucky of we could replace 20%..

diggy70

29th May 2008, 10:25 PM

I don't know whether to read that question as serious or not, but it is not the physical amount of oil available that matters, just how many people want to own it. If their number increases (pure speculators or commercial end-users or anything in between--it doesn't matter), then the price goes up until the commitments to own oil balance the obligations to provide it.

You are right, cause I never owned oil till it was like 50 bucks/barrel..But im still buying at 125, so i guess im the speculator..or fundamentalist

Here is the problem oil is demand is high and will go higher. Oil is the blood of modern life. supply and demand is why the price is so high, I'll give 15 to 20% to speculators. But thats why you have market corrections. to shake then off and see what the real price is!!

Badger

29th May 2008, 10:29 PM

Diggy70, I think the best plan is to run in circles, shouting, and waving one's hands in the air.

Thanks for the reservoir info DaveS, and the algae stuff (heh, burn new algae instead old....I love it!) Puppycow!

The Central Scrutinizer

30th May 2008, 04:37 AM

You are right, cause I never owned oil till it was like 50 bucks/barrel..But im still buying at 125, so i guess im the speculator..or fundamentalist

Or the one left holding the bag.

jammonius

30th May 2008, 05:40 AM

The issue with oil is not price; rather, it is supply. Murkans are addicts, right? Hence, the only thing that will bring pain is long lines at the pump, limits on number of gallons, odd/even days that you can get your fix, and such like.

diggy70

31st May 2008, 12:57 AM

everyone is broke ,so when you get lay offs there will be fuel but could be bread lines

Hooloovoo

6th June 2008, 10:58 AM

I've been reading lately about how many eastern and mid-eastern countries subsidize oil costs, and the people living in these places are, at least in part, buying more gasoline because they don't have to pay full price for it. I wonder what would happen to their demand if the subsidizing stopped, and how that would affect prices worldwide.
I'm not saying the price hikes are all the fault of China and India; we Americans still hold the lion's share of the blame for wasteful oil use (And the commodities speculation, along with nutty governments in oil producing countries play their part too). But since we have to really deal with price the increase, our demand has begun to decrease a little. Subsidized countries won't decrease demand until the subsidies are no longer there.
I'd really like to see the algae thing work on a massive scale. That would be way neato.

BenBurch

6th June 2008, 11:10 AM

$136.75 right now - if it closes at that it will be a record.

BenBurch

6th June 2008, 11:52 AM

Now $138.

Record territory and no sign we're ever going to fall much from here.

Franziska

7th June 2008, 12:55 PM

They drive it up for the craziest reasons! It's all greed and it hurts everybody. It might just be a plot by Bush and his oil buddies.

bobrayner

8th June 2008, 02:34 PM

I've been reading lately about how many eastern and mid-eastern countries subsidize oil costs, and the people living in these places are, at least in part, buying more gasoline because they don't have to pay full price for it. I wonder what would happen to their demand if the subsidizing stopped, and how that would affect prices worldwide.

Demand would be reduced, but not drastically. The subsidies encourage inefficient allocation of resources; but it's not free, so people don't just pour petrol down the drain at the taxpayer's expense.

Indian government spends more on fuel subsidies than it does on healthcare.

andyandy

8th June 2008, 03:03 PM

For some perspective on the effect of oil prices around the world, in Ghana the BBC reported that 1 gallon of oil was now five dollars...... which doesn't seem too remarkable until you realise that the average yearly wage is $500. So in effect 1 gallon of oil cost 1% of annual salary, which if it was extrapolated to America would see 1 gallon of oil trading at between $300-$500.

The effect had been a severe inflation of food prices due to transportation costs, with one loaf of bread now costing about a fifth of weekly income (two dollars), and people forced to buy bread by the slice.

Shocking really. So whilst it might be bad for us here in the West, it is devastating for developing countries across the world.

Francesca R

10th June 2008, 08:05 AM

I've been reading lately about how many eastern and mid-eastern countries subsidize oil costs, and the people living in these places are, at least in part, buying more gasoline because they don't have to pay full price for it.Well, strictly, they are not buying less.

Demand would be reduced, but not drastically. The subsidies encourage inefficient allocation of resources; but it's not free, so people don't just pour petrol down the drain at the taxpayer's expense.Gulf states' subsidy of fuel isn't really at taxpayers' expense, the subsidy comes from the huge sovereign wealth that oil has generated for these governments in the first place. Well, I suppose you could say that was "taxpayers' money", but there is little sign of much of it being spent on them.

Indian government spends more on fuel subsidies than it does on healthcare.India's subsidies increase the country's public debt which will have to be paid for by future generations, from tax or by inflating the debt away with a large FX devaluation. (Probably)

Francesca R

10th June 2008, 08:06 AM

They drive it up for the craziest reasons! It's all greed and it hurts everybody. It might just be a plot by Bush and his oil buddies.Who drives it up? For what reasons? And how?

The Central Scrutinizer

10th June 2008, 08:51 AM

Who drives it up? For what reasons? And how?

"They" do. Why and how? Only the Illuminati knows for sure, and they ain't talking.

Francesca R

10th June 2008, 09:01 AM

Also, and unrelated, "Franziska" is uncannily close to my name. . .

BenBurch

10th June 2008, 10:45 AM

Well, there is some drive up just from mass speculation, but a futures market is all about speculation.

Suppose you own a refinery. You need to know that in three months you have oil, and so you can make financial plans you want to know how much that oil is going to cost you. So, you buy a futures contract and lock in a price in three months.

Suppose you own an oil well, and you similarly want to plan for your future. You SELL a futures contract for the oil you know you will be able to pump out in three months, and you have now got a stable financial footing.

Futures are not evil.

Now, people who do not consume crude oil do buy futures and hold them to re-sell later if they price goes up. Of course, if they are wrong, and it goes down, they lose money, and their activity does tend to drive up the price when prices tend up, but they also drive it DOWN, when prices tend down. However, the fundamental supply is the same (more or less) and the fundamental demand is the same (more or less) and they are just taking advantage of fairly small variations in those two factors.

However, when something happens, like Israel threatening to nuke Iraq into a sheet of glass, then creates doubt that Iraqi oil will be available at any price in the future, and so people who NEED to have that supply of oil to keep their refinery running will be willing to pay more for those contracts rather than go out of business. This cost they pass along.

This is why gasoline goes up on news.

JonnyFive

10th June 2008, 11:14 AM

Also, and unrelated, "Franziska" is uncannily close to my name. . .

It's a conspiracy!

Tippit

10th June 2008, 11:25 AM

Who drives it up? For what reasons? And how?

Gee, I don't know, maybe OPEC (http://en.wikipedia.org/wiki/OPEC)? You know, the cartel.

car·tel (kär-tl)
n.
1. A combination of independent business organizations formed to regulate production, pricing, and marketing of goods by the members.

Dymanic

10th June 2008, 11:47 AM

Gee, I don't know, maybe OPEC (http://en.wikipedia.org/wiki/OPEC)? You know, the cartel.
OPEC's power to control oil prices depends on its excess pumping capacity. They don't have as much of that as most people assume, and you can expect to see their influence continue to decline as their production peaks.

Consider the aftermath of the 1973 OPEC embargo: increased fuel conservation and a glut of oil on the global market. The consumer has plenty of power in this. Think of it as a bidding war. Every time you buy a gallon of gas at the price being asked, you're beating out some poor schmuck who can't afford to buy that gallon, and will have to do without it.

DavidS

10th June 2008, 12:48 PM

OPEC's power to control oil prices depends on its excess pumping capacity. They don't have as much of that as most people assume, and you can expect to see their influence continue to decline as their production peaks.
OPEC's power to lower oil prices depends on its excess production capacity. Their power to raise oil prices by restricting production depends more on their political will and financial resilience to defer income by restricting production, and the distribution of excess production capacity across other sources (including potential OPEC cheaters or conservation) that might replace their reduced production.

Dymanic

10th June 2008, 07:31 PM

OPEC's power to lower oil prices depends on its excess production capacity. Their power to raise oil prices by restricting production depends more on their political will and financial resilience to defer income by restricting production, and the distribution of excess production capacity across other sources (including potential OPEC cheaters or conservation) that might replace their reduced production.
Fair enough. But I think the whole thing can appear quite different depending on how you chose to look at it. If OPEC could increase production, but they don't, you could choose to see that as them deliberately restricting production in order to drive up price, but it's not at all clear to me that that's really what's going on.

There seems to be a strong tendency to approach the issue from a standpoint of motives; specifically, other people's motives. Take a camera crew to any filling station in the US, and in five minutes you can have a clip of some Joe Sixpack quacking on about high fuel prices being all about the oil companies and the A-rabs as he pumps gallon after gallon of fuel into an enormous SUV. Try informing him and that neither OPEC nor the oil companies actually have total control over price, that the owner of the station he's buying gas from may be making little or no profit on the fuel at all (but rather from sales of candy bars and cigarettes inside), and that analysts do not presently see a significant shortage of oil on the market, and you'll likely meet with considerable resistance to those ideas. Joe Sixpack doesn't want to hear that he and millions of others just like him are at least as responsible for the rising prices as anyone. He wants his gas, and he wants it at a price he can afford, but it's not just that he wants that; he feels he has a right to it.

BenBurch

11th June 2008, 06:26 AM

See related thread; http://forums.randi.org/showthread.php?t=115617

Almo

11th June 2008, 07:14 AM

He wants his gas, and he wants it at a price he can afford, but it's not just that he wants that; he feels he has a right to it.

Yeah. After living in the UK and Canada where gas prices are higher, I really don't have sympathy for people whining about gas prices where they are in fact low, and they drive SUVs.

The Central Scrutinizer

11th June 2008, 08:07 AM

There seems to be a strong tendency to approach the issue from a standpoint of motives; specifically, other people's motives. Take a camera crew to any filling station in the US, and in five minutes you can have a clip of some Joe Sixpack quacking on about high fuel prices being all about the oil companies and the A-rabs as he pumps gallon after gallon of fuel into an enormous SUV. Try informing him and that neither OPEC nor the oil companies actually have total control over price, that the owner of the station he's buying gas from may be making little or no profit on the fuel at all (but rather from sales of candy bars and cigarettes inside), and that analysts do not presently see a significant shortage of oil on the market, and you'll likely meet with considerable resistance to those ideas. Joe Sixpack doesn't want to hear that he and millions of others just like him are at least as responsible for the rising prices as anyone. He wants his gas, and he wants it at a price he can afford, but it's not just that he wants that; he feels he has a right to it.

Bingo.

I always hope that one of those idiot reporters is there when I am filling up, but it never happens. I suspect the conversation would go something like this:

IR (Idiot Reporter): What do you think about these gas prices?
Me: What about them?
IR: Do you think they're too high?
Me: Compared to what?
IR: Ummm....uhhhh...errrr...compared to last year?
Me: Well, lot's of things are more expensive than they were last year.
IR: Ummm....uhhhh...errrr...so you don't think they're too high?
Me: "Too high" implies that there is a "correct" price for gas. I can't offer an opinion on whether they are "too high", without knowing what the "correct" price is, or whether there even is one.
IR: Uhhhhhhhhhh.....Back to Roger in the studio

Francesca R

11th June 2008, 09:50 AM

Hmm, if you are buying "gas" then you think the gas you get in your tank is worth more than the money you give over, so the price it actually low :)

JonnyFive

11th June 2008, 11:23 AM

Hmm, if you are buying "gas" then you think the gas you get in your tank is worth more than the money you give over, so the price it actually low :)

Well, affordable, anyway. Whether or not it's "low" kind of depends on what you're comparing it to. Compared to six years ago? Hell no! Compared to what they're paying in the UK? Hell yes!

Francesca R

13th June 2008, 03:12 AM

I was being slightly facetious, comparing the petrol to the amount of money it costs, and pointing out that if you would rather have the petrol than the money (because you buy it) then the price is lower than the value (to you) of the fuel :)

JonnyFive

13th June 2008, 07:26 AM

skepticalbeliever

14th June 2008, 07:45 PM

I don’t understand why liberals aren’t elated over the news of high oil prices. This means less use of gas guzzlers. If you look at a demand curve, you see that if you want to limit the use of a commodity, than you should raise the price. Well it seems that high oil prices are having the effect of putting airliners and Hummer dealerships out of business. Therefore, people like Barak O’Bama should praise oil executives who supposedly make hundreds of millions at the expense of consumers.

High oil prices are the only cure for global warming. If gas costs 2.00$ per gallon, than people will use more of it.

Dymanic

14th June 2008, 10:14 PM

High oil prices are the only cure for global warming.
High oil prices are an absolute disaster for global warming along with other environmental issues, because the higher those prices go, the more reliance there will be on even dirtier sources of energy, and the more economies suffer, the more difficult it will become to find support for environmental measures.

skepticalbeliever

15th June 2008, 07:40 PM

High oil prices are an absolute disaster for global warming along with other environmental issues, because the higher those prices go, the more reliance there will be on even dirtier sources of energy, and the more economies suffer, the more difficult it will become to find support for environmental measures.

Explain which types of dirtier sources of energy will be used. I'm no expert in this area, but it seems that people are beginning to use solar and wind power now as a result of high oil prices. If gas costs $ 2.00 per gallon, than there will be a lot more hummers and SUVs on the road. That is for certain.

Most people don’t care about the environment to the point where they will purchase a fuel efficient vehicle if there is no economic incentive. That I know for a fact.

BenBurch

15th June 2008, 07:56 PM

Explain which types of dirtier sources of energy will be used. I'm no expert in this area, but it seems that people are beginning to use solar and wind power now as a result of high oil prices. If gas costs $ 2.00 per gallon, than there will be a lot more hummers and SUVs on the road. That is for certain.

Most people don’t care about the environment to the point where they will purchase a fuel efficient vehicle if there is no economic incentive. That I know for a fact.

Coal.

We have enough coal for about a century even if we process it into liquid fuels and "town gas" to replace oil and natural gas.

Coal itself is a useful fuel.

The process that makes liquid fuel pollutes hideously.

Town gas production makes coke as a byproduct, and that is almost pure carbon. It can be burned in powerplants and in steam locomotives and in steam ships. It also can be used in home heating directly in a coal furnace.

If we go back to doing that, CO2 levels will skyrocket, and the air in and around cities will be just hideously polluted.

And then there are tar sands and oil shales. The processes that make those into usable liquid fuels are also polluting, though again, both can be burned in their solid forms in a variety of ways.

Dymanic

15th June 2008, 09:36 PM

Explain which types of dirtier sources of energy will be used.
BB has pointed out the first one that comes to mind: coal. It's also worth noting that oil itself gets dirtier as it gets more expensive. Petroleum refining is already the single greatest industrial consumer of energy in California. The cruder the crude, the more energy it takes to turn it into nice, clean gasoline -- and never mind what happens when you start using oil shales and tar sands (which is one of the things you do when you start running out of light sweet crude).

Most people don’t care about the environment to the point where they will purchase a fuel efficient vehicle if there is no economic incentive.
I certainly don't disagree with that. Enthusiasm about environmental causes often tends to wane quite a bit at about the point where it starts looking like it may involve some serious changes in cherished lifestyles, and if you want to see just how little regard for those issues people can demonstrate, then really put the squeeze on them economically and see what happens then (which is precisely my point). But honestly, I don't think a lack of economic incentive is likely to be much of a problem. Mexico has peaked, Indonesia is dropping out of OPEC, and trade-in values on SUVs have tanked (so to speak). The party is over.

it seems that people are beginning to use solar and wind power now as a result of high oil prices.Industry accounts for about a third of the total energy used in the US, with the transportation sector a close second at 28%. Petroleum accounts for about 96% of that. I've seen solar powered cars, and while that strikes me as an idea with potential, it still needs a lot of work. A wind powered car sounds like an extremely cool idea. There's an Eastbound stretch of Interstate 10 between LA and Phoenix where that might actually work on some days. Hey, how about a wind powered Segway!

BenBurch

16th June 2008, 08:11 AM

Looks like we may bruise $140/bbl today...

Mister Agenda

16th June 2008, 09:13 AM

BenBurch

16th June 2008, 11:07 AM

I've heard of something called 'green crude', an oil-substitute based on algae that can be refined in the same sort of refinery as regular oil is. It would absorb CO2 when made before releasing it when burned, so it would, on balance, contribute much less CO2 than burning oil does. Does anyone see a future for this stuff?

Absolutely.

Especially as we genetically modify the algae to optimize the oil production.

It does not require arable land, and can be watered with sewage (in fact it would likely prefer that) and appears to have a large energy gain.

Were the USA a sane nation, we'd have a "Manhattan Project" doing JUST this right now.

Mister Agenda

17th June 2008, 01:57 PM

Thanks! I see there's a thread on it now over in Science, no one seems to know of any specific barriers that would make it impractical, although we've been disappointed before.

diggy70

12th July 2008, 12:04 AM

Matt Simmons on fast money

http://www.cnbc.com/id/25640227

The Central Scrutinizer

12th July 2008, 07:49 AM

Matt Simmons on fast money

http://www.cnbc.com/id/25640227

So?

Blackadder

20th July 2008, 11:47 AM

some data from my backyard (Netherlands and Germany)

Netherlands The 2007 fuel tax was € 0.684 per litre or $ 3.5 per gallon. On top of that is 19% VAT over the entire fuel price, making the Dutch taxes one of the highest in the world.

Fuel taxes in Germany are €0.4704 per litre for ultra-low sulphur Diesel and €0.6545 per litre for conventional unleaded petrol, plus Value Added Tax (19%) on the fuel itself and the Fuel Tax.

The strength of the Euro makes it a little easier for us. A large part of the price is taxes, but it was 72% of total price for tax in 2004, and now it is 61% tax in 2008.

countries and price/ gallon (data from cnn around in May 2008)

* 1. Bosnië-Herzegovina $10,86
* 2. Eritrea $9,58
* 3. Norway $8,73
* 4. United Kingdom $8,38
* 5. Netherlands $8,37
* 6. Monaco $8,31
* 7. Iceland $8,28
* 8. Belgium $8,22
* 9. France $8,07
* 10.Germany $7,86
* ...
* 111. United States $3.45

cheap (in dollars)

* 1. Venezuela 12 cents
* 2. Iran 40 cents
* 3. Saudi Arab 45 cents
* 4. Libya 50 cents
* 5. Swaziland 54 cents
* 6. Qatar 73 cents
* 7. Bahrein 81 cents
* 8. Egypt 89 cents
* 9. Kuwait 90 cents
* 10. Seychelles 98 cents

So Europe must be kicking and screaming right? No, mostly we drive smaller cars and have short distances in our tiny crowded countries.

Plus I know the tax money is used for my country to pay for roads but also education, health, pensions, social security. Most countries at the very top of the price list are also the happiest and safest countries in the world. It's the price we pay.

diggy70

20th July 2008, 11:06 PM

Plus I know the tax money is used for my country to pay for roads but also education, health, pensions, social security. Most countries at the very top of the price list are also the happiest and safest countries in the world. It's the price we pay.

you just dont get it. There is no stopping oil. 150 oil is not the top thats the problem. i'll say like 400 to 500 will be the top. shipping crap from china dont work no more. our whole system is oil. 90 % of our job down the drain.

JonnyFive

22nd July 2008, 08:25 AM

you just dont get it. There is no stopping oil. 150 oil is not the top thats the problem. i'll say like 400 to 500 will be the top. shipping crap from china dont work no more. our whole system is oil. 90 % of our job down the drain.

It's down to about $127 a barrel now.

$400 or $500 is probably a bit unrealistic in the near future, given that at least one alternative exists to create a light sweet crude equivalent (so-called "green crude" - we've talked about it on here before) that probably costs less than that.

You get oil that expensive, and then the alternatives that are in place start to be more cost effective and take hold in the market. I'm sure the posters with more specific experience with energy markets can chime in on that point.

Mister Agenda

22nd July 2008, 01:58 PM

It's down to about $127 a barrel now.

$400 or $500 is probably a bit unrealistic in the near future, given that at least one alternative exists to create a light sweet crude equivalent (so-called "green crude" - we've talked about it on here before) that probably costs less than that.

You get oil that expensive, and then the alternatives that are in place start to be more cost effective and take hold in the market. I'm sure the posters with more specific experience with energy markets can chime in on that point.

Not an energy market guy, but I read somewhere that it costs about $180.00 currently to produce a barrel of green crude, so I imagine it would be marketable if oil hits $200.00 a barrel.

JonnyFive

23rd July 2008, 05:33 AM

Not an energy market guy, but I read somewhere that it costs about $180.00 currently to produce a barrel of green crude, so I imagine it would be marketable if oil hits $200.00 a barrel.

Cool. If you could find a source for the figure too that would be nice, because I hadn't seen one yet and was very interested in knowing what kind of costs would be involved.

PadainFain

23rd July 2008, 08:30 AM

Long time watcher, first time poster. :)

Since this is a skeptics' forum perhaps the question one should ask is:

Who stands to gain from higher oil prices?

I've worked in the Oil industry and my fiancee's father still does. Neither he nor I have seen anyone on the inside panicking about the lack of reserves. To the best of my knowledge there is no such lack. But if demand outstrips supply then prices rise, share prices rise, profits rise. It's a win:win situation for the Oil companies.

There are large untapped resources in the ex-Soviet states which have already been apportioned by the big players but as yet are underused because there is no requirement to use them.

Oil reserves will last a lot longer than people seem to believe but I'm sure the prices will continue to rise well ahead of inflation.

None of this of course detracts from any environmental message about the use of fossil fuels.

Francesca R

23rd July 2008, 09:10 AM

Who stands to gain from higher oil prices? Oil producers, net of the (increasing) cost of production and the (politically-influenced) "underinvestment" in exploration.

Neither he nor I have seen anyone on the inside panicking about the lack of reserves. "Lack" or reserves for what? You can't lack oil unless you do not have it. Yes everyone who is able to buy some can get some.

To the best of my knowledge there is no such lack. But if demand outstrips supply then prices rise, share prices rise, profits rise. It's a win:win situation for the Oil companies.In much of the world the companies are owned by sovereign states (who don't have share prices ;) )

There are large untapped resources in the ex-Soviet states which have already been apportioned by the big players but as yet are underused because there is no requirement to use them. The rights associated with many not-yet-extracted oil reserves have not been allocated according to market mechanisms, which disrupts the idea that oil supply will respond to market-determined parameters.

Oil reserves will last a lot longer than people seem to believe but I'm sure the prices will continue to rise well ahead of inflation.
They have not always done this. As others have argued, there is a self-correcting force that would act against the real oil price increasing persistently. At some point it becomes susceptible to substitution.

ETA--Welcome :)

soylent

24th July 2008, 02:32 AM

Mister Agenda

24th July 2008, 11:38 AM

I didn't find a link for the $180.00 a barrel estimate for green crude, but these folks claim to be able to produce it for about $87.00 US a barrel if I've correctly converted from 35 Euro cents a litre. I'm skeptical about the claim, it seems like a big leap from the $20.00 US a gallon it was costing not so long ago, but maybe they have a breakthrough. If so, it would be worth marketing as quickly as they can get their production up.

http://ec.europa.eu/environment/etap/pdfs/sept06_algae_energy.pdf

Blackadder

28th July 2008, 02:29 PM

I read we use 86,400,000 barrels/day in the world, but we produce only 85,000,000/day

So right now we a short 1,400,000 barrels a day. This is ok since we have a load in stock. But sooner or later will be gone and we need to find more or start using less.

Some say the OPEC can't increase production, because their major fields are at or almost at peak production, and will only get down. (This means they still can produce for many many many years, but will yield less and less every year. remember 5% less of a huge amount is still a huge amount. It only illustrates that they cannot increase production)

Other countries still can increase production. But why should they? For america? For china? They think: let's produce as little as possible, because everything we don't sell today for $130 we can sell in years to come for $200 or more? They will pay.

Sounds reasonable. I would do the same.

So we can find a few new sources... But most are very hard to come by, even if it would go over $250.

Instead of investing billions of $ trying to get that hard to get oil, we might be better of investing those billions in research of other energy sources.

Mister Agenda

29th July 2008, 08:04 AM

Good point on holding out for higher prices. One of the ironies of investing in alternate fuel sources or new drilling or conserving is that it can lead to lower gas prices immediately if the oil producers believe their resource may be worth LESS in the future. Another one is that lower oil prices stifle the incentive to develop alternative energy sources or new oil fields. It can be of frustrating to observe the cycle persisting without being broken.

RecoveringYuppy

29th July 2008, 08:14 AM

$400 or $500 is probably a bit unrealistic in the near future, given that at least one alternative exists to create a light sweet crude equivalent (so-called "green crude" - we've talked about it on here before) that probably costs less than that.
Have to keep in mind that most of the prices cited for so-called "green crude" are based on current prices of the various feedstocks they use. Ramping up production of "green crude" would (in some cases already is) driving up the cost of the feedstocks. It's even debatable if some of the feedstocks for the various processes can be made in significant quantity at all.

JonnyFive

29th July 2008, 08:51 AM

Have to keep in mind that most of the prices cited for so-called "green crude" are based on current prices of the various feedstocks they use. Ramping up production of "green crude" would (in some cases already is) driving up the cost of the feedstocks. It's even debatable if some of the feedstocks for the various processes can be made in significant quantity at all.

I thought green crude was made using algae, not feedstock. Perhaps I am referring to the wrong thing? I meant the algae-based substitute for light sweet crude.

Fuel using feedstock seems to be a bad idea in general. Better to use a higher density crop (like sugar cane in Brazil) to make ethanol.

RecoveringYuppy

29th July 2008, 05:46 PM

I thought green crude was made using algae, not feedstock. Perhaps I am referring to the wrong thing? I meant the algae-based substitute for light sweet crude.
By "feedstock" I meant whatever the bio-fuel is made from, which in the case of oil made from algae, would be algae.

Algae may be the most promising feedstock for energy harvesting but it's far from given that it can be produced in quantities sufficient to make a dent in petroleum usage. Human energy needs currently satisfied by petroleum would require the equivalent of harvesting 10% of all plant life on Earth. And that's assuming an optimistically high efficiency and doesn't factor in any growth.

PadainFain

29th July 2008, 06:26 PM

Oil peaked recently at $146/barrel and has been falling since; now we're back down to $124 again. Demand is down quite a bit, especially in the US where gas has been so cheap for so long.

As long as the prices are moderate and there are no strong competitors, the people who have oil.

If oil prices get too high, the people who want to sell alternatives. One example would be electric vehicle companies, battery companies and the utillities who supply coal or nuclear sourced electricity for them(since you'll probably be charging at night that means baseload, not hydro or NG which are seldom used for anything but peaking). Another might coal mining companies like Sasol who turn coal into diesel-like fuel using CTL. Providers of public transportation and sellers of high efficiency vehicles are also likely to profit.

I'm happy to bow to superior knowledge, yourself and the previous poster who quoted me. However oil is not only used for fuel. Plastic? Lubricants? And yes there are alternatives to Petrol, Diesel and Kerosene but how many users of these fuels would actually go out and buy them? Some industries might but your average Joe? No. Will your airline suddenly refuel on something else? No.

Maybe I'm overly cynical but the kinds of changes that make alternative fuels take market share from oil products do not take place overnight. The Oil companies can milk the market as much as they want. They can rape and pillage! And once the competitors get enough market share to be a blip on the radar? They can drop the prices. They can pull the strings on their puppet politicians to reduce the subsidies on alternative fuels. They can buy these competitors out.

Personally I think that the price of oil and scaremongering about the environment will, somewhat ironically, result in a massive uptake in nuclear fission power and that nearly everything we power with oil products will be running on highly efficient, high storage batteries in our lifetimes. One day maybe we'll master fusion, or properly work out how to use geothermal energy (although I think that will impact on the environment in wonderfully insane ways), or put up a solar panel ring a la Larry Niven or something equally clever. There are water-based lubricants that can replace the oil ones and somehow we'll overcome our desire for plastics.

One can only hope but I believe that for the medium term oil prices will outstrip inflation by a fair mile.

Blackadder

29th July 2008, 06:59 PM

By "feedstock" I meant whatever the bio-fuel is made from, which in the case of oil made from algae, would be algae.

Algae may be the most promising feedstock for energy harvesting but it's far from given that it can be produced in quantities sufficient to make a dent in petroleum usage. Human energy needs currently satisfied by petroleum would require the equivalent of harvesting 10% of all plant life on Earth. And that's assuming an optimistically high efficiency and doesn't factor in any growth.

Yesterday I happened to read about algae. Maybe you know we (dutchmen) made quite a lot of our land from the sea. Those pieces of new land are called Polders. We have a lot, most are small en centuries old, but in the 20th century we made a few final ones, very big ones, called Flevopolder and NorthEastPolder. A 3rd one was in the planning but never got finished because it was decided that we had enough land area and the area was better of being water for recreational purposes. But we finished the dykes around it. It's a big lake now. If that algae for fuel is going to work, they claculated we just need put the whole lake full of algae to grow enough for the total energy consumption of the Netherlands. I have not checked if this is true, but it sounds promising. The area needed is exactly 2% of our total land area. (but it's water now so we would not lose any actual land) Sounds like a good deal.

RecoveringYuppy

29th July 2008, 07:24 PM

If that algae for fuel is going to work, they claculated we just need put the whole lake full of algae to grow enough for the total energy consumption of the Netherlands. I have not checked if this is true, but it sounds promising.
Well, the first question I have about that, is what technology can actually use a lake to grow the algae? The methods usually cited as "most promising" grow a very specific species of algae in "reactors" where the culture can be kept pure.

http://www.greencrudeproduction.com/solution.html

And completely harvesting the algae from a lake means nothing else is going to be growing there and what impact would that industry have on the recreational uses of the lake?

Blackadder

30th July 2008, 08:08 AM

Well, the first question I have about that, is what technology can actually use a lake to grow the algae? The methods usually cited as "most promising" grow a very specific species of algae in "reactors" where the culture can be kept pure.

http://www.greencrudeproduction.com/solution.html

And completely harvesting the algae from a lake means nothing else is going to be growing there and what impact would that industry have on the recreational uses of the lake?

What I heard was that the lake would be totally lost for anything but the algae farming. But we have many bodies of water so that is a small sacrifice to make if it means we van make the energy for a nation. It had another major advantage, the algae would feed on the huge surplus of cow and pig manure we have.

But I guess there must be some major problems, because these things have been discussed by university professors and Shell since 1994 , and nothing has happened yet. So either it was not cost effective in the past or there are technical problems.

RecoveringYuppy

30th July 2008, 09:29 AM

But I guess there must be some major problems, because these things have been discussed by university professors and Shell since 1994 , and nothing has happened yet. So either it was not cost effective in the past or there are technical problems.
I'll think I'll try to clarify my main point and point out that there is a problem more fundamental than cost or the current technical issues. The problem is simply the scale of energy flow on this planet.

Natural photosynthesis is not terribly efficient at capturing sunlight. The entire biomass of Earth captures .1% of the energy falling on the Earth. Human energy needs are moving in to that range, having just past .01%.

Those numbers have some scary implications if we try to use biomass for any significant portion of our energy needs:

The limits to what we can harvest via biomass are already in sight. We're rapidly moving in to scales of energy usage that compete with all of the rest of life on Earth.

We'd be talking a major change in the biosphere. If we do it by harvesting natural growth we're talking about harvesting noticable percentages of all life on Earth. For example: 10% of all photosynthetic energy to replace petroleum.

Alternatively, if we do it by harvesting selected species grown in a more artificial manner, those species we select to do that would become the most "biomassive" species on Earth, outmassing any other species.

The energy contained in the food the human race eats is .018 Zettajoules/year if I've calculated correctly. That's about 0.0005% of the energy falling on Earth. Harvesting energy via plants might (repeat might) be less intensive than our food crops but how much less intense would it have to be to make up for the fact that we'd talking scaling up the energy harvest by 10, 100 or even a thousand times?

To me, the prospect that we might pump all the oil out of the ground, is a lot less scary than finding out we've pumped all the algae out of the bottom of the food chain.

http://en.wikipedia.org/wiki/Solar_power This link has some of the numbers I've cited. There's plenty of solar power on Earth, but photosynthesis collects only a small portion of it.

JonnyFive

30th July 2008, 10:14 AM

I'll think I'll try to clarify my main point and point out that there is a problem more fundamental than cost or the current technical issues. The problem is simply the scale of energy flow on this planet.

Natural photosynthesis is not terribly efficient at capturing sunlight. The entire biomass of Earth captures .1% of the energy falling on the Earth. Human energy needs are moving in to that range, having just past .01%.

(snip)

When you say the human energy needs, do you mean the energy needs from petroleum-based sources alone or from all sources?

RecoveringYuppy

30th July 2008, 01:11 PM

The .01% is for all human energy needs. Except for the number about the amount of energy we consume as food, the numbers are derived from the wikipedia article I cited.

I'm not sure how literal Blackadder was being but he said the project he was talking about was meant to address all of the Netherlands energy needs.

But the argument doesn't change much if you focus solely on replacing petroleum with bio feedstocks. We're well in to levels of energy that surpass that captured by any single species and are moving in to the realm of comparing to the entire biosphere.

RecoveringYuppy

30th July 2008, 01:17 PM

In an earlier post I claimed some numbers about how petroleum compares to biomass. The link below puts petroleum use at .18 ZJ per year. The wikipedia link on solar energy I posted puts photosynthesis at capturing 3 ZJ per year. That would mean diverting 6% of all photosynthesis to production of petroleum replacements. And that's with 100% efficiency and factors in no growth.

http://en.wikipedia.org/wiki/World_energy_resources_and_consumption#Oil

Blackadder

30th July 2008, 03:42 PM

Ok I tried to find some more reliable information about this. Didn't find anything from scientific origin. Most people that wrote about it (in Dutch so I won't give links) were not so optimistic. They say that most algae farm advocates make miscalculation in the amount of tons / ha algae farming would produce. Or they don't factor in the amount of energy that is needed to produce it. In our case in Holland, we might not have enough sun to make this happen. It should be done in Africa for really good production.

But the conclusion seems to be it still might be promising, algae could produce more than other biofuel sources and they take in more CO2. Shell has started with local projects (Hawaii, and Flevoland , the Netherlands)

KLM is a partner in making algae fuel for their aircraft. See http://www.algaelink.com/
(Note I have no idea how accurate that commerical website is)

RecoveringYuppy

30th July 2008, 06:01 PM

Or they don't factor in the amount of energy that is needed to produce it. In our case in Holland, we might not have enough sun to make this happen.
You might want to check these facts and calculations, but:

The Netherlands are 41.5 thousand sqare km, which is 41.5 billion square meters.
Solar insolation at that latitude is 2.67 KwH per sq meter per day on average
You said the lake in question was 2% of the area of the Netherlands.
The population of the Netherlands is 16.4 million people.
So there are 135 KwH falling on that lake for each person in the Netherlands. That might be livable if we could get 100% conversion. But 100% conversion is a pipe dream. In fact I cited earlier that one tenth of one percent is the average of natural photosynthesis. At one tenth of one percent that works out to approximately no KwH per day per person. Even if we could get 10% it would only be 13.5 Kwh per day per person. Not familiar with energy consumption in the Netherlands but I'd bet it's in the 100 KwH/day/person range, not 13.5.

soylent

30th July 2008, 11:14 PM

Maybe I'm overly cynical but the kinds of changes that make alternative fuels take market share from oil products do not take place overnight. The Oil companies can milk the market as much as they want. They can rape and pillage! And once the competitors get enough market share to be a blip on the radar? They can drop the prices. They can pull the strings on their puppet politicians to reduce the subsidies on alternative fuels. They can buy these competitors out.

You just have to make sure there's a (small) glut of oil by reducing consumption. It doesn't matter how you combine substitution, efficiency, less consumption or increase in oil production to make that happen. Too much oil is what brought it down to $10/barrel in 1998; but of course oil can't stay that low without consumption growing at a brisk pace.

There's no shortage of ways to do that. "Commuter towns" could convert to actual towns with businesses, schools and stores to provide some local jobs. People could use heat pumps instead of heating oil. People could buy more efficient vehicles(seen the price of SUVs lately?). There could be a recession and less people might afford to vaccation on the other side of the globe. Public transport might be privatized and start functioning smoothly for a change. Goods might increasingly be transported by rail instead of trucks. Canada might start using nuclear power to produce oil from tar sands instead of natural gas. Nuclear power might provide cheap and clean enough process heat to make syncrude from coal gasification acceptable(doesn't matter if it's in the US or China). Railroads might be electrified instead of continuing to use diesel. Increasing cost of transportation might encourage buying locally produced stuff to some extent(I'm not too hopeful; giant container ships are monstrously efficient).

I can keep listing ways in which petroleum consumption could be reduced all day, but it's way too complex and I have far too little data to actually guess which will really happen and when.

Francesca R

8th August 2008, 08:23 AM

Im going say 200 us dollar oil in the next 12 months(diggy's prediction).Difficult predicting commodities . . .

http://h1.ripway.com/FrancescaR/oilchart.jpg

Francesca R

11th September 2008, 05:58 AM

you just dont get it. There is no stopping oil. 150 oil is not the top thats the problem. i'll say like 400 to 500 will be the top. . . . <<. . . . echoes . . . . >>

*bites tongue*

The Central Scrutinizer

11th September 2008, 06:16 AM

The gold bugs have been awfully quiet lately.

JonnyFive

11th September 2008, 12:34 PM

<<. . . . echoes . . . . >>

*bites tongue*

Oh I'm sure it'll get there eventually... just not on a timeline that makes it particularly relevant to the current thread.

The Central Scrutinizer

11th September 2008, 01:36 PM

Oh I'm sure it'll get there eventually... just not on a timeline that makes it particularly relevant to the current thread.

Will the JREF Forum still exist when it does?

OneDollarWilliam

11th September 2008, 02:54 PM

soylent

11th September 2008, 04:22 PM

The gold bugs have been awfully quiet lately.

Sleep tight, don't let the gold bugs bite.

Nah, I'm actually more worried about the bed bugs; I hear they're making a comeback.

kookbreaker

12th September 2008, 07:54 AM

Sleep tight, don't let the gold bugs bite.

Nah, I'm actually more worried about the bed bugs; I hear they're making a comeback.

If you had invested in Beds back in 2006, you would be asleep by now.

Puppycow

15th September 2008, 03:55 AM

OPEC cut production yesterday to keep prices from dropping below $100 a barrel. It's holding today around $101. While I don't think we'll ever see it as cheap at 10 years ago I think consumer pressure can hold the price in the $100 to $150 range for quite a while.

It didn't work, either. Oil is back down to a 2-digit number again (http://www.bloomberg.com/apps/news?pid=20601087&sid=aTPdzmIgzZ4U&refer=home). This on a day when the dollar lost big against other currencies.

Darat

15th September 2008, 03:59 AM

Francesca R

15th September 2008, 04:04 AM

It is moderately amusing when some price is commentated on as "nosediving" and "plummeting to depths" that were far above and beyond the highest heights imaginable not too long ago.

Just thinking

15th September 2008, 05:47 AM

I think that the current trend (oil prices dropping despite cutbacks) is due in part to the perceived effort (at least in the media) of some glimmer of the USA being serious about going after alternative energies. Plus, we are using our reserves when needed, and not turning to the OPEC powers for every hiccup in the economy, or bump in the weather. Not to mention that right now, of the two presidential hopefuls, it's starting to look like the one that wants to drill here, drill now is showing signs of life.

JonnyFive

15th September 2008, 06:36 AM

And of course that fact is being headlined all over the media just as it was when it went over $100 for the first time because that magic figure represented the point at which the world started nose diving to Armageddon....

Psychologically, I guess, the change from two digits to three digits is significant.

It's like in Mario... you used to be able to only get up to 99 lives. That was pretty great, but in later games you could actually go over that and get 100 lives... or 120... or whatever.

Well, it's like a break-point. All of sudden, you're like "holy crap, I can have all these lives." It makes you feel really good about yourself.

It's like that, only with oil, and in reverse.

Also, OPEC represents Bowser and the princess is George Bush.

Francesca R

15th September 2008, 06:54 AM

Psychologically, I guess, the change from two digits to three digits is significant.JonnyFive: "Psychologically, I guess, the change from two digits to no digits is significant."

Lehman shareholder: BIFF, THUMP!! *stomps off* . . . .

Chaos

15th September 2008, 07:49 AM

In economics, it´s (almost) all about perceptions and expectations. And I can still clearly remember the doom-and-gloom when, during Desert Shield/Desert Storm, analysts predicted that war in the Gulf might push oil beyond $25 per barrel!

JonnyFive

15th September 2008, 08:16 AM

JonnyFive: "Psychologically, I guess, the change from two digits to no digits is significant."

Lehman shareholder: BIFF, THUMP!! *stomps off* . . . .

Well, the change from two digits to no digits is pretty significant for non-psychological reasons too, I'd say. :)

That would be like when Bowser nails you with a fireball or something.

Oh wait, I'm using OPEC for Bowser. Uh... I think my analogy is breaking down.

rjh01

15th September 2008, 06:33 PM

I think $200 barrel oil within the next year is a safe bet. I have made that prediction elsewhere on this forum.

Actually I think it is a good thing because about the only things that can stop it are a downturn in USA, China or Japan.

Do I win a $1m? I predicted the only thing that can stop the price of oil going up is a downturn in a major economy back in May. Now the price is going down and so is the US economy.

Puppycow

16th September 2008, 01:53 AM

92.06/barrel according to Bloomberg today. Seems to be falling almost as fast as it rose.

Not sure if it's a buy yet. There must be a bottom somewhere. Who knows if it's at 90 or 80 or 40 or 30 (I'd be surprised if it's as low as 30 though)

Francesca R

16th September 2008, 02:15 AM

Do I win a $1m? I predicted the only thing that can stop the price of oil going up is a downturn in a major economy back in May. Now the price is going down and so is the US economy.Thus continues the time-honoured tradition of punters to hedge their bets so that they are "always right".

rjh01

17th September 2008, 12:20 AM

Actually I could easily have been wrong. If the oil price had stabilized without a downturn in one of the major economies I would have been wrong. As it is the poor state of the US economy hit the headlines at the same time as the downturn in the oil price.

UnrepentantSinner

17th September 2008, 04:13 AM

The gold bugs have been awfully quiet lately.

Wasn't diggy the one who started the gold thread? The one he should have started in 2000, not 2008?

Blackadder

23rd September 2008, 04:30 AM

Crude oil prices jumped $25 a barrel on Monday – the largest one-day rise – as financial investors betting on falling oil prices were forced to cover their positions ahead of the expiry of the current benchmark futures contract.

After surging $25 to $130 a barrel, the October contract settled at $120.92 a barrel, up $16.37 on the day.

Francesca R

23rd September 2008, 04:42 AM

It expired at that price. The November (US) contract (now the front month) rose to $110-ish and is now $108 ish.

ETA: http://en.wikipedia.org/wiki/Backwardation

Matteo Martini

23rd September 2008, 04:42 AM

Peak-oil will soon become a non-issue.
Solar energy is becoming cheaper and cheaper, and soon there will be plenty of energy for everyone.

Going All-Electric
August 7, 2008
By Martin Roscheisen, CEO
The following is one of my favorite charts: How far a car can drive based on either of the following forms of energy, each produced from 100m x 100m (2.5 acres) of land:
http://www.nanosolar.com/images/FuelEfficiency.jpg

http://www.nanosolar.com/blog3/?p=93

Blackadder

23rd September 2008, 05:05 AM

nice, but I bet mr Martin Roscheisen, CEO needs to buy at least another next gen Prius because a businessman can't drive in an 20 year old ramshackle car

Matteo Martini

23rd September 2008, 05:11 AM

nice, but I bet mr Martin Roscheisen, CEO needs to buy at least another next gen Prius because a businessman can't drive in an 20 year old ramshackle car

Not necessarily.

The solar cell market will exhibit a remarkable growth—from a market volume of 5.6 GW in 2008 to 79.5 GW in 2015.
http://www.eetindia.co.in/ART_8800542953_1800008_NT_c5130ab2.HTM

And then consider that the GM Volt is due out in less than 2 years..

bobrayner

29th September 2008, 11:56 PM

Not necessarily.

The solar cell market will exhibit a remarkable growth—from a market volume of 5.6 GW in 2008 to 79.5 GW in 2015.
http://www.eetindia.co.in/ART_8800542953_1800008_NT_c5130ab2.HTM

And then consider that the GM Volt is due out in less than 2 years..

For how long have practical electric cars been "just around the corner"? Since the 1970s or 1980s?

I've seen quite a few launch dates come and go; so I stopped waiting and bought a very efficient fossil-fuel-burning car instead.

Blackadder

30th September 2008, 04:02 PM

This one, Tesla Moters (http://www.teslamotors.com/media/press_room.php?id=974)claims to have a electric sports car on the market and a business saloon car in design
http://www.teslamotors.com/display_data/media_hero_index.pjpeg

Matteo Martini

7th October 2008, 06:31 AM

For how long have practical electric cars been "just around the corner"? Since the 1970s or 1980s?

I've seen quite a few launch dates come and go; so I stopped waiting and bought a very efficient fossil-fuel-burning car instead.

The problem is not building an electric car, but building cheap solar panels

soylent

7th October 2008, 06:11 PM

The problem is not building an electric car, but building cheap solar panels

The problem with solar panels is that even if they're damned near free they're very costly to use due to the large storage, back-up and transmission requirement.

Just thinking

9th October 2008, 01:34 PM

Oil now at < $85.00.

Yes, I know it won't last ... but this global recession economic meltdown may prevent a good number of alternates getting any big push soon.

The Central Scrutinizer

9th October 2008, 02:56 PM

Oil now at < $85.00.

Yes, I know it won't last ... but this global recession economic meltdown may prevent a good number of alternates getting any big push soon.

That is the downside. :(

Francesca R

16th October 2008, 03:44 AM

Wait till opec realize they can charge 1000 a barrel and we will still buy it.I'll pass on that grand-a-barrel offer thanks.

http://h1.ripway.com/FrancescaR/CLc1.jpg

UnrepentantSinner

16th October 2008, 04:22 AM

It is moderately amusing when some price is commentated on as "nosediving" and "plummeting to depths" that were far above and beyond the highest heights imaginable not too long ago.

Whoo! Hoo! Gas has dropped like a rock to $3.20/gal. ;)

Chaos

18th October 2008, 02:02 AM

Whoo! Hoo! Gas has dropped like a rock to $3.20/gal. ;)

It´s floating like a turd on water at $7.50 per gallon over here, thank you for your sympathy.

Tailgater

21st October 2008, 10:21 AM

Whoo! Hoo! Gas has dropped like a rock to $3.20/gal. ;)

$2.69 and still dropping here.

The Central Scrutinizer

21st October 2008, 11:16 AM

$2.69 and still dropping here.

But wait...that can't be! The giant oil companies were all conspiring to keep prices above $4/gallon.

This is a perfect example of how stupid the "oil conspiracy" retards are. If there is an oil company conspiracy to keep prices high, why would they ever lower them?

LTC8K6

21st October 2008, 11:33 AM

http://www.mercurynews.com/giants/ci_10727401

applecorped

22nd October 2008, 11:39 AM

Below $68 a barrel. :)

Skeptic Guy

22nd October 2008, 11:40 AM

diggy doesn't post here anymore.

RecoveringYuppy

22nd October 2008, 12:22 PM

diggy still has seven months to be right FWIW.

Just thinking

23rd October 2008, 11:14 AM

Below $68 a barrel. :)

And about $2.50 a gallon (give or take a penny) for gasoline here.

I really wonder just how much oil consumption has gone down ... I mean, have we really cut back by 50%? I seriously doubt it, meaning that those who called for just modest conservation in order to see oil prices fall like a rock may very well have been right all along.

applecorped

23rd October 2008, 11:19 AM

I Don't hear much about drilling nowadays. :)

Skeptic Guy

24th October 2008, 11:40 AM

OPEC just announced that they are reducing production by 1.5 million barrels per day.

ETA: It's amazing that they couldn't see their way around increasing their production a few months ago when things were real ugly...ok, uglier.

soylent

24th October 2008, 02:06 PM

OPEC just announced that they are reducing production by 1.5 million barrels per day.

And then the price dropped by $5/bbl. Looks like the market was pricing in an even larger drop than what was announced.

Darth Rotor

25th October 2008, 06:56 PM

Here is a thought. Hugo Chaves might just be leaking into his drawers. He had attributed to him in the press last year a recommendation that the floor price of oil be set/fixed at about 55 dollars per barrel. This was necessary for a reason I do not recall him explaining. He has reason to be concerned, as oil is a significant source of revenu for his nation. (See also the problems in Mexico if Pemex can't develop more of their reserves.)

While I note that OPEC announced a production cut, I have a few things I'd like to toss out and see if our oil smart members can explain any of it.

Price of oil per barrel was just above $60 in June 2005, it had dropped below $50 at the end of April. The average nationally was $50.23 per barrel, gas at 2.27 a gallon average. (According to a US DoE web site.) It was below two bucks per gallon where I live, when the summer hit in Texas. Gas did not raise above two bucks per gallon until Katrina and Rita hit, doing a hit to Gulf Coast supply, production, and refinery capacity, among other things.

The past three years have been unstable, but I sit here this evening, three years after the wild swings in oil prices began, looking at an oil market that has returned to the 2005 high. The price of Crude closed near sixty dollars per barrel this week.
Brent North Sea crude slumped to $61 per barrel, the lowest point since March 2007. New York’s light sweet crude tumbled to $62.65, which was last seen in May 2007.
http://www.dailytimes.com.pk/default.asp?page=2008%5C10%5C26%5Cstory_26-10-2008_pg5_10

Today I saw gas for 2.26 a gallon. I think the national average is near 2.60=2.70) (Am I close)

The relationship between crude and pump is starting to close, it seems. Am I being fooled?

My friends in the oil business, and in the refining business, point out that not only do we pay for the conversion of crude to product, but the cost of transport has to be figured in, which is why I don't think we will see gas at the same price relative to crude this time at the sixty dollar level as we did in 2005. Diesel is still grossly expensive, and trucks tend to burn diesel.

Likewise, I wonder at how producers and distributors are doing contracts these days, long mid and short term, with an eye on the general instability of the market.

Let's look at the last three years of gas prices, and what that did to other economic activity. I get the creeping feeling that it had a sustained negative effect, not just on American car makers, that is coupled to what has been going on recently, a crash that is in part due to a sustained loss in confidence.

Help me out here: how sensitive to gas prices is the consumer economy? I have wathced the past six weeks of crashing and burning with the same disquiet as many others, but all the while I have marvelled at the decoupling of the gas price baseline while all else went awry.

Not only Hugo Chavez need worry. If this represents a modest stabilization, all to the good, but it begins to cast ethanol as a less sorely needed "replacement" or augmentation for gas. (The economics and BTU per volume, cost versus output, have been covered in some other threads.)

But ethanol seems to me related to all of this economic mess lately. Over the past two years, we have seen a lot of food prices surge. Again, a necessity, a staple, in part due to speculation (we think) based on futures and crops for fuel policies, seem to have contributed to lowered consumer spending on all else, and thus the confidence dearth part and parcel to the bad news from Wall Street.

Hugo is right to be worried. If the economies all retract, he's quite possibly SOL on a lot of his long term plans. What has me a bit confused is the correlation between food, fuel, and consumer discretionary income that keeps money moving in an economy.

Help?

DR

Just thinking

26th October 2008, 07:05 AM

Help me out here: how sensitive to gas prices is the consumer economy? I have wathced the past six weeks of crashing and burning with the same disquiet as many others, but all the while I have marvelled at the decoupling of the gas price baseline while all else went awry.

It appears to be very sensitive, as it surrounds us daily. Not only gasoline, but home heating fuel, airline fuel, labor intensive equipment fuel (machinery), non-aviation transportation fuel for food and other commodities (public and private) ... the list goes on and on. I suspect a good number of defaulted mortgages occurred as more and more folks had to divert their money to fuel costs and its effects.

But anyway ... here is an article (http://online.wsj.com/article/SB122418052416641331.html) that sort of confirms what I mentioned just earlier (post 163) as to a small drop in demand resulting in a huge drop in price. Less than a 10% drop in demand results in an over 50% drop in oil. I also suspect that since the US consumes 25% of the world's oil, any mention of increased drilling on our part, coupled with a desire to significantly reduce our dependence on foreign oil, had some effect as well.

Francesca R

26th October 2008, 10:52 AM

Help me out here: how sensitive to gas prices is the consumer economy? Arguably not all that much. After all, a fourteen-fold (1400%) rise in oil (I know that retail petrol did not go up that much--perhaps it quadrupled at the most) was something of a stern test, no? CPI inflation (headline rate including food and energy) did not get higher than about 5.5% y/y and is probably falling back now.

What has me a bit confused is the correlation between food, fuel, and consumer discretionary income that keeps money moving in an economy.One (not the only) fuel--> food link is a) oil became more expensive, b) more policy backing was given (at least in the US) to maize-ethanol production, c) corn got a lot more expensive, d) demand for food substitutes for corn increased, e) prices of corn substitutes went north as well.

The case for alternative energy doesn't diminish as oil depreciates by the way. Oil producers, losing revenue from undiversified supply, actually have a greater incentive to develop stuff like sugar-cane ethanol. I seriously doubt that Brazil is ratcheting that down right now. In several countries that have subsidised retail petrol prices, there is an additional means to do this because the subsidy saving boosts available fiscal support for alternatives.

Darth Rotor

30th October 2008, 10:21 AM

It appears to be very sensitive, as it surrounds us daily. Not only gasoline, but home heating fuel, airline fuel, labor intensive equipment fuel (machinery), non-aviation transportation fuel for food and other commodities (public and private) ... the list goes on and on.Arguably not all that much.
In economics, as in medicine, getting a second opinion oft leads to being just as confused as previously. :D
After all, a fourteen-fold (1400%) rise in oil (I know that retail petrol did not go up that much--perhaps it quadrupled at the most) was something of a stern test, no? CPI inflation (headline rate including food and energy) did not get higher than about 5.5% y/y and is probably falling back now.
Fourteen fold? Francesca, over what period of time did that take place? From 1973 to now? I am puzzled over what you are telling me. From fifty dollar per barrel to about one hundred and fifty, or so, in the past three years was a three fold increase in raw material. Clarification, please?
One (not the only) fuel--> food link is a) oil became more expensive, b) more policy backing was given (at least in the US) to maize-ethanol production, c) corn got a lot more expensive, d) demand for food substitutes for corn increased, e) prices of corn substitutes went north as well.
Not being an economist by trade, I am not all that familiar with models that explore the synergistic effects of these sorts of inter related products and markets. Food prices going up was, IMO, a significant problem for the global economy, not just in selected spots, as I understand the Economist's past year's worth of articles on the topic.

The constant theme I see as a subtext is the issue of the opportunity cost in decision on how agricultural resources -- land and crop output -- get significantly altered by the larger scale entry into the energy business.
The case for alternative energy doesn't diminish as oil depreciates by the way. Oil producers, losing revenue from undiversified supply, actually have a greater incentive to develop stuff like sugar-cane ethanol.
Yes, I get that, with a non trivial impact on land use, agricultural capacity, reserves, and thus food prices and food base product futures markets. I sense a synergy, but don't feel very confident in how valid that is.
I seriously doubt that Brazil is ratcheting that down right now.
Yes, with an unknown environmental and domestic agricultural secondary effect. As I understand it, the sugarcane based ethanol is far more energy in/energy out efficient than, for example, corn or palm oil.
In several countries that have subsidised retail petrol prices, there is an additional means to do this because the subsidy saving boosts available fiscal support for alternatives.
I had not considered that issue. Thanks.

FWIW, this morning I drove past three different gas stations with 1.99 per gallon regular unleaded, 87 octane, gasoline. Diesel is still lots higher, around three dollars per gallon today (http://www.sanantoniogasprices.com/index.aspx?fuel=D). It was explained to me that this was significantly influenced by the switch to the low sulfur (15-50 part per million) sulfur diesel standard, and the lag in procuders converting diesel production processes to meet that.

Darnit, with fuel prices changing to significantly in the past month or so, I am wondering at how much impact dumping dollars had in our latest financial slump. I don't think it's that closely linked, for all that some folks who do currency trading have been making a killing of late.

DR

Drewbot

31st October 2008, 08:16 AM

I think that perhaps the Oil Executives had a change of heart. If the 'Greedy Oil Executives' were at fault when gas/oil was high, perhaps they should go in front of congress and be thanked for allowing us to have these low gas prices.

Kudos to Dr. Walter Williams at Townhall.com for opening my eyes on this.

Francesca R

31st October 2008, 11:41 AM

Fourteen fold? Francesca, over what period of time did that take place?From 1999 (USD10/bbl) to mid 2008 (USD145). The rise was less measured in some other currencies but still dramatic.
Food prices going up was, IMO, a significant problem for the global economy, not just in selected spotsWell I pointed to why the rise in energy price produced broad appreciation of food crops, due to the knock-on effects of substitution. The damage to nutritional standard of living is greater the lower average income is and the less able government is to subsidise food. So in some poor countries with rubbish public finances (like Bangladesh) it has literally been a killer (and of course in war-torn badly governed third-world states).

Food supply is "inelastic" in the short term like oil is.

As I understand it, the sugarcane based ethanol is far more energy in/energy out efficient than, for example, corn or palm oil.Correct. However not everyone grows sugar cane.

I am wondering at how much impact dumping dollars had in our latest financial slump.None IMO. The fall in the dollar against other currencies (since 2002--G7, since about 2004--Asia) did not reduce the confidence in US assets (or sovereign debt) at all. I consider almost everything I read during this period, and now, about "the demise of the dollar" to be balls.

maxfrost

2nd November 2008, 03:01 PM

Just wondering here: Is the sudden drop in gas prices related in anyway to speculators being unable to cover their bets when the credit crunch hit?

balrog666

2nd November 2008, 05:20 PM

Just wondering here: Is the sudden drop in gas prices related in anyway to speculators being unable to cover their bets when the credit crunch hit?

Nope. Just a drop in demand from the USA. And Europe. And China. And ...

Francesca R

2nd November 2008, 10:27 PM

. . . Apart from the evidence that a large mass of hedge funds were long commodities and are having a terrible year (especially the last 3 months)

Francesca R

12th November 2008, 01:34 AM

http://h1.ripway.com/FrancescaR/20081113CLc1.jpg

[ . . . ] want diggy's plan get out of debt. And buy oil in thestock market for the long term.[ . . . ]
[ . . . ] If the public gets on the oil band wagon, now thats a scary thought.. 300 to 400 dollar oil in just months. [ . . . ]
And . . . investors selling oil futures because they don't want so many of them any more.

Sensationalism, not critical thinking.UR kidding me , what kind of critical thinker are you??? you seem to be very closed minded to make coments like that. Do some research on oil.

They can sell oil futures all day at $130 and people are buying them.. cause if people where not buy they would go down. [ . . . ]
[ . . . ] I never owned oil till it was like 50 bucks/barrel..But im still buying at 125, so i guess im the speculator..or fundamentalist [ . . . ]

Mister Agenda

12th November 2008, 07:04 AM

Just filled up at 1.959 a gallon.

Just thinking

12th November 2008, 05:39 PM

Last week I was in Florida and saw regular at $2.05. And that was on the Disney World property ... Hess brand.

This week in my home state there are places below $1.90.

Oil is now hovering around $55/barrel. Brent is a few dollars less.

Tailgater

20th November 2008, 08:10 AM

1.72 yesterday

[ . . . ] I never owned oil till it was like 50 bucks/barrel..But im still buying at 125, so i guess im the speculator..or fundamentalist [ . . . ]

ouch.

Sorry Diggy:(

Avoid bandwagons and be safe.

Tailgater

20th November 2008, 08:12 AM

Or the one left holding the bag.

Just thought I would bump this post to go along with above.

Travis

20th November 2008, 04:20 PM

You are right, cause I never owned oil till it was like 50 bucks/barrel..But im still buying at 125, so i guess im the speculator..or fundamentalist

Looks like he turned out to be both.

How many times do people need to buy into and then be hurt by these commodity conspiracy ideas before people stop believing them?

Francesca R

21st November 2008, 03:43 AM

Perhaps I can shamelessly quote myself (from another thread) :) (Currently NYMEX light crude January '09 is $49.93/barrel--yay!)
I should elaborate anyway . . .

The high price of oil is not by itself any kind of a statement on whether there is "free market capitalism" in energy. It probably has a lot more to do with so-called inelastic supply-demand, which--according to simple economics--makes for a volatile clearing price. (This, incidentally, means that it is "just as easy" for oil to drop to $50 as go to $230 from today's $140)

Second, the extent to which oil may be distorted by perverse incentives (those that kill capitalism, for example) has IMO really nothing at all to do with the companies in the sector being large. As mentioned above, they have to be large because it is a scale business--in the extreme.

Supply should not be so inelastic in a capitalist system. There is more oil to be explored/discovered. But the incentives for that to happen are blunted by various geopolitical risks (see Venezuela, Russia, Nigeria, The Gulf) which makes it an unfortunately poor risk reward trade for the boss of BP to invest what would otherwise be a sensible amount in finding the next few North Seas.

I would suppose/hope that the long term effect of this is good for alternative energy (and the oil giants will re-invent themselves that way anyway). In the shorter term it is a lot more problematic.

PrincessIneffabelle

21st November 2008, 06:40 AM

I almost veered off the road this morning.

$1.49

I never thought I'd see gas under $3 again.

Wow.

Darat

21st November 2008, 08:37 AM

Perhaps I can shamelessly quote myself (from another thread) :) (Currently NYMEX light crude January '09 is $49.93/barrel--yay!)

And they say those physic phone lines are rubbish!

lomiller

21st November 2008, 11:13 AM

I almost veered off the road this morning.

$1.49

I never thought I'd see gas under $3 again.

Wow.

Frankly I hope we see it back over $3 as soon as possible. Oil is very price inelastic so it can change rapidly with changes in demand when you are near production capacity. With prices dropping I don’t expect to see much in the way of new production, so when demand starts to increase prices will go back up.

Demand won’t increase until the global economy starts to pick up. So, just as falling oil prices were a leading indicator of very bad economic news, I’m expecting rising oil prices to be a leading indicator of a recovery.

andyandy

21st November 2008, 04:33 PM

The current volatility is pretty remarkable, some analysts are predicting a low of $20 a barrel, from a high of $150. Long-term the longer that oil prices remain low, the higher they will spike in the future. Refinery projects, alternative energy projects, conventional oilfield development and higher cost oil developments are all being cut back, deferred or shelved. When global growth gets back on track $200 may sound cheap :)

Francesca R

22nd November 2008, 01:16 AM

some analysts are predicting a low of $20 a barrelProbably the same ones that were calling for $200 six months back. Any of them called "Diggy"?

Francesca R

22nd November 2008, 01:21 AM

So, just as falling oil prices were a leading indicator of very bad economic news, I’m expecting rising oil prices to be a leading indicator of a recovery.Hardly a "leading" indicator since it peaked in July this year and ecomonies have been slackening since a year before. Also the covariance between oil and global final demand is not great. There might be linkages (well there are) but they are too weak for your statement to be very reliable IMO.

UnrepentantSinner

22nd November 2008, 01:35 AM

Whoo! Hoo! Gas has dropped like a rock to $3.20/gal. ;)

I almost veered off the road this morning.

$1.49

I never thought I'd see gas under $3 again.

Wow.

My above post was on Oct. 16th. Today the price at suburban Dallas stations is $1.75/gal.

You are right, cause I never owned oil till it was like 50 bucks/barrel..But im still buying at 125, so i guess im the speculator..or fundamentalist

Looks like he turned out to be both.

I'd can think of any number of more accurate adjectives to describe him.

Andyandy, I'd like to see prices remain about where they are or a little higher. That will encourage exploration and a reduction in consumption but not be the drain on the economy that the speculator prices were/would be.

lomiller

22nd November 2008, 06:15 AM

Hardly a "leading" indicator since it peaked in July this year and ecomonies have been slackening since a year before.

There were other indicators, but the fall in the price of oil led both the really big unemployment numbers and the negative growth n umbers.

There might be linkages (well there are) but they are too weak for your statement to be very reliable IMO.

All we can do is wait and see

Hindmost

22nd November 2008, 07:38 AM

Never thought oil would go below $80 a barrel. This will help the world economy rebound, but also give a false sense of security. I am sure alternate energy sources are being taken off the priority list.

glenn

gdnp

22nd November 2008, 08:09 AM

Sounds like time to start refilling the strategic petroleum reserve.

I would also push for an increase in fuel taxes to fund infrastructure projects. If nothing else, this would give us some taxes to cut when oil bumps back over $100 a barrel again.

Now that the stock market, housing, oil and commodity bubbles have burst, what is next? Gold?

Darat

22nd November 2008, 08:23 AM

89.9p a litre at ASDA today, and of course unlike when it went up to the dizzy heights of 120p a litre and we were told that meant we all had to immediately scrap our cars and all the pensioners would die this winter and our children would have to walk through 6 foot high snow drifts to get to school, the media is remarkable quiet about this news.

Just thinking

22nd November 2008, 08:46 AM

Frankly I hope we see it back over $3 as soon as possible. Oil is very price inelastic so it can change rapidly with changes in demand when you are near production capacity. With prices dropping I don’t expect to see much in the way of new production, so when demand starts to increase prices will go back up.

Wrong ... or at least that's my opinion. Too many folks now know that just leaving things "as is" is way too risky. Besides, there are many alternate energy sources existing now (e.g.; wind farms) than in past oil tight situations. It's in the public's face.

Demand won’t increase until the global economy starts to pick up. So, just as falling oil prices were a leading indicator of very bad economic news, I’m expecting rising oil prices to be a leading indicator of a recovery.

No again. The economy was already in trouble in late 2007/early 2008 ... rising oil prices simply exacerbated the situation. The only thing that people can look to as any sort of silver lining right now is some affordable energy. I'm not saying we're out of trouble yet, but higher costs anywhere on the map right now will simply prolong a recovery.

Just thinking

22nd November 2008, 08:52 AM

Just thinking

22nd November 2008, 08:56 AM

There were other indicators, but the fall in the price of oil led both the really big unemployment numbers and the negative growth n umbers.

Correlation does not conclude causation.

All we can do is wait and see

And that's the best course of action ... trying to manipulate things beyond what is controllable can lead to disaster.

Francesca R

22nd November 2008, 09:12 AM

the fall in the price of oil led both the really big unemployment numbers [ . . . ]No it didn't (I assume you are referring only to the US economy now . . .):

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS14000000

[ . . . ] and the negative growth n umbers. No it didn't:

http://www.bea.gov/newsreleases/national/gdp/2008/pdf/gdp308a.pdf (Table 1 page 5)

All we can do is wait and seeQuite--not reliable :)

andyandy

22nd November 2008, 10:13 AM

Probably the same ones that were calling for $200 six months back.

True, :D

andyandy

22nd November 2008, 10:26 AM

Evidence? ... or just opinion?

It certainly seems to be happening in the UK, plans to build a large offshore wind farm seem to be falling apart as various partners pull out, banks are unwilling to stump up the cash and political will for green energy dissipates. Oil price will be a factor in this, though maybe it is more a casualty of the general credit crunch:

One of the UK's largest wind farm projects is in doubt after the credit crunch has forced a backer to pull out.

Statoil, the Norwegian oil giant, is now looking for a new joint venture partner to help develop the £700m offshore wind project off the Norfolk coast. If built, the 108 turbines would provide enough electricity for the homes of a city the size of Cambridge.

Statoil's original partner, the Nobel Peace Prize-winning company Ecoconcern, pulled out about two months ago. It is understood that the European green energy firm could not raise the £350m finance needed to fund its share of the construction costs.

In August, the then business secretary John Hutton gave planning approval for the Sheringham Shoal project. But since then all forms of debt financing, particularly for large risky projects like offshore wind, have become much harder.

low oil price will probably have a greater effect on possible development of Canadian tar sands and other oil reserves with a high extraction value. At $150 a barrel they made economic sense, at $50 a barrel they don't.

lomiller

22nd November 2008, 06:59 PM

At $150 a barrel they made economic sense, at $50 a barrel they don't.

Syncrude, admittedly the most established tar sands producer says their break even point is around $20 per barrel. I.E. as $20 per barrel they can run their existing operations without loosing money. Obviously new players need more to cover capital costs but the point where they loose interest seems to be around $40 per barrel.

Remember energy represents a very large percentage of tar sands production costs so dropping oil prices also reduces production costs substantially.

Hindmost

22nd November 2008, 07:18 PM

Evidence? ... or just opinion?

I will assume you are talking about economy part of my post.

Since world economic growth is dependent on cheap energy, then reduced cost would will give people more disposable income. It won't help all segments of the economy, but it will provide additional money to circulate.

I realize, this is just an opinion...and this economy may be much tougher recover from since it is more severe than recent cycles.

glenn

Just thinking

22nd November 2008, 08:49 PM

It certainly seems to be happening in the UK, plans to build a large offshore wind farm seem to be falling apart as various partners pull out, banks are unwilling to stump up the cash and political will for green energy dissipates. Oil price will be a factor in this, though maybe it is more a casualty of the general credit crunch:

That is why I believe this is a tough call ... the credit crunch may be the biggest damper on development of any kind, including alternate energy sources. I don't think there is a large consensus that believes we have abundant cheap energy in fossil fuels; abundant, perhaps ... but not abundant and cheap, which is why I doubt that we will totally abandon all avenues of research. The biggest keys are to making it profitable, affordable and easily usable. The good news is, there will always be a demand for more energy ... the bad news is it needs to be there when one throws the switch.

Low oil price will probably have a greater effect on possible development of Canadian tar sands and other oil reserves with a high extraction value. At $150 a barrel they made economic sense, at $50 a barrel they don't.

Perhaps it's better to see it as a good idea knowing no well is unlimited. And this just stared us in the face.

Just thinking

22nd November 2008, 08:52 PM

I will assume you are talking about economy part of my post.

Actually it was more of the desire to abandon new research just because there is at present a dip in the price of oil. You seemed so certain of that.

Hindmost

23rd November 2008, 06:50 AM

Actually it was more of the desire to abandon new research just because there is at present a dip in the price of oil. You seemed so certain of that.

Past experience from the 80s. All alternative energy projects shut down when oil prices dropped. Even drilling slowed to a very slow pace. If the price of oil stays low for a protracted period, it will stop companies from spending money as there would be no return. Tboone Pickens is having trouble financing his wind farm already. Look for oil sand expansion to slow in Canada.

It may not shut it down completely, but it will probably require subsidies or companies won't take the risk.

glenn

soylent

23rd November 2008, 02:58 PM

Tboone Pickens is having trouble financing his wind farm already.

Good riddance; the wind power seems like little more than a distraction to deflect criticism from his water caper for which he has sleazily acquired eminent domain(granting him the power to seize private land to make way for his water pipeline + transmission lines).

http://www.businessweek.com/magazine/content/08_25/b4089040017753.htm

It may not shut it down completely, but it will probably require subsidies or companies won't take the risk.

It already does.

From an interview with Pickens: http://www.fastcompany.com/magazine/126/a-mighty-wind.html?page=0

Question: "What happens if Congress doesn't extend the $20-per-megawatt-hour Production Tax Credit for wind -- set to expire December 31? On a project this size, that's an $80,000 deduction every hour at full capacity."

Pickens: "Then you've got a dead duck. It would be hard to go without a subsidy."

...

Question: "What about when the wind doesn't blow?"

Pickens:"That's the problem with wind generation. You've got to supplement it with a gas-fired or coal-fired source so whoever buys it gets continuous 24-7 generation."

This is from a guy who has eminent domain, access to close to the best wind resource available on the planet and no plan to provide the necessary storage to supply wind mostly without the gas and coal; and he's still hesitant on his abillity to go on without a subsidy? Well, at least he's honest about it.

Hindmost

23rd November 2008, 03:20 PM

Good riddance; the wind power seems like little more than a distraction to deflect criticism from his water caper for which he has sleazily acquired eminent domain(granting him the power to seize private land to make way for his water pipeline + transmission lines).

http://www.businessweek.com/magazine/content/08_25/b4089040017753.htm

It already does.

From an interview with Pickens: http://www.fastcompany.com/magazine/126/a-mighty-wind.html?page=0

Question: "What happens if Congress doesn't extend the $20-per-megawatt-hour Production Tax Credit for wind -- set to expire December 31? On a project this size, that's an $80,000 deduction every hour at full capacity."

Pickens: "Then you've got a dead duck. It would be hard to go without a subsidy."

...

Question: "What about when the wind doesn't blow?"

Pickens:"That's the problem with wind generation. You've got to supplement it with a gas-fired or coal-fired source so whoever buys it gets continuous 24-7 generation."

This is from a guy who has eminent domain and no plan to provide the necessary storage to supply wind mostly without the gas and coal and he's still hesitant on his abillity to go on without a subsidy? Well, at least he's honest about it.

Capacity factors for wind power are just 35% during the best of conditions...and go down to 7% or so during the summer when needed most. Still, it should be included in world energy mix.

glenn

Just thinking

23rd November 2008, 07:12 PM

Question: "What about when the wind doesn't blow?"

Pickens:"That's the problem with wind generation. You've got to supplement it with a gas-fired or coal-fired source so whoever buys it gets continuous 24-7 generation."

What of nuclear? It's damn near 2010 already.

Just thinking

23rd November 2008, 07:17 PM

Capacity factors for wind power are just 35% during the best of conditions...and go down to 7% or so during the summer when needed most. Still, it should be included in world energy mix.

Then what exactly are these alternate sources that Obama wants to invest billions of $$$$ into that will get us off of foreign oil? ... if not nuclear?

PS: Personally, I think it impossible to get totally off of imported oil within 200 years. Maybe never.

soylent

24th November 2008, 03:01 AM

What of nuclear? It's damn near 2010 already.

If we're still talking about the US, the NRC is very slow and they have a lot of work on their table right now. Don't expect the utilities who have handed in applications for new nuclear build to even be allowed to put the first shovel into the ground until ~4 years after their application.

Capacity factors for wind power are just 35% during the best of conditions...and go down to 7% or so during the summer when needed most. Still, it should be included in world energy mix.

Sure, wind power is cheap if you don't care about intermittency(irrigation? desal?) and happen to live somewhere windy.

soylent

24th November 2008, 05:08 AM

Then what exactly are these alternate sources that Obama wants to invest billions of $$$$ into that will get us off of foreign oil? ... if not nuclear?

I can't speak for Obama but there's tonnes of ways to reduce oil consumption that do not necessarily involve nuclear power; you'd have to carefully sift through this mess to determine what might be cost-effective.

Solar space heating/hot water is quite affordable(no expensive silicon, just an array of evacuated glass tubes containing blackened/anodized inner tubes through which water can flow) and it can directly displace natural gas and oil.

Insulation and counter-current heat exchangers can directly reduce the amount of energy(oil, gas or otherwise) used in HVAC(if a home is made airtight and all ventilation goes through a counter-current heat exchanger you can recover over 90% of the energy loss from ventilation).

Electrified rail can directly replace oil used in diesel locomotives. Trains can directly replace trucks for transporting goods. Smaller cars can directly replace most big cars(check the price of SUVs; it's already happening on account of the recent high in oil price and price volatility/supply concerns. One way to ensure that it continues might be to put a price floor on oil and buy every barrel of oil below that, putting it into expanding the strategic reserve or puting an onerous tax on oil-based fuels like Europe).

To the extent that domestic natural gas production can be expanded or natural gas can be saved from other uses natural gas or natural gas derivatives(e.g. dimethylether, an excellent low-particulate, high efficiency diesel replacement. See Gas To Liquids, GTL) can be used for motor vehicles.

Biogas from anaerobic fermentation of crop wastes and manure can be used to expand the natural gas supply a little bit without puting much pressure on soil carbon(might not be worth transporting this gas off of the farm if it's not connected to a natural gas grid, but you can displace other fossil fuels used for drying corn, use it as an automotive fuel for farm equipment or put it through a small gas turbine and generate electricity so you don't have to pay the higher price of electricity during peak times or export electricity to the grid produce ammonia/urea locally if haber-bosch can be cost effectively scaled down etc.).

You can use black liquor from the paper industry to produce small amounts of DME or other valuable liquid fuels through gasification.

You can try to develop GM-plants that are specifically made more vulnerable to attack(e.g. produce enzymes required to break themselves down) such that the cellulose can be separated from lignin and turned into glucose for yeast or bacteria; you can try to develop higher yield yeast or bacteria that produce butanol instead of ethanol(butanol naturally floats to the surface at some concentration, requiring no distillation; less corrosive than ethanol. 15% gasoline + 85% butanol can be used in unmodified gasoline engines).

You can gamble some money on developing cheaper/better battery and high energy density ultra-capacitor technology(even if you're just going to use it with an ICE in a hybrid, the fact that you can run an engine/micro-turbine at it's peak efficiency with just enough power to coast at high-way speeds and use the battery to provide the oomphh for fast acceleration instead of having a hugely oversized ICE saves you a lot of gas; as does having ultra capacitors can easily recover most of breaking energy).

You can use a SOFC to recover energy and clean up VOCs(e.g. paint fumes at an auto-factory that you may not be allowed to just emit to the atmosphere).

You can try to develop a "smart-grid"(which would try to turn the electrical grid into more of a fully connected graph that can shuffle electricity from anywhere to anywhere to better soak up intermitent generation) with "smart appliances"(such as a freezer with embedded eutectic or phase change material that can defer electricity consumption to cheaper off-peak electricity and provide the electrical companies with the abillity to switch off your freezer or air conditioning for a few hours(at their expense) to deal with an emergency drop in generation until replacement sources come online).

You can gamble some money on trying to develop metallic carbon nanotube quantum-wires into a potentially cheaper replacement for aluminium and copper in electrical motors, in HVDC distribution systems(quantum wire has higher conductance along the wire and much lower conductance across it, absurd tensile strength and light weight); the natural first customer on the road to commercialisation is anything to do with space, because performance and weigth is much more important than cost to these people.

You can gamble some money on unlikely alternative approaches to fusion(a few million here and there to see if there's anything to it. E.g. focus fusion and polywell IEC).

You can encourage people to eat less meat or shift consumption towards chicken(much more efficient at converting grains into meat than cattle, sheep or pigs).

You can put a fuel consumption rating on food to encourage people to pick stuff produced closer to home(not just miles, because trucks are far more efficient than aircraft, trains and inland barges far more efficient than trucks, huge container ships far more efficient than trains). You can discourage fuel and water intense forms of low density organic agriculture. You can encourage the development of GM crops, either through industry or entirely patent and royalty free varieties produced entirely with public funding.

There's just an endless list of stuff to pick from(much of which won't make much sense if you examine it closely, I'm sure).

Just thinking

24th November 2008, 06:07 AM

That's a good list ... have any been shown to be cost effective? For example, I seriously doubt we'll ever get our major railways to be electric powered.

mbp

24th November 2008, 08:45 AM

I seriously doubt we'll ever get our major railways to be electric powered.Why? Is traffic too light to justify the initial cost?
If so then higher oil prices - and I'm sure we'll see those again - could eventually make change that. Or, I guess, kill off the railways altogether.

soylent

24th November 2008, 10:47 AM

That's a good list ...

Thanks, but it's not even a tiny fraction of the number of different ideas that are floating about out there.

have any been shown to be cost effective?

Solar hot water can be very cost-effective in reliably sunny locations with no need for freeze-protection.

I'm not sure if anaerobic digestion is cost-effective; but it's supplying ~1.4 TWh/year(2006) of gas in Sweden(mostly from municipal sewage treatment plants and land fills); that's an equivalent amount of energy to 4.6 gallons of petrol per capita. One study found that it has a potential to produce 7 TWh/year without dedicated use of farmland and 14 TWh per year with 10% of farmland.

DME from black liquor is similarly quite small in the big scheme of things. We happen to have a large forest industry and so does Finland; if cost-effective it could supply up to 30% of our auto-motive fuel and 50% of the finns'. Chemrec is running a development facillity in Piteå(northern Sweden), it appears to have been quite successful and last I heard they're in talks with some american company about setting up a larger facillity in (Michigan?). Technology wise it has significant overlap with Coal-To-Liquids(CTL) and Biomass-To-Liquids(CTL) through gasification, in which the fuel is gasified by being subjected to a little bit of oxygen and a lot of steam, to produce hydrogen gas and carbon monoxide; the H:CO ratio is adjusted with the water-gas shift reaction and typically fisher-tropsch is used to produce some mixture of alkanes(composition being determined by H2:CO ratio). Producing DME is potentially cheaper to produce than Fischer-Tropchs diesel as well as being a much cleaner fuel(NOx and particulate wise) than long-chain alkanes.

There are investors and companies betting their own money on trying to develop many of these approaches but I haven't the faintest which ones might turn out to be cost-effective.

For example, I seriously doubt we'll ever get our major railways to be electric powered.

Electric rail is very widespread here in Europe. The operating cost is much lower than diesel-powered trains but the capital cost is much higher; it's not cost-effective unless you're sending enough goods or people to justify the added installation cost(I'm not sure if that means you need a high population density to support the required level of goods/people).

Just thinking

24th November 2008, 12:30 PM

Electric rail is very widespread here in Europe. The operating cost is much lower than diesel-powered trains but the capital cost is much higher; it's not cost-effective unless you're sending enough goods or people to justify the added installation cost(I'm not sure if that means you need a high population density to support the required level of goods/people).

That's why I don't think it'll ever get off the ground around here. There are too many areas in which the population density is too low ... freight trains are the greatest in number through those areas. Along the coasts, perhaps; but never mainstream. And it won't be lower in cost vs. Diesel unless we increase fuel taxes ... and increased taxes right now is one thing no one needs.

WildCat

24th November 2008, 01:01 PM

Electrified rail can directly replace oil used in diesel locomotives.
And what would be the point of that? Diesel/electric locomotives are about the most efficient form of transportation we have to move freight. How could converting all those tracks to electric possibly be worth the expense?

soylent

24th November 2008, 01:13 PM

And what would be the point of that?

Because lowering operating costs by shifting from expensive diesel to cheap coal and uranium could make it affordable to shift a lot of ton-miles of freight from trucks to rail?

Supposedly(I can find many sources but not a reputable one) the reason/excuse the US railroad companies give for not persuing electrification is that a property tax is levied on electrified rail but not diesel.

Just thinking

24th November 2008, 01:27 PM

Diesel/electric locomotives are about the most efficient form of transportation we have to move freight.

That's what I'm thinking too. Those engines are basically miniature power plants in and of themselves ... with the conversion being done directly where the work is being done. If coal is converted into fuel (liquefaction) then I doubt you can beat the current set-up.

Just thinking

24th November 2008, 01:30 PM

Because lowering operating costs by shifting from expensive diesel to cheap coal and uranium could make it affordable to shift a lot of ton-miles of freight from trucks to rail?

Didn't you just argue against nuclear reactors, in their not getting on-line until a good number of years?

soylent

24th November 2008, 01:39 PM

Didn't you just argue against nuclear reactors...

No. As much as I like fission there are realistically many ways to reduce oil consumption.

...in their not getting on-line until a number of years?

How does that prevent the US's 104 currently operating nuclear reactors from cranking out cheap baseload electricity to the tune of one fifth of the US's electric supply?

WildCat

24th November 2008, 03:48 PM

Because lowering operating costs by shifting from expensive diesel to cheap coal and uranium could make it affordable to shift a lot of ton-miles of freight from trucks to rail?
Now all you have to do to show this is add up and show the expense involved in electrifying the freight lines in the US, the cost of the new locomotives which will be required to run on them, the cost of the electricity, and compare that to to the cost of simply continuing on with diesel/electric locomotives.

Maybe you'll see a savings in 100 years or so, if you completely disregard the time value of money...

Supposedly(I can find many sources but not a reputable one) the reason/excuse the US railroad companies give for not persuing electrification is that a property tax is levied on electrified rail but not diesel.
Because electrifying the rails will require infrastructure to public lands, additional easements, etc.

And how much freight in Europe is actually moved by electric rail lines? I note the most powerful locomotive in Europe, the ER 20 CF (http://www.infrasite.net/news/news_article.php?ID_nieuwsberichten=8249&language=en), is diesel/electric, same design used here in the US. I also note that Corus locomotives are also diesel/electric (http://www.nebusiness.co.uk/business-sector-reports/business-innovation-north-east/north-east-vision-spring-2007/2007/03/13/only-operator-in-europe-to-design-and-build-its-own-locomotives-51140-18820933/).

Any evidence at all that pure electric locomotives are used in anything but light rail?

Hindmost

24th November 2008, 06:28 PM

Then what exactly are these alternate sources that Obama wants to invest billions of $$$$ into that will get us off of foreign oil? ... if not nuclear?

PS: Personally, I think it impossible to get totally off of imported oil within 200 years. Maybe never.

Well, nuclear can't solve the problem as there is not enough industrial capacity on the planet and we just can't build them fast enough.

In about 50 years, with current oil consumption, we will be off fossil oil.

glenn

Hindmost

24th November 2008, 07:14 PM

I can't speak for Obama but there's tonnes of ways to reduce oil consumption that do not necessarily involve nuclear power; you'd have to carefully sift through this mess to determine what might be cost-effective.

Solar space heating/hot water is quite affordable(no expensive silicon, just an array of evacuated glass tubes containing blackened/anodized inner tubes through which water can flow) and it can directly displace natural gas and oil.

Insulation and counter-current heat exchangers can directly reduce the amount of energy(oil, gas or otherwise) used in HVAC(if a home is made airtight and all ventilation goes through a counter-current heat exchanger you can recover over 90% of the energy loss from ventilation).

Electrified rail can directly replace oil used in diesel locomotives. Trains can directly replace trucks for transporting goods. Smaller cars can directly replace most big cars(check the price of SUVs; it's already happening on account of the recent high in oil price and price volatility/supply concerns. One way to ensure that it continues might be to put a price floor on oil and buy every barrel of oil below that, putting it into expanding the strategic reserve or puting an onerous tax on oil-based fuels like Europe).

To the extent that domestic natural gas production can be expanded or natural gas can be saved from other uses natural gas or natural gas derivatives(e.g. dimethylether, an excellent low-particulate, high efficiency diesel replacement. See Gas To Liquids, GTL) can be used for motor vehicles.

Biogas from anaerobic fermentation of crop wastes and manure can be used to expand the natural gas supply a little bit without puting much pressure on soil carbon(might not be worth transporting this gas off of the farm if it's not connected to a natural gas grid, but you can displace other fossil fuels used for drying corn, use it as an automotive fuel for farm equipment or put it through a small gas turbine and generate electricity so you don't have to pay the higher price of electricity during peak times or export electricity to the grid produce ammonia/urea locally if haber-bosch can be cost effectively scaled down etc.).

You can use black liquor from the paper industry to produce small amounts of DME or other valuable liquid fuels through gasification.

You can try to develop GM-plants that are specifically made more vulnerable to attack(e.g. produce enzymes required to break themselves down) such that the cellulose can be separated from lignin and turned into glucose for yeast or bacteria; you can try to develop higher yield yeast or bacteria that produce butanol instead of ethanol(butanol naturally floats to the surface at some concentration, requiring no distillation; less corrosive than ethanol. 15% gasoline + 85% butanol can be used in unmodified gasoline engines).

You can gamble some money on developing cheaper/better battery and high energy density ultra-capacitor technology(even if you're just going to use it with an ICE in a hybrid, the fact that you can run an engine/micro-turbine at it's peak efficiency with just enough power to coast at high-way speeds and use the battery to provide the oomphh for fast acceleration instead of having a hugely oversized ICE saves you a lot of gas; as does having ultra capacitors can easily recover most of breaking energy).

You can use a SOFC to recover energy and clean up VOCs(e.g. paint fumes at an auto-factory that you may not be allowed to just emit to the atmosphere).

You can try to develop a "smart-grid"(which would try to turn the electrical grid into more of a fully connected graph that can shuffle electricity from anywhere to anywhere to better soak up intermitent generation) with "smart appliances"(such as a freezer with embedded eutectic or phase change material that can defer electricity consumption to cheaper off-peak electricity and provide the electrical companies with the abillity to switch off your freezer or air conditioning for a few hours(at their expense) to deal with an emergency drop in generation until replacement sources come online).

You can gamble some money on trying to develop metallic carbon nanotube quantum-wires into a potentially cheaper replacement for aluminium and copper in electrical motors, in HVDC distribution systems(quantum wire has higher conductance along the wire and much lower conductance across it, absurd tensile strength and light weight); the natural first customer on the road to commercialisation is anything to do with space, because performance and weigth is much more important than cost to these people.

You can gamble some money on unlikely alternative approaches to fusion(a few million here and there to see if there's anything to it. E.g. focus fusion and polywell IEC).

You can encourage people to eat less meat or shift consumption towards chicken(much more efficient at converting grains into meat than cattle, sheep or pigs).

You can put a fuel consumption rating on food to encourage people to pick stuff produced closer to home(not just miles, because trucks are far more efficient than aircraft, trains and inland barges far more efficient than trucks, huge container ships far more efficient than trains). You can discourage fuel and water intense forms of low density organic agriculture. You can encourage the development of GM crops, either through industry or entirely patent and royalty free varieties produced entirely with public funding.

There's just an endless list of stuff to pick from(much of which won't make much sense if you examine it closely, I'm sure).

What you are proposing is not really going to make enough of a dent in the problem. The world needs to replace about 360 quads of fossil fuel use within about 50-100 years. It is going to take every form of energy available.

glenn

by the way replacing diesel trains with electrified rails actually uses more energy due the losses from the rankine cycle.

Hindmost

24th November 2008, 07:17 PM

Didn't you just argue against nuclear reactors, in their not getting on-line until a good number of years?

No. As much as I like fission there are realistically many ways to reduce oil consumption.

How does that prevent the US's 104 currently operating nuclear reactors from cranking out cheap baseload electricity to the tune of one fifth of the US's electric supply?

FYI: the current schedule for new nuclear plants to come on line in the US is about 2016 or so.

glenn

soylent

25th November 2008, 01:44 AM

What you are proposing is not really going to make enough of a dent in the problem. The world needs to replace about 360 quads of fossil fuel use within about 50-100 years.

That depends on what the goal is, dependency on foreign oil(and particularly unstable regions who's politics you'd rather be left out of), global warming or pollution(of the non-GHG kind).

If you don't care about oil imports, mitigating global warming is primarily a question of phasing out non-CCS coal power as soon as humanly possible and making sure oil sands, shale oil and methane clathrates stay were they are. Phasing out coal is definetly a job well suited for nuclear power but it does almost exactly nothing to get independent of foreign oil by itself.

by the way replacing diesel trains with electrified rails actually uses more energy due the losses from the rankine cycle.

That's OK, electric power is easy to make without oil and not as expensive(~3% of the US grid is powered by oil-fired generation; mostly islands, remote regions like Alaska).

Besides, how can that possibly be true? On the electrical-grid you could take the same amount of diesel and put it through a combined cycle gas turbine(brayton cycle turbine followed by a rankine bottoming cycle; typically run on natural gas but can be run on syngas or fuel oil) at up to 60% efficiency. Wouldn't that beat just about any ICE even when grid-losses are included? And don't most diesel trains use electrical transmission(Diesel ICE->Generator->Electrical traction motors; i.e. you already take the loss of converting to electrical power and back)?

With electrified rail you can use regenerative breaking and recover a good proportion of energy otherwise lost in breaking(probably insignificant if stops are few and far between)

FYI: the current schedule for new nuclear plants to come on line in the US is about 2016 or so.

That sounds about right; takes about 4 years for the NRC to process your application and about 4 years to build the plant after you get the go ahead(provided its not a first-of-a-kind reactor, that can take years longer).

WildCat

25th November 2008, 05:10 AM

Besides, how can that possibly be true? On the electrical-grid you could take the same amount of diesel and put it through a combined cycle gas turbine(brayton cycle turbine followed by a rankine bottoming cycle; typically run on natural gas but can be run on syngas or fuel oil) at up to 60% efficiency. Wouldn't that beat just about any ICE even when grid-losses are included? And don't most diesel trains use electrical transmission(Diesel ICE->Generator->Electrical traction motors; i.e. you already take the loss of converting to electrical power and back)?
You keep ignoring the tens (hundreds?) of thousands of miles of new infrastructure that would need to be put in place, and the maintenance of said infrastructure. It would be incredibly expensive, and you've shown no evidence at all it would save one cent in the short or long term.

Diesel/electric locomotives, as it stands right now, are extremely efficient at hauling freight long distances. You've offered no reason so far to replace this with pure electric.

Is anyone using elecric trains to haul freight?

mbp

25th November 2008, 06:11 AM

Is anyone using elecric trains to haul freight?Yes, of course.
http://www.transportation.siemens.com/ts/en/pub/products/lm/services/platforms/eurosprinter.htm

Also:
http://www.jernbanen.dk/Fotos/Motor/DSB_EG3108_2001.jpg

Hindmost

25th November 2008, 10:03 AM

That depends on what the goal is, dependency on foreign oil(and particularly unstable regions who's politics you'd rather be left out of), global warming or pollution(of the non-GHG kind).

If you don't care about oil imports, mitigating global warming is primarily a question of phasing out non-CCS coal power as soon as humanly possible and making sure oil sands, shale oil and methane clathrates stay were they are. Phasing out coal is definetly a job well suited for nuclear power but it does almost exactly nothing to get independent of foreign oil by itself.

In about 50 years or so, there won't be enough fossil fuel oil to supply the world. Production is going to start a downward slide soon--within 10 years I would estimate. Oil sands and shale oil are just too energy intensive to get much of a return and the infrastructure would take too long to build and solve any energy issues. Most of the energy is not recoverable.

To phase out coal in the US alone, we would need to build about 400 nuclear plants...that would almost double the world capacity. Obviously not likely to happen.

That's OK, electric power is easy to make without oil and not as expensive(~3% of the US grid is powered by oil-fired generation; mostly islands, remote regions like Alaska).

Besides, how can that possibly be true? On the electrical-grid you could take the same amount of diesel and put it through a combined cycle gas turbine(brayton cycle turbine followed by a rankine bottoming cycle; typically run on natural gas but can be run on syngas or fuel oil) at up to 60% efficiency. Wouldn't that beat just about any ICE even when grid-losses are included? And don't most diesel trains use electrical transmission(Diesel ICE->Generator->Electrical traction motors; i.e. you already take the loss of converting to electrical power and back)?

With electrified rail you can use regenerative breaking and recover a good proportion of energy otherwise lost in breaking(probably insignificant if stops are few and far between)

I will never agree that natural gas should be used as fuel for electrical plants as it is a waste of the resource that is needed for space heating. IN the last 20 years, natural gas capacity has been built because it is about the only plant that is easy to site from an environmental standpoint.

There are 1 million Mw of installed capacity in the US and none of it should be from any type of oil or natural gas. Combined cycle efficiency helps, but that capacity factors for such plants are relatively low and the electricity is still high priced.

Some diesels are electric drives and some are geared...I will have to look into which are used to haul freight.

That sounds about right; takes about 4 years for the NRC to process your application and about 4 years to build the plant after you get the go ahead(provided its not a first-of-a-kind reactor, that can take years longer).

The NRC has changed it methods...the design is already licensed and the site review process won't take 4 years. The current construction schedules are set for about 3 years as the design and construction has been simplified...however, I don't believe the first units can achieve that as we don't have enough experience.

glenn

WildCat

25th November 2008, 02:07 PM

Yes, of course.
http://www.transportation.siemens.com/ts/en/pub/products/lm/services/platforms/eurosprinter.htm

Also:
http://www.jernbanen.dk/Fotos/Motor/DSB_EG3108_2001.jpg
Ugh, who the hell wants all those overhead lines cluttering up the landscape? And it has to cost far more than it's worth to run all those wires and maintain them.

Travis

25th November 2008, 02:36 PM

Hindmost

25th November 2008, 03:05 PM

It seems to me we have a lot of untapped hydroelectric potential too. I know a bunch of loons are trying to get the nearby Clavey River added to the federal protected list so that they can stop a new hydro project that's been proposed for some 20 years. Further north we have the Auburn dam that has been on hold for forever that probably should be restarted. It was supposed to be for flood control but it could also be used for electrical generation.

There really isn't too much available in the US--we have exploited most of it. Plus, the capacity factors of hydro plants are not as good as most people think. Typically around 35% due environmental factors. However, I do think we should harness whatever is available.

glenn

mbp

25th November 2008, 04:02 PM

Ugh, who the hell wants all those overhead lines cluttering up the landscape?Cluttering up the landscape? They're not tall and hardly noticable at all from any sort of distance.

And it has to cost far more than it's worth to run all those wires and maintain them.A purely electric locomotive gives you greater power at a lower weight and a lower running cost (for the locomotive). Whether or not this makes the total cost lower depends on many factors, but that it's more efficient and pollutes less isn't really in question.

Also, you can't run proper high speed trains on anything else - and once the lines are there it would be extremely stupid not to use them for freight as well.

So, I take it you accept that electric power is in fact used for other things than light rail?
http://www.luxurytraveler.com/tgv_east_1.jpg

WildCat

25th November 2008, 04:34 PM

Cluttering up the landscape? They're not tall and hardly noticable at all from any sort of distance.

A purely electric locomotive gives you greater power at a lower weight and a lower running cost (for the locomotive). Whether or not this makes the total cost lower depends on many factors, but that it's more efficient and pollutes less isn't really in question.

Also, you can't run proper high speed trains on anything else - and once the lines are there it would be extremely stupid not to use them for freight as well.
And that's the crux of the matter - they have advantages in areas where trains make frequent stops and thus also have to get back up to speed quickly. In the US, this isn't a need as stops are few and far between. In Europe where population densities are higher and thus you have more stops and passenger rail makes more sense an all electric system can be useful. But I doubt it is cheaper, in fact I don't see how it can be with all that extra infrastructure needed.

So, I take it you accept that electric power is in fact used for other things than light rail?
http://www.luxurytraveler.com/tgv_east_1.jpg
I'll concede that, but I don't see how it would be practical in the US anywhere but the crowded northeast corridor. Delivering freight from the port of Los Angeles to the eastern seaboard is still best done by diesel/electric hybrids.

mbp

26th November 2008, 01:47 AM

And that's the crux of the matter - they have advantages in areas where trains make frequent stops and thus also have to get back up to speed quickly. In the US, this isn't a need as stops are few and far between. In Europe where population densities are higher and thus you have more stops and passenger rail makes more sense an all electric system can be useful.I think it has more to do with the amount of traffic than the frequency of stops. If a line is used by 100 trains every day the infrastructure overhead for each is obviously much lower than if it's only used by 10.

But I doubt it is cheaper, in fact I don't see how it can be with all that extra infrastructure needed.It would depend on the relative costs of diesel and electricity, I guess. In places with abundant cheap hydroelectricity it could be an obvious decision to make while in others it might require some subsidy.
Reducing the reliance on oil and lowering emissions might also be worth at least a slightly higher cost.

Delivering freight from the port of Los Angeles to the eastern seaboard is still best done by diesel/electric hybrids.Probably. And maybe hydrogen powered fuel cell locomotives in the future.

Darth Rotor

3rd December 2008, 09:29 AM

Crude oil rose 28 cents to $47.44 a barrel by midday.
A report from yesterday's oil news.

Not sure how this renders the much promised cold fusion hydrogen fuel cell solution other than continued wishful thinking. Being able to make a long term plan keeps getting tripped up by short term considerations. Hindmost's points on macro level energy capacity and requirements are sobering.

The last thirty years' dubious energy policy is, politically, unlikely to be changed in the near term. I'll be happy to be wrong on this, delerious even, but since politics is involved, the risks are significant that energy policy will continue to be suboptimal.

DR

The Truth Hurts

31st December 2008, 01:14 AM

I am a newbie to these forums, however I have lurked around for a while now and have enjoyed the critical thinking and debates found on these forums.

Basically I consider myself to be fairly knowledgeable on the issue of Peak Oil and I really cannot believe why Peak Oil is the dominant discussion around the world?

I am about to make a statement which I plan to support with relevant information or evidence as questions arise. I am sure this topic has been discussed previously somewhere on these forums however I really feel it is relevant to this thread so will continue. See if you can follow me on this...

Every year the global oil production has increased by at least 2% per year until 2005. Since 2005 global oil production rates have stopped increasing and have been essentially stagnant. This means that for the years 05 - 06 - 07 and 08 the global production rate for oil hovered at around 86 - 87 million barrels of oil per day and DID NOT INCREASE to keep up with global economic growth as per all previous years. This situation led to oil supply becoming tighter and tighter essentially forcing buyers of oil to outbid each other hence the rise in price of oil from $30 to $100 (begining of 08) then reaching $147 per barrel in July 08. These ever rising prices caused massive problems to the global economy! High oil prices affect the price of everything because everything is linked to oil. It is either made from oil, mined using diesel equipment, transported in diesel ships or trucks etc.

Now when the price of oil goes up that quickly like it did many businesses and families get caught out. 24 airlines went bust in the first 6mths of 08! They are the "canaries in the mineshaft" for peak oil. Airlines are an indicator of the damage high oil prices have on the economy.

Whilst our financial system is (obviously) flawed and people were able to get ridiculous loans with little to no documentation the "trigger" for the subprime mortgage meltdown was the high oil prices. Think about it, oil prices were rising and rising, which drives up the cost of fuel for cars and fuel for trucks and basically the cost of everything as mentioned previously everything is linked to oil. Of course in this situation the first people to feel the pinch (like the airlines in the business world) are the subprime homeowners. They on average live in the outer burbs with older bigger vehicles, lower wages, etc and they had to make ends meet whilst all the while the fuel price was going up, the grocery food prices were going up, even interest rates were going up because of inflation (cost of everything rising). So when one family in one of these outer suburbs finally breaks and cant make their payments... well it wont be just one family will it, because many families have similar economic situations which live in the same suburb and suddenly you have heaps of people defaulting on loans all at the same time! This causes massive problems for banks who are lending out money when they dont actually have any money (and we have seen what happens and are continuing to see what happens).

Anyway, oil is finite. Peak oilers like me are not saying that it is running out. We are saying that it does not have to run out to become a major problem because we live in a global economic system that is based on growth and cannot survive unless there is growth. This does not work when this growth is driven by a finite fossil fuels in which there is a peak of production rate. Peak oil is peak production. There is plenty of oil left, the whole other half of the oil is waiting to be sucked up! The problem is that it is not in the big wells that are easy to get, its in deep sea, tar sands, oil shale, Arctic, and war torn areas where it is in ever smaller sized reserves which require more technology and other expensive equipment etc. It is much slower and more expensive to get out and often the well runs dry after only a few years meaning all of that infrastructure needs to be moved to the next small well!

Basically globalization is about to be replaced (through necessity not choice) by localization!

The Truth Hurts

drkitten

31st December 2008, 05:52 AM

Anyway, oil is finite. Peak oilers like me are not saying that it is running out. We are saying that it does not have to run out to become a major problem

This is obviously true. We've burned the cheap half of the oil and so the price of the expensive half cannot help but be higher.

But what the hell does this mean?

because we live in a global economic system that is based on growth and cannot survive unless there is growth.

Nothing about our "global economic system" is based on growth with the exception of some inflated stock prices and equally inflated bonuses paid to business analysts who predict growth.

The global economic system is based on cheap energy (which a luxury that will be increasingly difficult to find); if it costs me a dollar to produce a widget, which my Chinese competitors can produce for seventy-five cents, I will be outcompeted (locally) by the Chinese as long as transportation costs are less than a quarter. If transportation costs rise to thirty cents, my locally produced widgets will be less expensive than the ones from China.

"Growth" doesn't enter into it, except as a way for people to evaluate the profit potential of my business vs the Chinese one.

gdnp

31st December 2008, 08:36 AM

I don't think the issue is whether oil is finite vs. infinite. Air on the planet is finite. Solar energy is finite. The question is whether there is a lot or a little.

In the short run the supply of oil is inelastic. It takes time to drill new wells and create new delivery infrastructure. What wells will be drilled and which will be shut down depend on the price of oil. If an oil company has an oil field where it expects to be able to produce oil for $50 a barrel, there decision to develop it depends on whether or not they expect oil prices in 5-10 years to be $45 a barrel or $145 a barrel. The same goes for those trying to develop alternative energies. If ethanol from biomass can be produced for the oil equivalent of $75 a barrel it will only be produced in large quantities if oil prices go back up, with the expected lag.

macdoc

31st December 2008, 03:29 PM

Then what exactly are these alternate sources that Obama wants to invest billions of $$$$ into that will get us off of foreign oil? ... if not nuclear?

PS: Personally, I think it impossible to get totally off of imported oil within 200 years. Maybe never.

New in here - not to the discussion - refugee from Dawkins.:boxedin:

Sweden is committed to fossil free by 2025
Now they do have advantages over North America but not all that much.

I think a war footing level could get the US off imported oil in 20 years.
Hey the VCs want a cut of the $5-10 billion a DAY going offshore and north to Alberta and South to Mexico.

Doerr thinks someone will make a trillion dollars off the coming Greentech bubble.

••

Someone said earlier we'll need it all.

Yep - with 50% more people and some 2 billion wanting North American level life style every single source needs to be maxxed especially nuclear as it comes down to coal or nuclear for base load....and coal is NOT a good thing.

Easiest is efficiency gains and moving off fossil for personal transport - if oil gets back up to $200 - which it will - EVs, PHEVs and hitech diesels ( VW ) will be self financing. ( the VW diesel almost is at $100 a barrel ).

Industry has done a decent job getting efficient California in particular but housing and vehicles in North America have a long way to go to catch Europe or Japan.

macdoc

31st December 2008, 03:36 PM

. If an oil company has an oil field where it expects to be able to produce oil for $50 a barrel, there decision to develop it depends on whether or not they expect oil prices in 5-10 years to be $45 a barrel or $145 a barrel. The same goes for those trying to develop alternative energies. If ethanol from biomass can be produced for the oil equivalent of $75 a barrel it will only be produced in large quantities if oil prices go back up, with the expected lag.

IF???

Oil is expected to hit $200 in 2009 and $300 further out.....there is no question cheap oil peak is here and gone.
( there ARE lots of fossil fuel sources tho for hundreds of years )

This breathing space is a good thing to cool the economy ( maybe too much ) and get the Greentech rolling as a make work deal.

Hey Hoover dam is still cranking it out 70 years out.....:D

mikehh

31st December 2008, 06:11 PM

everyone who thinks oil is headed up (i agree but not as quickly as the above poster) are you investing in it and if so how?? i have a few etf's im heavy in, just wanted to get everyone else .02

gdnp

31st December 2008, 07:43 PM

IF???

Oil is expected to hit $200 in 2009 and $300 further out.....there is no question cheap oil peak is here and gone.

Expected by whom? How many experts predicted $37 a barrel oil in December 2008 last summer when it hit $140 a barrel? Has the worldwide recession bottomed out, or are we in for a decade-long depression? Darned if I know.

The Truth Hurts

31st December 2008, 08:39 PM

This is obviously true. We've burned the cheap half of the oil and so the price of the expensive half cannot help but be higher.

But what the hell does this mean?

This means that the price of oil, diesel, petrol, food, milk, clothes and pretty much everything is going to go higher. This will force people to make choices about where they spend their money which will mean certain businesses (95% of all businesses which are non essential) will suddenly have less customers. Many will go bust or at least offload significant number of employees. These employees will default on their home, car and credit card loans. These defaulted loans will further impact the banks and other lenders and expose how over leveraged they are as we have already witnessed with recent bank troubles. All of this at a time when the global economy is already struggling and money is being printed like crazy. In short our global economic system is not going to survive because it is based on growth.

It is based on growth because who in their right mind would knowingly invest in an airline (as an example) when they know that prices for oil are going through the roof (over $150 at least, likely higher though)? Who would invest in a bank when they know that there are going to be so many more defaults on home loans, credit cards, car loans etc which will likely bring down even more banks? Who is going to invest in a toy company when people are going to be tightening their belts and letting their kids play with less toys or hand me downs? Who is going to invest in any business which is likely to collapse when people shift their spending habits from "wants" to "needs", not by choice but by sheer necessity?

The moment it becomes common knowledge that the global production rate of oil is declining no matter what we do in terms of more drilling and tar sands etc nobody is going to invest in any company that isnt going to grow because of higher oil prices (pretty much all companies!). Why invest in something that is going to lose money? Why would you invest money into a company even if it didnt decline but didnt grow either? Investors look only to invest where there is likely to be an increase in share price not stagnant or decreasing share prices.

macdoc

31st December 2008, 08:51 PM

Few predicted a massive recession - that's really not a factor in this as demand is down due to a slow economy and that last spike was speculative to a large degree.

http://www.arabianbusiness.com/542255-energy-chief-predict-100-oil-between-2010-2015

$100 oil does not take into account the US dollar devaluation that is pretty certain. That will spike it up in the $200 range as the economy picks up again.

$100 plus is best all around as it sets a level for getting fossil free by 2025 as Sweden has committed to.

Saudi Arabia cannot tolerate low prices as they will go into deficit ( yeah hard to believe :boggled: ) will be forced to cut production.

Interesting times.

macdoc

31st December 2008, 09:03 PM

It is based on growth because who in their right mind would knowingly invest in an airline (as an example) when they know that prices for oil are going through the roof (over $150 at least, likely higher though)? Who would invest in a bank when they know that there are going to be so many more defaults on home loans, credit cards, car loans etc which will likely bring down even more banks? Who is going to invest in a toy company when people are going to be tightening their belts and letting their kids play with less toys or hand me downs? Who is going to invest in any business which is likely to collapse when people shift their spending habits from "wants" to "needs", not by choice but by sheer necessity?

The moment it becomes common knowledge that the global production rate of oil is declining no matter what we do in terms of more drilling and tar sands etc nobody is going to invest in any company that isnt going to grow because of higher oil prices (pretty much all companies!). Why invest in something that is going to lose money? Why would you invest money into a company even if it didnt decline but didnt grow either? Investors look only to invest where there is likely to be an increase in share price not stagnant or decreasing share prices.

Nah - growth is NOT a prerequisite at all for a vibrant economy.
Better has a huge role to play and many businesses like mine are designed around a steady state without growth.

Your view is that of the next quarter MBA who is trying to pump stocks.

A hydro facility does not need to grow
A baker and butcher even a candlestick maker does not need to grow.
Some farms have been in a steady state for a century or more - they don't need to grow.

You are in frontier mode.

As for airlines - they will be the first two switch to bio-fuels - they already are as they have a small fleet and and easy transition and the money to go and do it.

Greentech is the next bubble and it will be huge - you might want to consult one of the more successful VCs on the planet about that.

http://earth2tech.com/2008/03/24/john-doerr-how-greentech-investing-adds-up/

http://www.redherring.com/Home/18901

It's the very first self financing bubble and there is more VC money chasing Green projects than there are opportunities.

High oil provides enormous opportunity. There is $5-10 billion a day in oil revenues flowing right now.......slicing any % of that off is a winning strategy.

GE and Siemens do it by retrofitting multiple dwellings and other energy reduction strategies....both have big divisions.

If oil goes to $200 then an PHEV or high tech diesel is self financing the savings in transport is more than the financed cost of the new vehicle. That already happened in some cases in the last spike.

Look at Denmark jumping on wind energy and creating a huge industry and income.

China is lining up big time to make billions in Greentech.

And indirectly - Saudi Arabia is funding it's own demise. :D

The Truth Hurts

31st December 2008, 09:43 PM

Expected by whom? How many experts predicted $37 a barrel oil in December 2008 last summer when it hit $140 a barrel? Has the worldwide recession bottomed out, or are we in for a decade-long depression? Darned if I know.

Whilst I cannot claim that I picked the price of oil dropping to $37 per barrel I can explain what is going on... I will be as brief as possible.

Basically as per my previous post oil prices shot up because global oil production rates plateaued at approx 86-87 million barrels of oil per day from 2005 till 2008 rather than increasing like they had in previous years. This mean that the global oil production rate did not keep up with global oil demand as the world economy grew. Thus, there was not quite enough for everybody so someone had to miss out on oil. How do "they" work out who misses out? Simple, it is an auction whereby we all have to bid for the oil and richer countries simply outbid poorer countries for the oil hence the price of oil rising from $100 in Jan 08 to $147 in July 08. This high prices causes massive upheaval to the global economy (see my previous post) and thus as companies go bust or wind back production this is called "demand destruction". Less need for oil so supply/reserves increase and ensures demand is easily met and the auction process means the price drops.

The thing is that global oil production is at peak which means that it is about to decline remorselessly. The International Energy Agency just within the last month or so released a paper stating that they believed the decline rate for global oil production would be 9.1% per year!!!!! This is scary stuff! They went on to say that if the right investment into oil was made the decline rate could be reduced to 6.4% per year! Which is still very scary!

To give some perspective on what a global oil production decline of 6.4% would mean... check out what happened back in 1973/74 after the Yom Kippur War where the US assisted Israel in defeating Eygypt and Syria and OPEC (Organization for Petroleum Exporting Countries) decided to stop providing oil to the US. That was a small shortfall of oil but caused a massive economic shock to the world.

gdnp

31st December 2008, 10:27 PM

The thing is that global oil production is at peak which means that it is about to decline remorselessly. The International Energy Agency just within the last month or so released a paper stating that they believed the decline rate for global oil production would be 9.1% per year!!!!! This is scary stuff! They went on to say that if the right investment into oil was made the decline rate could be reduced to 6.4% per year! Which is still very scary!

Do you have a link to this?

There are some mitigating factors. Attempt to decrease greenhouse gas emissions are one, as are rising fuel economy standards on US cars and the development of alternative energy sources. If oil production is really going to drop 9% per year any competently run company is going to be seeking alternatives.

The Truth Hurts

1st January 2009, 12:01 AM

timhau

1st January 2009, 12:18 AM

Sweden is committed to fossil free by 2025

In 1980, they also committed to being free from nuclear energy by 2010.

http://upload.wikimedia.org/wikipedia/commons/8/8c/Electricity_production_in_Sweden.PNG

gdnp

1st January 2009, 12:23 AM

I am not yet able to properly post URLs but I am able to provide them in streched out format. Just take the spaces out and it should work. It is a Financial Times article...

http://www.ft.com/cms/s/e5e78778-a53f-11dd-b4f5-000077b07658,dwp_uuid=f2b40164-cfea-11dc-9309-0000779fd2ac,Authorised=false.html?_i_location=htt p%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fe5e78778-a53f-11dd-b4f5-000077b07658%2Cdwp_uuid%3Df2b40164-cfea-11dc-9309-0000779fd2ac.html%3Fnclick_check%3D1&_i_referer=&nclick_check=1

Unfortunately the problem is that our global economy is so reliant on cheap oil that if it does decline anything like 9.1% or even 6.4% it will be catastrophic and no company will be in a position to utilize green technologies.

To be honest you should check out Chris Martenson's website Crash Course and do his crash course as it explains way better than I could why oil depletion is such a big deal. It deserves your attention!

However, you can only take a horse to water.... so good luck either way.

Do you know how annoying trying to edit out those spaces was? I gave up and retyped the header.

For others interested I fixed it in the quote.

I would like to see the details of the report. 9% seems awfully steep.