Silver™

Whew, I guess the "abyss" is farther away than some of your articles in this thread lead me to believe.

And what about my bet?

SpeedyV6

I guess we aren't "staring into the abyss." Rather, Fibonacci suspects there may be an abyss somewhere at the end of the rainbow - wherever that may be.

Fibonacci

I proposed a simple bet that a new high would be established on NYMEX, then you went on your typical talky, talk tangent and you never named a number.

Silver™

Re-read the thread.

And then let me know if you will take my bet, and I would be happy to take yours.

Silver™

If crude oil prices extend their sharp slide below the $US50 a barrel mark it could trigger an even deeper wave of investor selling, energy analysts said on Wednesday.

Oil prices have slumped about 16 per cent since the start of the year to below $US51 a barrel before picking up to around $US52.50 in after-hours trading and the market has a concentration of "put", or sell, options around the $US50 and $US45 a barrel level, making them key pivot points.

The spot price in Dubai sank to $US49.39 on Wednesday but in early trading last night was back over $US50 - by just one cent.

"If the speculative funds were able to push crude below $US50 a barrel it could trigger a further wave of put short hedging which would give additional negative momentum," said Olivier Jakob at Petromatrix.

The drop in oil prices has been caused in part by an abnormally warm winter that has cut into demand for heating fuels and has rung alarm bells for OPEC members struggling to buoy prices with production cuts.

But analysts have also been pointing to hedging by oil producers who wish to lock in revenue because they think oil's five-year rally may have run out of steam.

http://www.smh.com.au/articles/2007/...html?from=top5

Fibonacci

You are incorrigable

I proposed a side bet, you didn't like the terms and passed. End of story.

Silver™

I am willing to take your bet. You are unwilling to take my bet. End of story.

Fibonacci

Fibonacci

I propsed you name a number, you passed. Crikey - stop talking and start walking!

Silver™

I said that the average price of oil this year would be in the $60's. It is now your turn to pick a $10 range. You have been incapable of even doing that for the last several pages.

Fibonacci

My original bet was that a new high would be established this year. Very simple. :wink:

Your counter bet is like picking a ten dollar trading range on Google.

Silver™

My bet is very simple too and more relevant to this thread.

But I know you won't step up so stop talking and start walking.

Fibonacci

I think we should take this off-line.

Send me a PM if you want to discuss further. I propose a friendly debate over a few margharitas. I'll buy!

Silver™

It is quite simple.

I accept you bet regarding a new high.

You need to accept my bet regarding the average price for 2007 and pick a $10 range. Whoever is closer wins.

How can it be any more simple

SpeedyV6

January 28, 2007
Saudi Officials Seek to Temper the Price of Oil
BY JAD MOUAWAD

Saudi Arabia, which benefited immensely from record oil prices last year, has sent signals in the past two weeks that it is committed to keeping oil at around $50 a barrel — down $27 a barrel from the summer peak that shook consumers across the developed world.

The indications came in typically cryptic fashion for the oil-rich kingdom. In Tokyo last week, Ali al-Naimi, the Saudi oil minister, said Saudi Arabia’s policy was to maintain “moderate prices.” The previous week, on a stop in New Delhi, he effectively put his veto on an emergency meeting of the Organization of the Petroleum Exporting Countries to prop up prices after oil briefly dropped below $50 a barrel, the lowest level in nearly two years.

The events that propelled oil prices above $77 a barrel last July, then dragged them down again, were beyond the control of any single producer. Still, Saudi Arabia, which is by far the largest oil producer within OPEC and sets the cartel’s agenda, is seeking to avoid a repeat of the dramatic rise in prices while trying to put a floor beneath them.

Nowhere was last summer’s spike in oil prices felt more profoundly than in the United States. As gasoline rose above $3 a gallon, consumers cut their spending elsewhere, tamping down profits in retail, travel and other industries. United States automakers were devastated as consumers fled from large vehicles to smaller ones, which have historically been the specialty of the Japanese; on Thursday, Ford said that 2006 had been the worst year in its history.

The recent slide back to $50 a barrel for oil — which translates to about $2 for a gallon of gasoline — has eased the pressure on the domestic economy, quieting talk that oil prices and the declining housing market would lead to a recession.

The Saudis appear to be rediscovering that painfully high energy prices take a profound toll on the global economy, which in turn reduces demand for their oil. But other motives seem to be at work, too, including the Saudis’ desire to restrain Iran’s ambitions in the region.

How much influence the United States has exerted is an open question. Vice President Dick Cheney met with King Abdullah of Saudi Arabia in Riyadh in November, but his office would not say if oil was discussed. The White House has been supportive of Saudi energy policy, and President Bush and his father are close with Prince Bandar bin Sultan, the Saudi national security minister and former ambassador to Washington.

Although Saudi officials say their oil policy is based on market considerations and not political ones, the meeting in November led to renewed speculation that the kingdom might be tempted to dry out Iran’s ambitions by pushing oil prices down. Prices have already been falling because of mild weather and slowing demand.

Prices at $50 to $55 a barrel are just about right for the Saudis, according to Saudi energy officials — not too high to hurt the global economy, not too low to hurt their own economy. Last year’s record highs meant that the growth in global oil demand slowed to 1 percent in 2006, compared with a 4 percent increase at its peak in 2004.

But 2006 was not the first reminder for the Saudis that too-high prices can backfire. The oil shocks of the 1970s and 1980s also set off a scramble for gas-sipping cars and a brief push to wean the West from its oil dependency. In recent months, the higher prices have rekindled America’s quest for alternatives and propelled energy security to the top of the agenda in the United States and Europe.

Even President Bush, who began his presidency emphasizing the need to increase domestic oil production rather than cutting consumption, called for a reduction in gasoline use over the next decade in last week’s State of the Union address.

High prices have also emboldened rivals within OPEC, among them Iran and Venezuela, which have used their oil revenue to prop up their governments and export their more radical agendas. Saudi Arabia has worked cooperatively with Iran since the late 1990s, when oil producers were panicked by the decline of prices to around $10 a barrel. More recently, Iran has favored rising prices over the moderation that Saudi Arabia seeks. Venezuela also tends to favor higher prices but wields less political influence in the cartel.

“High prices are not in the interest of Saudi Arabia,” said Sadek Boussena, a former OPEC president from Algeria. “We’ve all seen what $70 does: it attracts alternatives, it reduces demand. On the other hand, I don’t think the Saudis want oil below $50. They need the revenue.”

The Bush administration has repeatedly acknowledged Saudi Arabia’s efforts in trying to moderate prices. “Buyers and sellers have a common interest in maintaining reasonable prices for oil,” Samuel Bodman, the energy secretary, said in October.

There is no set formula for setting oil prices. In the 1980s, the market settled on around $18 a barrel as a fair price. In the 1990s, it was ratcheted up to $22 to $25 a barrel. Recently, oil producers have realized they can charge twice that amount, although consuming nations complain that the price is too high.

Mr. Naimi, the Saudi oil minister, borrowing the manner of a careful central banker, is rarely explicit about his plans. His every word is dissected by legions of analysts for the slightest hint of an inflection in policy.

Sometimes, the uncertainty gives rise to more conspiratorial theories. Oil traders have been buzzing in recent weeks about whether Saudi Arabia was seeking to depress oil markets in hopes of crippling Iran’s economy, as a Saudi analyst — albeit not one from the government — suggested late last year in an opinion article in The Washington Post. The Saudis quickly dismissed the claim, but given the tensions in the Middle East, oil and politics remain closely linked.

“It is difficult to work out what the Saudis really want, since they never say things explicitly,” said Leo Drollas, the chief economist at the Center for Global Energy Studies, a London-based research group founded by Sheik Ahmed Zaki Yamani, a former Saudi oil minister. Sometimes, he said, “you have to read between the lines.”

The Saudi government does not disclose what oil price it uses when it builds its budget, but analysts at Samba Financial Group, a bank in Saudi Arabia, say they believe the price is $42 a barrel for 2007, with oil production at about 9 million barrels a day. With oil averaging $66 a barrel last year, the kingdom recorded a budget surplus of nearly $71 billion, Samba said, five times more than in 2005.

Saudi officials repeatedly point out that they do not set the price of oil on international commodity markets — they point the finger at hedge funds and other speculative traders for the heightened volatility in recent years. Nor, they say, do they run their oil industry with political considerations in mind.

Mr. Naimi has led the ascent of oil prices since 2000 and managed his various partners within OPEC toward better discipline within the cartel. Last fall, under Saudi stewardship, OPEC members twice agreed to cut their output to prevent prices from falling too steeply.

More than any specific target, the Saudis have always sought stability in oil prices. But stability may prove just as elusive this year as it did last year, given how vulnerable global oil supplies remain to the vagaries of the weather as well as political turmoil in the Middle East and Africa.

Although OPEC’s 12 members decide by unanimous votes whether to increase oil production — which lowers prices by making supply more plentiful — consumer pressures ultimately hold sway, and an extremely cold winter followed by a very hot summer could override whatever price goals the Saudis have set.

Not everyone is reading the Saudis’ recent public signals — scant as they are — in the same way. “The Saudi policy has not changed,” said Roger Diwan, an energy analyst at PFC Energy. The Saudis, he said, have “led the way in managing the market. They showed leadership in OPEC.”

But Amy Myers Jaffe, the associate director of Rice University’s energy program, said she thought that Saudi policy had shifted, backing away from a defense of higher prices.

“The debate in Saudi Arabia is about what is the right strategy, where demand is headed, and what is the right amount of investments,” she said. “And that’s a very tough question.”

Jim Rutenberg contributed reporting.

SpeedyV6

Oil Weapon is Unleashed against Iran
Tuesday February 13, 4:50 am ET

Gary Dorsch (Global Money Trends) submits: Crude oil has become a key weapon in the battle between Saudi Arabia, Kuwait, and the UAE, aligned with the United States, against the mullahs of Iran. The Arab Oil kingdoms fear the emergence of a Tehran-led axis linking Iran, Iraqi Shiites, Syria, Lebanon’s Hezbollah, Palestinian Hamas in Gaza, and Islamic militants linked to al Qaeda trying to topple the Saudi royal family.]

Earlier this month, Riyadh fired the first shot in the war against Iran, by knocking the price of crude oil to as low as $50 per barrel. The goal is to squeeze Iran’s budget and wreck havoc on its economy, as much as possible, before the mullahs can get their hands on the nuclear bomb. According to a Jan 24th report in the UK Telegraph that indicated North Korea is helping Iran to prepare an underground nuclear test similar to the one Pyongyang carried out last year.

Under the terms of a new understanding between the two countries, the North Koreans have agreed to share all the data and information they received from their successful test last October with Teheran’s nuclear scientists, to assist Teheran’s preparations to conduct its own test, possibly by the end of this year.

On January 24th, the Saudi All Share Index [SASI] closed below the 7,000 level for the first time in two years, and trying to find a bottom. The specter of a nuclear armed Iran is sinking SASI, while lower oil revenue dries up market liquidity. Until SASI shows concrete signs of a bottom, powerful spike rallies in crude oil might fizzle out, with Riyadh trying to apply overhead resistance with excess supply.



On Jan 23rd, Saudi Arabian Oil Minister Ali al-Naimi said the kingdom is aiming for moderate oil prices, but did not give an actual price level. He noted that Saudi Arabia’s spare crude production capacity is set to rise to 3 million barrels per day (bpd). In the event of a US naval embargo on Iran’s daily exports of 2.4 mil bpd, Riyadh could fill the missing gap from its spare capacity.

Crude oil prices were sliding steadily in the second half of 2006, even as OPEC was cutting back on its oil output from a record high of 28.3 million bpd. That’s because 1.8 million bpd of new oil supplies from Angola, Brazil, Canada, Kazakhstan, and Russia are expected to come on stream this year. As of Feb 2nd, OPEC-10 had lowered its output to 26.8 million bpd, but is still cheating by one million bpd above the quotas that it agreed upon on in October and December.
[img]http://seekingalpha.com/wp-content/seekingalpha/images/dorsch2_01.jpg[.img]

US Vice President Dick Cheney’s visit with King Abdullah on November 25th was brief, lasting only a few hours before he flew back to Washington. Cheney might have asked Abdullah to use his influence in the oil markets to knock prices lower, to put a squeeze Iran’s troubled economy, which depends on crude oil sales for 95% of its foreign exchange earnings and 50% of government spending.

To counter the Saudi inspired plunge in oil prices, Iranian President Mahmoud Ahmadinejad proposed on Jan 21st, to cut the oil price on which the next Iranian budget is based to $33.70 per barrel for the year starting in March, compared with a price of $44.10 for the existing budget.

“It is a signal to Iran’s enemies saying we are ready and we will manage the country even if you lower the oil prices more. We assume our enemies want to damage us by decreasing the price of oil. So we must reduce our dependency on oil revenue,” Ahmadinejad said.

Iranian crude usually sells for about $7 a barrel less than US light crude oil. So West Texas Sweet would have to stay below $51 per barrel for an extended period of time, to wipe out Iran’s budget surplus. Tehran spends $20 billion to $30 billion on heating oil and gasoline subsidies per year, costing the government roughly 15% of Iran’s GDP. Ahmadinejad was elected promising to bring oil revenues to every family, eradicate poverty and tackle unemployment.

But Ahmadinejad has failed to meet those promises. Instead, inflation in Iran according to various estimates is galloping ahead at 15% to 30%, and the jobless rate among men below 30 years old is at 20 percent. Anticipating a possible US blockade of gasoline imports in the next stage of economic warfare, Tehran is prepared to start rationing gasoline as early as March 23rd.

Mohsen Rezai, secretary of Iran’s Expediency Council, told the Dubai-based Al-Bayan newspaper on Jan 21st:

“America will exploit sanctions against Iran to incite people to rise up against the Islamic revolution, provide aid to movements hostile to Iran, carry out operations inside Iran and promote a sectarian war. The next two months will show the world this strategy. An Iranian-US confrontation is inevitable,” he said.

Iran’s nuclear program is continuing apace, and it aims to install an array of 3,000 centrifuges at a uranium-enrichment plant, more than enough to produce fuel for a nuclear bomb. Iran’s supreme leader Ali Khamenei said that if the United States were to attack Iran, he would respond by striking US interests all over the world.

Speaking to a gathering of air force commanders on February 10th, Khamenei said:

“The enemy knows well that any invasion would be followed by a comprehensive reaction to the invaders and their interests all over the world. Some people say the US president is not prone to calculating the consequences of his actions. But is it possible to bring this kind of person to wisdom?”

US crude oil prices (AMEX: USO - News) bottomed out at $50 /barrel, after Prez Bush ordered another 21,000 troops to Iraq, and directed the USS John Stennis to the Gulf. US crude oil rallied more than 4% on Jan 23rd, the biggest one-day gain in nine weeks, after US Energy Secretary Sam Bodman announced a plan to expand the Strategic Petroleum Reserves by 11 million barrels (100,000 bpd) starting in April.

Crude Oil Market Jolted by Depletion of Mexico’s Cantarell Oilfield

Then on January 29th, crude oil surge by $3 per barrel on news that daily output at Mexico’s biggest oil field tumbled by half a million barrels to 1.5 million bpd last year, according to the Mexican government. Mexico’s overall oil output fell to just below three million barrels a day in December, down from almost 3.4 million barrels at the start of the year, the lowest rate of oil output since 2000.

Some experts predict that Cantarell’s output will drop another 600,000 bpd by the end of this year. Petroleos Mexicanos [PEMEX] might try increase output by 200,000 barrels a day at other fields, leaving the country with a net decline of 400,000 bpd by year’s end and daily exports of less than 1.4 million barrels. Mexico’s oil reserves are expected to last only nine years and eight months at current rates of production.

Cantarell, the world’s second-largest oil complex, in the shallow gulf waters off the shore of Mexico's southern Campeche state, is a prolific giant that is past its prime. Monthly production peaked in late 2004 at just over 2.1 million barrels a day and has fallen more than 28.5% since then. Experts agree it has nowhere to go but down. Its proven reserves have tumbled by more than a third since 2000.

To counter a powerful $10 per barrel rebound in crude oil prices from a low of $49.84 per barrel, on January 18th, to $60 /barrel on February 19th, Saudi oil minister al-Naimi indicated in a timely interview with the media, that the kingdom would continue to over supply the oil market in the first half of this year. “Are we going to make additional cuts or increase supply? Most probably, if the trend is like it is today, (i.e. $60 /barrel) with the market getting in much, much better balance, there may not be any reason to change,” he said.

While the Saudis try to squeeze Iran’s income with low oil prices, the Bush administration has increased pressure on foreign banks and financial institutions to cut ties to Iranian counterparts, warning them that they risk losing access to US financial markets unless they stop doing business with Tehran. The US is especially trying to dry up financing for Iran’s two massive new oil fields that could expand output by 800,000 bpd over the next four years.

But Royal Dutch Shell and Spain’s Repsol (NYSE: REP - News) signed an initial $10 billion agreement on January 29th, to help Iran develop a major gas field. RD is struggling after being forced to hand over vital Russian reserves at Sakhalin Island to the Kremlin. Still, it could be hard for the European oil companies to maintain operations in both Iran and the US, where Shell and Repsol both have oil fields.

US officials warned they will hold Beijing accountable under Washington’s unilateral sanctions laws if it proceeds with a $16-billion project to develop Iran’s North Pars gas field. And in the latest move in the developing US-Iran chess match, the US has dispatched a second aircraft-carrier battle group to the Persian Gulf as an apparent symbol of its ability to carry out air strikes against Iranian targets, if necessary.



Thus, trading shares in the Amex Oil Index [^XOI] has become a game of predicting the wild swings in the highly volatile crude oil market, which is also under the heavy influence of schizophrenic hedge fund traders. ExxonMobil (NYSE: XOM - News) for instance, would gain or lose nearly $3 billion in profits, or $540 million for every dollar move in the price of oil per barrel. ChevronTexaco (NYSE: CVX - News) and ConocoPhillips (NYSE: COP - News), the second and third-largest US oil companies, would gain or lose about $330 million and $200 million respectively, for every dollar of crude oil per barrel per year.

But the fireworks are just beginning for the crude oil markets and Amex Oil Index members. “The problems with Iran will not be resolved through economic sanctions alone. At some stage we must expect that Iran will acquire the capacity to enrich uranium on the scale required for a weapons program,” according to the conclusions of an internal European Union document, compiled by the staff of EU foreign policy chief Javier Solana, the Financial Times reported on February 11th.

The Saudi inspired plunge in crude oil is just one of the economic levers that will be applied on Iran’s economy as the year unfolds. But can such “crude” methods work, especially with the rapidly depleting oil output from Mexico, and saber rattling in the Persian Gulf bolstering prices?
http://biz.yahoo.com/seekingalpha/07...7_id.html?.v=1

Silver™

The Kern River oil field, discovered in 1899, was revived when Chevron engineers here started injecting high-pressured steam to pump out more oil. The field, whose production had slumped to 10,000 barrels a day in the 1960s, now has a daily output of 85,000 barrels.

In Indonesia, Chevron has applied the same technology to the giant Duri oil field, discovered in 1941, boosting production there to more than 200,000 barrels a day, up from 65,000 barrels in the mid-1980s.

And in Texas, Exxon Mobil expects to double the amount of oil it extracts from its Means field, which dates back to the 1920s. Exxon, like Chevron, will use three-dimensional imaging of the underground field and the injection of a gas — in this case, carbon dioxide — to flush out the oil.

Within the last decade, technology advances have made it possible to unlock more oil from old fields, and, at the same time, higher oil prices have made it economical for companies to go after reserves that are harder to reach. With plenty of oil still left in familiar locations, forecasts that the world's reserves are drying out have given way to predictions that more oil can be found than ever before.

http://www.iht.com/articles/2007/03/04/news/oil.php

Silver™

The energy source of the future may lie beneath the ocean floor and under Arctic permafrost, scientists say.

Both places are sources of gas hydrates, strange icelike substances that trap methane—the primary component of natural gas. "It's not frozen gas," explained Timothy Collett of the U.S. Geological Survey in Denver. "It's [formed] from the interaction of gas and water."

The hydrates were discovered in 1983, and no one knows how many of them exist.

But there appear to be enough hydrates to represent a larger energy source than all of the word's gas, oil, and coal combined, Collett said at a meeting of the American Institute of Physics in Denver, Colorado on March 5.

Twenty-three percent of the Earth's surface is covered by permafrost and may have hydrates beneath it, he said, and most of the world's oceans are deep enough for hydrates to exist just under the seabed.

http://news.nationalgeographic.com/n...y-methane.html

Fibonacci

^^ I've heard and read a little about this before. Sure it's great in theory to find new energy sources...obviously the challenge is acquisition and logistics.

The sun is a huge source of energy, the reason why solar hasn't been tapped yet is because it is not cheap enough to produce energy relative to existing fossil fuels.

It will take a super spike in energy prices to promote greater funding for alternative energy sources or pipelines to the bottom of the sea or nuclear power plants buried 5 miles into the earth to get oil out of shale.

Silver™

Now that would be a technological feat.

Fibonacci

Peak Oil starting to break into mainstream media. On CNBC now...

Who's been ahead of the curve?

Silver™

Hello and welcome to last year...

http://video.msn.com/v/us/msnbc.htm?...&f=00&fg=email



Not the self proclaimed "guru"

Fibonacci

Reality is a bitch slap in 'yo face Mr. Oil is an endless river...

Silver™

Can you try english this time?

Fibonacci

Still waiting for that oil shale and hydrates to come on line!

Silver™

I am sure you will see them online before you have to "stare into the abyss"

Fibonacci

Fibo ---> < --- silver

Silver™

^^^



Have you paid attention to this thread at all? The days of easy oil have been declared over for more than a century. But those predictions were shown to be wrong when early last century technology was developed that let you drill down more than a couple hundred feet. Then the same thing happened during the latter half of last century when you had to drill down more than a thousand feet and use imaging technology to get at the oil.

The oil is there, it just is hard to get at until the technology catches up, which is always has...

Silver™

the oil is running out again...


In 1979, President Jimmy Carter, an early practitioner of the Oh, Woe! School of Planetary Analysis (today Al Gore is the dean of that school), said that oil wells were "drying up all over the world." Not exactly.

In 1971, according to M.A. Adelman, an MIT economist, non-OPEC countries had remaining proven reserves of 200 billion barrels. After the next 33 years of global economic growth, Adelman says, those countries had produced 460 billion barrels and had 209 billion remaining. As for OPEC countries, in 1971 they had 412 billion barrels in proven reserves; by 2004 they had produced 307 billion and had 819 billion remaining.

Note the adjective "proven." In 1930, U.S. proven reserves were 13 billion barrels. Then we fought a global war, fueled the largest, most sustained economic expansion in history and achieved today's electricity-powered "information economy." Today, America's proven reserves are about 30 billion barrels -- not counting the perhaps 15 billion in the field discovered last year in deep water 175 miles off Louisiana's coast.

America produces about one-quarter of the 20.6 million barrels of oil it uses a day. Unfortunately, just as liberals love employees but not employers, they want energy independence but do not want to drill in the "pristine" (read: desolate) Arctic National Wildlife Refuge ( potential yield: 10.4 billion barrels) and are reluctant to countenance drilling offshore.

http://www.washingtonpost.com/wp-dyn...d=opinionsbox1

Fibonacci

No!

Do yourself a favor and read the front page of today's WSJ and report back to me, or perhaps speedy can do us a favor and post the entire article.

Silver™

Can't get at the WSJ, but how about these article from the last couple weeks

Fibonacci

Supply and demand are simple concepts to grasp. Nobody is disputing that new reserves are found each and every day.

The problem dear is that new discoveries are miniscule in comparison to the rate of accelerating global demand. The new sources will take many years and require many multiple billions of investment before they come online.

Like I said, do yourself a favor and read today's journal - there is an excellent write up on the declining production of the giant oil fields.

Silver™

So you haven't watched the CNBC report on "peak oil" yet?

https://acurazine.com/forums/showpos...&postcount=102


As the price of oil increases, the viability of new technologies increases. Just as it has through out history when we were supposed to reach the peak.

During the upcoming years new technologies will be discovered for bringing out the oil, and new technologies will be discovered to find the oil, etc... Tar sands that are not profitable at $30bbl suddenly become very profitable at $100bbl, and the technology will only get better making it easier and more profitable.

hornyleprechaun

If either of you specify the article title I will post it.. I couldn't find it online when looking for it..

Fibonacci

Sorry, it was on the front page of 4/05/07 print edition and I already tossed it. The article was in reference to the world's major oil fields and their rapidly declining production levels and how we aren't discovering easy to tap like-sized fields to quickly replace them.

I get the WSJ delivered at work and don't have a login id, otherwise I would have posted a link. If you get a chance, I'm sure your local library will keep last week's print edition thru the weekend.

Fibonacci

The problem is unconventional sources of oil, like tar sands, represents a miniscule portion of global supply - less than 1%.

I don't dispute that new technologies will make alternative sources more viable - the problem lies in that consumers aren't farsighted enough to prepare for the upcoming painful adjustment process. Oil at $150pb will certainly put pump prices at easily double the current level.

Silver™

The oil trapped in the oil shale in the United States is more than 3x as much as all the oil in Saudi Arabia. And then add the trillions of barrels in oil sands in Canada and Venezuela that are there to.

It is there for the taking. Just takes money and technology.



Unless something drastic happens, the rise in prices will not happen over night, and during the run up to $150 more reserves of conventional oil will be found and the higher prices supports new R&D into getting both the conventional and non-conventional oils. Simple economics.

Fibonacci

Oh is that all...

Silver™

Yup, just like most other innovations.

Or do you think we will leave the trillions of dollars of oil in the grond

Silver™

The pessimistic claims about peaking oil supplies should be treated with skepticism. For decades, analysts have argued that oil supplies were dwindling and that the peak rate of production would soon been reached. In fact, the most eminent advocate of that argument today once predicted that the global production peak would occur in 1989, but since then global crude oil production has grown by 23 percent, and oil supply (crude oil and other petroleum liquids) has grown by more than 28 percent. More telling, the world’s ultimately recoverable resources (URR) have been growing over time, largely because many fields contain substantially more oil than was originally believed.

One reason URR are growing despite the world’s continuing consumption of oil is that improved technology has allowed a far greater fraction of reserves to be extracted from oil fields. In 1980 only 22 percent of the oil in the average field was recoverable, but with better extraction technology average recovery is now up to 35 percent, effectively increasing URR by more than 50 percent. The results of the growing URR and recovery rate are striking: in 1972 the “life-index” of global oil reserves, the length of time that known reserves could support the current rate of production, was 35 years; in 2003, after 31 more years of accelerating oil extraction, the life index stood at 40 years. In short, no one knows how much oil is ultimately recoverable from the earth, but there is no compelling evidence that reserves are running out or that production is near the peak.

Although the simplest version of the peak oil hypothesis exaggerates the likelihood of impending oil shortages, there is a subtler cause for concern that has some merit: the world’s remaining oil supplies are increasingly concentrated in politically unstable regions, particularly the Persian Gulf and Central Asia.28 Fears of instability in those regions could suppress investment in exploration and development of oil fields, which could increase prices. Moreover, the pessimists argue, unstable future oil production could leave the United States vulnerable to sudden supply shocks.


Oil industry research and development has a good track record for increasing oil supplies. Decades of investment in exploration technology have made it easier to find deposits, and improvements in extraction technologies have made it possible (and economically feasible) to recover oil from locations that were once inaccessible, such as under deep water. Improved extraction technology has also increased the fraction of the oil that can be recovered from fields. As a result, the average finding and development cost of a barrel of oil (adjusted for inflation) plummeted from $21 in 1979–81 to $6 in 1997–99. The steady stream of technological innovation in the oil industry explains why URR has grown over the past half century.

http://www.cato.org/pubs/pas/pa589.pdf