POLL: CLQ08 went through $140/bbl today..so, in the next 60 days, the front month price of CL will...
Posted by Prof. Goose on June 27, 2008 - 9:50am
hit $154 before it hits $126
60% (2415 votes)
hit $126 before it hits $154
9% (361 votes)
stay in a trading range between $126 and $154
25% (985 votes)
it's still all geopolitics and other "above ground factors," so what does a price signal mean anyway?
2% (70 votes)
haven't you heard? it's all about the declining dollar and specs-not growing demand and a stagnant supply.
4% (171 votes)
Total votes: 4002
POLL: CLQ08 went through $140/bbl today..so, in the next 60 days, the front month price of CL will...
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113 comments
POLL: CLQ08 went through $140/bbl today..so, in the next 60 days, the front month price of CL will...
PDF version
113 comments
“Any coward can fight a battle when he's sure of winning, but give me the man who has pluck to fight when he's sure of losing. That's my way, sir; and there are many victories worse than a defeat.”
—George Eliot
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In our last poll on 18 MAY (and here's the old accompanying comment thread--NB, SuperG fixed the glitch, so the poll and comments can be in the same thread now), 50% of you predicted that CL would hit $140 in the front month before it hit $114. Yep, we've passed it today, though we closed below it. Oil has risen from $127 to $140 (~10%) in just over a month--again. Our last three polls have predicted 10% rises within 60 days of each poll. Past performance is not a predictor of future values, YMMV, and as it says in the disclaimer, nothing here should be construed as investment advice.
And be sure to digg Gail's post if you haven't already. :)
and here's the reddit links for this poll:
http://www.reddit.com/info/6p64x/comments/ (reddit.com--link fixed!)
http://www.reddit.com/info/6p616/comments/ (business)
http://www.reddit.com/info/6p619/comments/ (energy)
Personally, I'm picking the trading range this time. Strong dollar talk is going to begin in earnest here pretty soon--though it's going to kill the consumer if they raise rates with any speed. Demand has to go down at some point too. Then again, one geopolitical event or disruption further, and you're easily at 150.
That's the point about peak oil to me: increasing uncertainty and volatility over time. As far as I am concerned, it's a guessing game right now...and will be for the foreseeable future. I mean, what if the psychology changes because of government intervention in commodities trading and money flows out of those markets, etc.? (which I don't think will matter, folks will just go to London to trade oil instead of here, idiots...talk about a symbolic gesture...) Who f-ing knows?
Thanks Prof. Goose, I was keen to vote again for the highest possible choice as I was right to do so the last two times (and the only ones I voted).
Something tells me that I may be wrong this time... you know, the Stock Market.
One big hurricane that even looks threatening to hit the Gulf, and we're at $150. Doesn't actually have to hit anything.
Yes, it is a guessing game right now, but lately, the pessimists (doomers) seem to be out distancing the optimists (cornucopians) on every front.
When in doubt for speculating on crude prices, aim high. Very high. Conversely when dealing with stocks or real estate or your bank account or intelligence from TPTB, then aim low. Very low.
Appears to be the current winning formula. Except that under these gaming rules, who really wants the jackpot??
I would have to disagree. Oil prices have been cyclical for years. Why would it be different this time? Yes, they might continue rising in the short run and anything minor such as a hurricane threat could send them above $150 but it is only the matter of time before they are falling back down to $100.
Oil, like any other bubble such as tech or real estate has risen too much and too fast. It will also pop like any other bubble only to come back to its peak, but that won’t happen for years. So anyone putting their money in oil today would be making the same mistake as the people who invested in real estate a year ago. You are more likely to double up by investing in the beaten up airlines, which will sky rocket as oil will fall, than you are investing in oil today or shorting the market which is at its lowest point in two years.
Q. "Why would it be different this time?"
A. Uh, ever heard of peak oil?
Why would it be different this time?
The turkey gets heavier every day. Why should tomorrow be different?
(Ans: it's coming up Thanksgiving/Christmas)
Ahhhh.. a newbie (<10hrs at the time of this post). Being one myself, I'm not too sympathetic. I found out about PO about 8 or 9 months ago but, I pride myself in having gotten up to speed really quickly. To avoid embarrassing myself, I lurked her for a few months before signing up and posting. Had the OP even taken the time to read Gail's latest PO overview, I doubt he would have posted. If he has read, he obviously disagrees with the whole concept of PO or does not understand it.
Alan from the islands
"Q. "Why would it be different this time?"
A. Uh, ever heard of peak oil?"
So, peak oil precludes market corrections, loss of demand due to high prices & deep recessions? It is impossible that high prices cannot moderate demand? Political constraints on production in the US, Mexico, Iraq, Iran, Nigeria, and Venezuela will never change? There can be no market bubbles due to foolish speculators? Oil prices will always move in a never varying line upwards. Gone will be all those little (and sometime large) squiggles that are so common in commodity charts? If you believe that I suggest you put every dollar you can beg borrow, and steal and go long in the future market. You can't loose, right?
I didn't just fall off a turnip truck.
Did you even read the comment I responded to?
Ah, a clue to the secret new crop in Willits this year. [heh]
Are you investing in airlines? Good luck with that one :D
Dear Grautr,
I would like to take this quick opportunity to say "i told you so" No, it's not all over. Oil prices might still bounce back in the short term, but it's nice to see how my Northwest Airlines have made me a healthy 94% return since the day that I made my comment and was shredded to pieces by all of you oil "experts".
Regards,
Andrius Spokas
How the other side thinks
Andrius Spokas,
thanks for posting. It's not always easy being a lone dissident voice in a group which stands against your opinion. I'll give you credit for that (and a vote up).
However, that doesn't still make your opinions right. You need to back up opinions with data, to build a real argument.
Because I like to play thought games and I can fully admit to not knowing with anywhere near 100% certainty, I will play along.
I'm going to generalize here, and go beyond your argument, but hopefully staying within the boundaries of honest argumentation and not building a straw-man.
Goldman seem to think we're now almost through oil investment phase and will start going to the exploitation phase soon, likely causing a significant and long lasting drop in prices:
Source: Goldman/Pernwell, 3/2008
IF this is true, then the index fund positions on oil futures are likely to take a big hit AND futures price will go into contango (that means, prices of futures contracts will start to drop as their maturity shortens, as the spot price is going lower).
Source: Homeland Security Committee hearing on Commodity Markets speculation, 5/2008
Source: AMP Capital, 5/2008
The same people also believe we are not 'running out of oil' (sic), meaning we are not near production peak yet - something which they are at least acknowledging now as a possibility
Source: Deutsche Bank, 5/2008
Further, even the FED thinks oil is not really that expensive in real terms
Source: Dallas FED, 2008
Lehman seems to somewhat agree:
Source: Lehman brothers, 6/2008
Now, please accept that in order to go simulate this thinking, I have to disregard a lot of data on production, spare capacity, refinery situation, inventory levels and export trends and estimates about upstream projects coming on-line.
However, what seems certain, that the thinking I've outlined above is not something only a few people believe in. It seems - at least on the surface - to be quite prevalent in the big banking industry and amongst politicians.
NB! I do NOT personally believe in the above hypothesis. Further I don't think the fact that they are in powerful position, automatically makes their deductions correct, which unfortunately many people automatically assume.
What the above hypothesis does, is to create confusion and a lot of cognitive dissonance in people. Esp. those who know the production fundamentals or people who try to follow experts of differing opinions.
Taking into account the data disregarded above, I think the above speculation/lots-of-oil-left argument is a very likely a seriously misguided hypothesis.
Now, this doesn't mean that the price of oil cannot fall to, say $100 for a while. Even many peak oil analysts believe this. A big recession world wide could bring down the price. But when will it happen, what will it result in and how long will that price level last - that's where opinions start to differ widely.
And even the people who should know seem to be very inaccurate in regards to predicting the oil prices historically:
Source: PRX Capital
But then again, I can't be sure I'm right, but at least I acknowledge that, unlike many of the bankers/politicians :)
PS I voted for the highest price on crude, just because of this:
Authors@Google: Philip Tetlock
Capsule summary: How do the best 'experts' fare on the aggregate in their predictions? Not any better than simple extrapolation models (+ lots of more stuff in the video, like the hedgehog-fox metaphor @ c. 26:30, that I recommend to everybody)
SamuM,
You've laid out the "oil bubble" argument pretty well, but I would argue that it is not a straight peak v. bubble debate. I have sympathy with the bubble argument, at least to an extent, but also beleive we face a very serious supply problem. What I would argue is happening is that commodity investors (for they are investors rather than speculators this time) are jumping the gun by a couple of years. You might even see this as a rational market repsonse to a looming supply crisis - choke off demand before demand exceeds supply. I argue this for a couple of reasons:
Q1 2008: US crude inventories rose by more than has ever previosly been recorded in any one quarter. Prices rise by 40%. Odd to say the least.
OECD forward days cover (Total crude and products): Currently sitting at 53.7 days. The top of the five year-range.
H2 projections: OK, projections are subject to lots of provisos, but with Khursaniayah now up and running and a mass of new production coming from Brazil, Angola and the GOM the global balance only looks likely to improve. Demand is rapidly slowing due to the high prices (US down 600k b/d!), though Middle East and Asia are still going strong. The higher the price rises though, the more this will affect demand (at least in Asia - amdittedly the elasticity here is probably at lot lower than was previosuly thought).
Iran: 14 VLCCs sitting in the Gulf full of Iranian crude that can't find a buyer.
The traders I speak to in the physical market say they have no trouble sourcing cargoes. The point is that there is a diconnect between what is happening in the market and the price. I can think of a few explanations.
- The data might be wrong. The IEA does frequently revise (usually demand up and supply down), but they'd also need to be wrong on inventories in quite a big way. It's possible, but seems only part of the possible explanation.
- There might be a shortage of light crude. That's not what I'm hearing from traders and the light/heavy spread is actually narrowing - which suggests this isn't the fundamental issue.
- Capital inglows into commodities are amplifying price moves. This seems plausible given the rapid increase in activity (the amount of WTI futures contracts held by non-commercials has increased by 600% since 2003).
I think those investors are buying becuase they fear peak oil. However, by ramping the price up now they are going to contribute to reduced demand, economic stagnation and improved efficiency. The danger is that this is a bigger bubble than we realise, and it pops. If that happens we just set ourselves up for an even worse spike in 2011-13 (looking at Skrebowski's supply projections, which I think are as accurate as you can get). There are feedback effects here.
I can't claim that this view is THE truth about what's happening by any stretch - the oil market is nothing if not opaque, and I accept that in the past price has often been the best clue we have to the underlying fundamentals. What I would say is you can still be concerned about peak oil, and see what's happening now as a bubble. They are not mutually exclusive.
I am on the same opinion. I fear the commodities bubble could come back with a vengeance. Then people will be declaring that "PO is BS" etc... Until one more year or two.
We have so short attention spans.
Thanks for all the additional input, Chicken Little. Nice nick, btw :)
I also agree and outline in my other post, that peak vs bubble is not a either/or situation. I do believe there is some sort of a 'premium' on top of fundamental supply/demand situation. How much it is and what causes it and IF it'll make any difference, well that's another thing.
However, where I strongly disagree with the hard line speculative bubble theorists, is that this premium is in the order of $75/barrel currently (they claim a 'real' price of $65/barrel for oil based on supply/demand).
As for the inventory data.
My reading says:
1. OECD commercial stocks at near normal levels, historically a bit below 1996-2002 figures
2. US combined crude oil stocks at low levels
3. I have no data on Asian commercial stocks, but according to CSIS world was at below five year stock levels by numbers available in March 2008.
As for H2 projections. So far all cuts in OECD demand has been exceeded by extra demand in Asian countries. I'm not sure how the recent subsidy cuts in China will fare, but I'm not sure there'll be a great drop in demand until China's economy slows down. OECD almost has to go there first, like we currently are going. I agree that demand supply cut potential there remains significant in due time, perhaps not yet fully in H2/08.
RE: "Iran tankers"
I was under the impression that the tankers are a temporary storage for the refinery repair phase and that the oil would be unloaded during mid-summer. If that is so, and that the oil can find buyers, and there is a significant amount stored in the VLCCs, then that might offer some relief on the price.
RE: "There might be a shortage of light crude"
The heavy-light spread I calculated from EIA data has been shrinking in relative terms (% price premium) but growing in absolute terms. I'm undecided, but it would make sense if there was a light-heavy crude mismatch in supply/demand (based on geological production profiles alone).
RE: "I think those investors are buying because they fear peak oil"
Perhaps, but I think that only applies to futures. Again, I don't believe stocks show hoarding or pulling oil off the market (US/OECD stocks). This, IF correct, would mean that speculators are unlikely to be driving up the spot price considerably.
I really thank you for all the comments. I've learned again.
Fundamentally what matters is the c.2011 situation ala IEA/Skrebowski. Whatever happens by then might be just a warm up anyway. On that I'm in full agreement.
Here is the historic 'record' prices for any crude as recorded at: http://tinyurl.com/2tdb6w ,data from
http://www.upstreamonline.com/market_data/?id=markets_crude
The records go to light crude almost right across the board, since the start of the year. Prices won't 'geologically' ease until heavy crude refinery capacity is in place and Khursaniyah is pumping.
But IMO they won't ease until 2009. 2010, however, will likely be a bastard of a year price-wise.
This is not taking 'above ground factors' into account. And, on history, weather or rebels will cause big spikes in oil price.
January 2 - oil prices - Tapis crude is $US99.60
January 2 - oil prices - Tapis crude is $US103.96, a record high.
February 14 - oil prices - Tapis crude climbs to $US99.14
February 21 - oil prices - Tapis crude briefly climbs to $US102.98
February 29 - oil prices - oil reaches a new historic high of $US103.05
March 01 - oil prices - as the dollar weakens, oil reaches a new historic high of $US104.53 for Louisiana sweet. Other sweet crudes are not too far off. Only heavy blends, for which refinery capacity is limited, remain around the mid nineties.
March 03 - oil prices - light sweet oil reaches a new historic high of $US105.95 for Tapis light. The spread between light and heavy grades continues to widen.
March 04 - oil prices - light sweet oil briefly reaches a new historic high of $US106.59 for Tapis light before falling back to around $US104.
March 09 - oil prices - light sweet oil reaches a new historic high of $US109.21 for Tapis light. Heavy oil such as Dubai and Oman 1M is stuck around the $96-$97 mark.
March 10 - oil prices - light sweet oil reaches a new historic high of US$109.69 for Louisiana Sweet.
March 11 - oil prices - light sweet oil reaches a new historic high of $US110.93 for Tapis light.
March 13 - oil prices - light sweet oil reaches a new historic high of $US111.47 for Tapis light.
March 14 - oil prices - light sweet oil reaches a new historic high of $US113 for Tapis light.
April 8 - oil prices - light sweet oil reaches a new historic high of over $US115 for Tapis light.
April 10 - oil prices - light sweet oil reaches a new historic high of $US116.20 for Tapis light.
April 10 - oil prices - light sweet oil reaches a new historic high of $US116.84 for Tapis light.
April 21- oil prices - after a series of historic highs over the last week, light sweet oil reaches a new historic high of $US123.78 for Tapis light.
April 22 - oil prices - light sweet oil reaches a new historic high of $US124.18 for Tapis light.
April 28 - oil prices - light sweet oil reaches a new historic high of $US126.94 for Tapis light.
May 8 - oil prices - light sweet oil reaches a new historic high of $US128.58 for Tapis light.
May 11 - oil prices - light sweet oil reaches a new historic high of $US131.43 for Tapis light.
May 21 - oil prices - light sweet oil reaches a new historic high of $US134.12 for Tapis light.
May 24 - oil prices - light sweet oil reaches a new historic high of $US139.37 for Tapis light.
June 8 - oil prices - light sweet oil reaches a new historic high of $US141.97 for Louisiana sweet. The American crudes are now expensive, West Texas Intermediate is $138.48, Alaska North Slope is $138.09. Tapis, from Southeast Asia, the previous price leader, is a relatively 'cheap' $135.54.
June 24 - oil prices - light sweet oil reaches a new historic high of $US142.74 for Tapis light.
June 28 - oil prices - light sweet oil reaches a new historic high of $US147.30 for Tapis light.147.30
Cheers,
Lorenzo
SamuM,
I think we are pretty much in agreement here - I also don't think that the speculative premium is anything like $70/b. If I had to guess I'd say we're probably more like $25/b over, perhaps a little more.
But the bottom line is I really don't know, and in opening up the discussion I'm trying to improve my own understanding. As I mentioned, I look at the fundamental data on an ongoing basis, and if you showed me the data and asked me to speculate on price, I would have the trend right but the absolute price way off. It's a new market we're seeing, and we need to figure out how it will, and is, behaving.
I think that this blog is good at assessing underlying supply problems and pointing to a systemic shift in the way we consume oil and other energy sources. Where I still have some real questions are on how much we can reduce demand and how quickly, and also how price plays into all this. I do see the peak coming sometime between 2011-13, but if we face a serious global slowdown beforew then, we may delay the shortages by a further two to three years and buy some time.
The biggest concern I have about the current market is that there is a bubble, and it pops (maybe through over aggressive changes by the US government on the futures market). If that happens and the price tumbles in a short space of time, OPEC will say "I told you so", the US government will quit worrying for a while and consumers will happily go out and repurcahse the SUVs they recently sold at knock-down prices. But all that leaves us even more exposed to the real crunch, which is yet to come.
Sustaining this price now may be better for everyone in the long-run - just look at how quickly governments are talking about improving efficiency and seeking out alternatives. It's a very interesting market right now, and very difficult to understand. I appreciate the disicussion!
A "cycle" implies that at some point we return to the beginning.
In 1998 crude was $10 a barrel. So your optimistic "fall" is to ten times that price.
Some "cycle".
Perhaps the real "cycle" is a return to not using any oil?
You found the holy grail - energy independence: If we do not use any oil, we will not be dependent on it.
And, how about that story that there was ice on Mars? It is a wee bit chilly there, but we can solve that with a little global warming.
Given the nature of the futures market and the fact that the bulk of the worlds REAL oil is sold at a discount or premium to the spot price knowing people like you exist warms my heart. It lets me know we have yet another candidate loser for a futures trade. Without people like you willing to lose billions liquidity would dry up.
This reminds me of the knife catchers buying houses on the way down for stupid reasons they set a ever lower market price for homes forcing the market to mark homes to market. A frozen market can stay priced at fantasy for a long time. These buyers will of course be the foreclosure victims of a few years hence but without them you can't get a market to drop.
I often get worried we may be running out of suckers but it seems one is born every minute.
You must be new here!
Or you wouldn't be making that statement!
Oil prices are unstable, but only upward.
The Saudi announced a production increase, Libya announced a reduction. Pricing strength is in the hands of the exporters. Prices climbed.
Oil's supply chain is long and requires inventories to ballast small bumps.
Inventories are at the bottom of the range that prevents most outages. When we fall below that range betting on higher prices seems a zero risk. Outages will create panic buying at any price.
Imports into the US Gulf are below the worst of Katrina. If there is a significant hurricane anywhere between Venezuela and Louisiana, inventories will plunge and panic is likely:
The world is 3 times worse off than in the 1973 Oil Embargo. World exports (Production minus Domestic Consumption) are at a deficit 3 times greater than the 1973 Oil Embargo.
Risks favor upward spikes.
Plant a garden.
Interesting graphic, thanks.
I did plant a garden but its not doing very well. Too hot and the bugs and birds ate most of it. What's ripe gets that way all-at-once so that its very hard to deal with 100 tomatoes and 50 green peppers. Besides, how much dang salad can one eat?
Piece of advice: plant potatoes because they have shelf life.
If I had to survive by farming I definitely wouldn't make it.
It takes 3-5 years to become a competent gardener. Hope we have enough time.
For tomatoes, buy vines marked "indeterminate" and they won't all ripen at once. Bush tomatoes are usually determinate so they do all ripen at once. If you get 100 tomatoes then can or freeze them.
For potatoes (also carrots), leave them in the ground if you can. If not, don't clean them when you dig them up and keep them cool, they'll last longer.
--
JimFive
Tip, try staggering your planting if conditions allow.
Dear all, I think my JA input is getting old hat, but still...
Flicking on the TV over lunch yesterday, I stumbled across a (the?) "Family First" senator posing a question in parliament; basically a follow up on the opposition's proposed 5 cents per litre petrol reduction. The gentleman lacked all sorts of confidence and the question, as small as it was, seemed pointless and lost.
I plan to email him this weekend to ask what part he feels crude oil plays in the lives of everyday Australian families, attached with a few basics I've learned here and elsewhere. I will ask him if he has ever considered the concept that affordable oil is finite; and whether we might be near that affordable limit right now.
Even as oil touched $140 today, still I have yet to see, hear or read that one of the primary reasons may be attributed to PO; answers continue to centre around the US dollar, speculation, everything but.
It continues to leave me in limbo...
Regards, Matt B (married, three kids, Average Joe Family)
PS. Just in case you're wondering, watching parliament is number 1,408,909 on my list of things to do before I die (just above spending a month lost in the snowfields with the wolves).
Hi JA,
re: "I think my JA input is getting old hat."
Nope, at least not to me. I think it's valuable.
I thought the other day you said you'd put one foot in the "peak oil boat" - ?
(Does that mean you're only half in limbo? :))
re: "I have yet to see, hear or read that one of the primary reasons may be attributed to PO"
Well, you read it here.
Giddaye Aniya,
Everytime I see/hear/read the reasons "why" from from various sources outside TOD, rarely (extremely rare in fact) is mention made of PO - that the world is running out of affordable oil. Sure, there's plenty of talk "around" it, such as alternatives, but these are mainly CC-related. And for most of we Joes and Janes, myself included, while costs continue to escalate, CC is barely a consideration.
So the foot that's in your boat, on occasion I lift a little, then back again, then up... In the back of my mind, beyond the sprockets and widgets, is a sense that all of these people that put their names to articles can't all be "hiding something" (or ignorant, or blinkered or whatever).
Oh, and I mean't see/hear/read in "MS".
Regards, Matt B
In support of this thing-that-nags, I fumbled my way through The Australian Financial Review (another first!) after dinner. Though there were several articles about oil/petrol/food prices, I failed to locate the words, "Peak Oil". So up comes the foot, hovering again...
The worse thing is, I'm not sure whether to build and tend to a vegie patch, or borrow a bit more money to expand the business a little further. "Do both", you'll probably say!
Well, all those people writing articles used to write about how any dot com was a good investment, how Iraq had WMD, children were thrown overboard, and that house prices would rise forever. So if they now happen to forget that oil is finite, well... it wouldn't be the dumbest thing they ever did.
Or you could consider that in every war ever fought, the newspapers of both sides almost universally told people that their side would win... well, at least one of the two sides had to be wrong. Were they hiding something? Or just being hopeful? Or maybe it was just that since the consequences of losing were so horrible, they couldn't even bear to imagine it as a possibility?
Likewise, the consequences of running short of oil seem so horrible to your average economist - "what? I'd have to take the train and eat tofu? NEVER!" - that they just can't bear to even imagine it as a possibility.
I don't think your average economist is capable of understanding that geology and physics can actually cap flow rates. They believe that if you just add enough $ that oil will magically flow out of solid rock at infinite rates, because the market needs it.
At some point you do have to think for yourself and prepare for your own life and what you thinkis going to happen. If you follow the no regrets policy then a vegie patch won't hurt you and if you approach it the right way, you may even start to enjoy it. But it's up to you. Don't try tomakeit anyone elses responsibility to tell you what to do.
i voted for the range too. i believe we're going to hit a stable price zone, where price increases from lower
outputexports will be matched by lower demand. and even if the price is "stable", each day there will be more and more people that cannot aford the things they used to.but hey, at least the price is stable :)
I am a newbie here
Let me introduce myself.I'am what you refer too as a lurker.
I have no primary education,let alone a secondary
education.
I find your incite,comments and research easy too follow and understand.
That said...I voted for the high range based on current trends.
Having taught myself financial anaylisis and being a
student of human nature I feel confident the rise will
continue.
I will use my best endeavors to further TOD,s aims...
if even in a mere peanut gallery cheering section sort
of way.
Welcome!
You're kidding right? If you mean no formal primary education, that's OK. I think of people with no primary education as those who cannot read or write. Most of the people around here seem to have passed the tertiary level.
Alan from the islands
I will point out that at the upper end of this range ($152/barrel) is the 4 Yergins trading value. (for the newbies, a "Yergin" is $38/barrel, the price that Daniel Yergin predicted oil would drop back to when it was in the $50/barrel range. Google "Daniel Yergin Day" to find the appropriate irreverent links. As will be obvious, some of us are not too impressed with Yergin's/CERA's recent performance history.)
Fot laughs, the other day I reread the EIA's 1997 assessment of energy prices with the adoption of the most and restricitve approach to the Kyoto Treaty. The worst case was that gasoline prices would peak in 2008 (that would be now) at almost $2.00 gallon (1995 dollars, that would be $2.84 in today's dollars).
Seems they blew it.
I wonder if they did blow it? If we were on track to meet the obligation we negotiated under Kyoto, the demand for oil would be less and prices lower. Serious action by the US and Australia towards meeting Kyoto would also likely get the attention of China and India, lowering demand even further. Certainly, the current run up in prices would be delayed and gas prices would not be as high as they are now. In this third Bush Recession, failed leadership is clear to see.
Chris
Yeah, they did blow it. And here's how we know. Their other scenarios that went on to "no adoption" or the BAU approach had the cost of gasoline nearly "flat-lined." everything in between cost less than the "maximum" scenario but more than the BAU approach.
While the logic you put forward makes sense to those of us who might think in like-minded, supply limited views, to have gotten it "right" the EIA BAU cost inflation would have need to be inverted from the document that actually presented. It isn't.
You are correct of course, but my meaning is would not the price be just about where they pegged it if we had been making progress towards Kyoto? Certainly, if we took most of our compliance out of transportation now, we'd knock the price of oil way down since we would have to get it all done by 2012. It seems to me that complying with Kyoto is economically more sensible that our present course.
Chris
Demand destruction and economy collapse have to kick in at some point. Even prices cannot rise to infinity and beyond.
Demand Destruction does not apply in a famine or an addiction.
If there is demand destruction, producers will decrease output to maintain their current revenues; eg, they will increase price per barrel. They are addicted to their current revenues as we are to oil.
Exporters have pricing power. Using addicts have no pricing power.
I've got a queasy feeling myself that there is some sort of negative feedback out there that isn't being accounted for properly. You might be onto it. I was thinking ore along the lines of that since a very large amount of our debt is tied up in our houses, I doubt that everyone can really sell their house and move in-town.
Also, I believe that the infrastructure to create a good mass transit system takes decades to produce and maybe we don't have that amount of time before panic sets in. That could mean that giving up the car to commute is the very last thing the people do before giving up their job altogether. Buses are fairly easy to implement on our current infrastructure, but require fuel. IIRC, on PBS the guy from the city of denver mass transit (RTD) the other day was saying every penny increase in diesel per gallon costs them $100k.
Well, something seems to be happening on the mass transit front...
House OKs funding for mass transit systems
agreed,
its one thing to cut down on driving to the shops or taking the kids to school. To stop driving to your work, which is 30 miles away or several different locations visited per week, is not an option if they want to keep the roof over their families heads.
"To stop driving to your work, which is 30 miles away or several different locations visited per week, is not an option"
Sleep in the car. Sleepovers (one employee goes to another employee's house overnight so they can carpool the next day). There are options, just not pleasant ones.
It's not a matter of "can't", it's a matter of "don't want to".
This was the US in 1935:
Maybe the former parking lot of the exurban workplace of your choosing in 2015?
It is, after all the way that many of our goods are produced now...
(Chinese factory complex with dormitory housing)
The "Happy Motoring" nations will be starting late, and in recession, so we may well not be able to manage this level of worker "comfort" :{
I wonder in which picture Orwell envisioned 1984's Proles living?
You mention George Orwells "1984"
7 years ago I repurchased the book and read it again
just to confirm the books fictional premonitions had
really come true.
Soon big brother will be telling us "The worlds always
had a shortage of oil"
Or "There has never been a period without peak oil"
And everyone on this blog is going to be brought in for reprograming.
Karlof Winston has a ring too it,dont you think?
I have already reduced my demand by driving less but it is a very small reduction. Even multiplied across millions of consumers, this type of demand destruction is miniscule and would serve only to allow inventories to build again rather than flooding the market.
My feeling is that there would need to be deep and sustained demand reduction to allow spare capacity of around 4-10Mbbl/d + large inventories accumulated in consuming countries to see much lowering of the price.
It would take a massive co-ordinated worldwide effort to achieve, like the Oil Depletion Protocol implemented. It's do-able but unlikley that we will see the politicians move fast enough to make it happen. Look at what the meeting in Saudi achieved last week - nothing. Most treaties and protocols are only ever struck and adhered to after a massive war, when those involved in the negotiation understand completely the alternative to agreement is more war. Unfortunately the politicians we are electing today have no direct experience of war and will therefore be more eager to engage in it. I don't know if thats a reason to vote for McCain or not (not that I get a vote).
Apparently we (US) drove 1% less last quarter than we did in the same quarter 2007. Turns out 1% less driving per quarter is 4 BILLION less miles!?
The scale of the impending crash truly does boggle the imagination.
Have a little math fun and figure out how many billion miles US drivers drive per year.
4 billion less miles last quarter? How many drivers are there in the U.S.? Let's say 200 million. That should be in the ballpark out of 300 million population. I daresay it has to be somewhere in the 150M to 250M range. So that works out to be 20 less miles driven per person per quarter, or 80 less miles driven per year. That's not very much.
Or looking at it another way, if the average driver drove 12,000 to 15,000 miles a year, a 1% drop would mean 120 to 150 less miles driven per year. Notably more than my first estimate, but still not very much.
This ignores that there may be an increase in the number of drivers though. Maybe each driver is driving, say, 250 miles less a year, it's just that there are now additional drivers which cancel out a significant portion of that reduction.
However, most US consumers aren't addicts and aren't starving either. The high prices have been sustained for quite a while. This sends a message to the rational people out there that this is not a temporary spike and it is now the right time to look at alternatives. It is within everyones power to reduce their consumption by voluntary means. This might be buying a smaller car, planning trips better, adjusting the thermostat, taking public transportation, buying energy efficient appliances, etc. Maybe now, entrepreneurs with big dreams can launch a venture because their business case finally works based on the high price of energy. Now there is a problem to be solved - there is nothing better to stimulate the mind of an engineer. Who knows, maybe we switch to riding $700 electric hybrid bikes to work. Cumulatively, this will decrease oil demand and will lead to some level of demand destruction or flattening. Since oil is priced based on the last barrel sold, even a small amount of surplus could lead to a price decrease. You also need to look at the situation from the point of view of the oil producers. Most of these countries have less than perfect governments, are import dependent for basic things like food and have too many people living on the handouts from their oil revenue dependent governments. If (and when) this revenue stream dries up, these oil producing countries will do everything possible do to keep the masses pacified. These countries will pump every gallon out of the dirt - they have no other alternative. When you talk about addicts, you need to include the oil producers and their citizens- they are dependent on our revenue and are scared to death that we might find an alternative or use less of their dirty oil. Matt Simmons talks about energy wars. The scary part happens after oil is no longer relevant.
Doubt it. Americans will cut back elsewhere in their budgets first. Many can't buy a better mileage car if the current vehicle has no trade in value and the house value tanked so they can't tap equity, and the credit cards are already maxed out.
They'll cut back on entertainment, restaurants, vacations, school tuition, charity donations. They'll start doing thier own toenails, washing the dog themselves, making their own coffee lattes, they'll cut out the spa or the gym memberships and go jogging or use the public tennis courts instead. They'll borrow books and shop consignment stores instead of buying retail.
They won't shell out thousands of dollars for a new car.
They'll cut back on entertainment, restaurants, vacations, school tuition, charity donations. They'll start doing thier own toenails, washing the dog themselves, making their own coffee lattes, they'll cut out the spa or the gym memberships and go jogging or use the public tennis courts instead.
If they do that they won't need that new car or any car at all and, as well, will have destroyed what remains of the US economy. Boy are you a black pessimist! :)
I'm one of those, even though I'm aware the petrol gauges on the six-cylinder Commodore and the six-cylinder Falcon are near empty at the moment and knowing the shell-out to fill both tanks will exceed $200(Aus). The cars are in great nick, but even if sold together there's a big shortfall to step into a single Prius.
No thanks. As work and living is local for myself and the missus, I'd prefer to wait. In fact, it's a no-brainer!
Regards, Matt B
Two weeks until I get my motorbike license (hope I pass the testing!)
There's plenty of $1000 cars that get great mileage. You just have to be willing to drive something that isn't new, trendy, or fast. I get 28 city, 35 highway MPG in my 1980's convertible rabbit and it's been as reliable as any car I've owned, even with 206K on the engine. With modern fuel management it could probably get 30 in the city and high 30's on the highway, and such a conversion would cost maybe $500.
There's a lot that could be done if people were resourceful and serious about it. It won't solve our problem, but it would cushion the blow.
I owned a 1980 rabbit during the 80's and it was great! Good fuel mileage, quick performance, easy maintenance, and it could punch on to the highway. Took it to Midas Muffler in Redwood City, California and they tried to blow the transmission by filling it all the way up to the top and driving it around the block for a while. Then in a panic as I tried to track down what was happening, they dumped some of the oil out and I caught them. The mechanic was shaking, but I couldn't get him to admit something was up. Later when I got home it was dripping oil because the mechanic didn't tighten the pan correctly (in his panic) and I had to do it myself. Even so, the automatic transmission worked flawlessly until I sold it years later.
I read later that Midas (80's and maybe even later) had/has a reputation for purposely destroying transmissions to make money rebuilding or replacing them. But also read later in consumer reports that VW Rabbits had the best repair record of any automatic transmission for an economy car.
Don't do what I did and sell it - for goodness sake, keep it!
From my observation a lot of "middle-class" people are now simply using their credit cards to pump gas.
A lot of families with decent salaries are maxed-out, that with the mortgage, car loans and so on. Difficult to get rid of devaluating assets, besides the psychological obstacles to do so (it will get better…).
It's only a matter of time before those credit card bills start catching up.
I was wondering if this was the case. It would explain why demand destruction isn't happening a lot faster. An over abundance of consumer credit allows BAU to continue for a lot longer than it would in a cash economy. The crash at the end is going to be even more painful. Ouch!
Alan from the islands
Of course they are using credit cards to buy gas. Not many people walk around with enough cash to pay their $50-$100 fill-ups. But that doesn't prove they can't afford to pay for the gas they charge. For all we can tell maybe every single one of them pays off their entire balance each month.
I don't think you can read that much into the observation that most people seem to charge their gas. With prices being high, people would do that for convenience reasons even if they were multi-millionaires easily able to afford the gas they are buying.
I'd almost be more worried to see middle class people paying cash. I'd be afraid that meant they had maxed out their credit line.
Yes, well, reminds me of this story, which I'm sure is not unique
from the Houston Chronical Online:
Doesn't American Express require that your balance be paid off every month? It's a different kind of charge card. So she would obviously have the monthly income to pay it. This is not a good reason to knock McCain, [whom I don't like for other reasons].
Three years ago I bought a 1990 Geo Metro for $1,000 that had a rebuilt engine (from Japan). It gets 54-57 mpg on the freeway. Since they we've spent $1,500 on repair, as it does have > 200,000 miles on the odometer. I'm 6'4" and fit fine, and with a hatchback we can haul all sorts of stuff. Great little car!
It is very easy to conserve electricity. People just don't know about it. Educational campaigns are needed. Plug all appliances into surge protector-type strips so you can turn the electricity off when appliances, computers, etc. are not in use. Turn off lights when leaving a room. Replace all incandescent light bulbs. Our electricity bill is down 20% from last year despite a steep price hike.
Funny you should mention that, on my way to work the other day I noticed a new business had moved into a previously empty (for a rather long time BTW) store front. They are selling, of all things, electric bikes and scooters in exactly that price range. Go figure :-)
Now if only the folks who still drive the big PUs and SUVs would just stay out of the bike lanes. Either that or I'll take advantage of my constitutional rights and get a safety vest with a reflective sign that says I ride a bike and I have a loaded gun!
Ride a Bike or Take a Hike!
I really don't see what the big deal is! Most merikans can still afford to fill'er up, no problem. We still got credit cards don't we?
/sarconal off
ej
The first thing to do when a politician wants to shift the blame to you by calling you an addict is to admit that you have a scumbag politician who is going to utterly fail at doing anything to lead on the problem.
You are not an addict. You've just been called an addict so you'll feel powerless.
In fact, you can choose not to use oil. You have a choice. And, we have a choice. Our government has already prepared a rationing plan that could be put in place in months. We could have oil down to $20/barrel in time for the heating season. A diet or even a fast is not a famine. Cut out a quarter of your oil use, and the price of oil will plummet.
http://mdsolar.blogspot.com/2008/06/oil-is-too-expensive.html
Chris
Stop talking sense, damnit! The Great Generation did all the fighting and sacrificing so we would never have to, so shut yer gob!
/sarconol
In all seriousness, unless or until one of our dear leaders pulls his/her head out and says in no uncertain terms, "Conserve or your f'd," there is no real hope of avoiding a deep crisis. And they'd better do it soon.
Cheers
It does take leadership to get the rationing plan started.
Chris
The government will do a terrible job of rationing oil supplies. While I agree that petroleum needs to be rationed to the most economically vital industries, I think that the market and pricing mechanisms will do a far better job than any Bureaucrat could dream of doing.
Unfortunately, it seems we will go the opposite direction and end up fixing low a price and there will be terrible allocation of oil.
If you want the government to stop hurting, allow drilling in ANWAR and the outer continental shelf, also remove red tape on Coal to liquid and Nuclear power. We need Fast breeder reactors and Coal to liquid, while at the same time doing heavy research on alternative liquid fuel sources.
-Jack
I guess you did not read my link. Our rationing plan includes a "white market" in rations.
The point is to avoid exploring for pointless oil or encouraging other foolish schemes such as CTL which ultimately damage the economy because the oil is too expensive to produce. Your suggestions are all of that nature.
Chris
Drilling is gonna stop the government, the US or PO from hurting? You're an idiot. But that's beside the point.
I didn't say anything about the government DOING anything, I said until a "leader" (term used loosely) SAYS what needs to happen, it won't happen as much as it needs to because Americans have become SHEEP.
Cheers
I have chosen not to use oil but I have lost 200 Euros per week by working local rather than driving to a higher paid job. I can cope with this drop in pay because of the situation I am in but I dont think many others could do the same.
In many cases, if you get rid of your car you'll save that much money anyway. According to the RACV, the cheapest car to run is the Getz, at A$123 a week*. A Toyota Landcruiser is more than A$400 a week. The Aurion AT-X was the cheapest family car at A$226.20 per week.
So it varies a lot, especially once you factor in the distance driven and thus fuel used, but in many cases if moving your work and home closer to each-other would let you get rid of your car, even if you take a pay cut or pay more for housing or whatever, the loss of the car could still save you money, or at least balance it out.
* Anyone wants to quibble the numbers, just go to the link and have a look at their assumptions.
New York Times has a story on this blame shifting phenomenon here:
An Inexhaustible Energy Source: Heated Words. But Can It Be Tapped?
If there is massive demand destruction OPEC's influence over the market based on their ability to act as an efficient cartel weakens. People need to bear in mind that there is still lots of oil relative to what was being used in the 1980s and that state of affairs will probably hold for the next couple of decades. Passing the peak initially means only that demand for cheap oil can't keep on growing. That is only a major problem if all of the usage is essential and there are no replacements readily available like coal and nuclear power. The scale of the problem over the next 20 years or so will be determined by the extent to which western societies can cut back their oil usage by switching over to alternatives that are now economically viable due to the higher oil price. Seems to me there is plenty of fat to trim in transportation, which will be assisted by a move to hybrids and public transportation over the next decade, and in phasing out the use of oil for home heating.
They don't have to go to infinity. In this poll, even the pessimists get to only bet on $154. Me, I've already said I think it'll hit $180/bbl this year.
That may seem unthinkable to you, that it'll make the entire Western world's economy spontaneously combust. But then... if in 1998 with oil at $10/bbl someone had said, "ten years from now it'll be $140/bbl" you might have said, "our economy will have collapsed by then!"
Amazing what we can and will pay for the stuff.
According to Societe Generale's oil burden index
Whilst the oil price is the highest ever, to reach the same proportion of worldwide GDP as the previous oil shock it would have to rise to around $190/barrel.
Despite being PO aware for years, even I am startled by the rapid run-up in prices. In every scenario I had previously imagined oil reaching such lofty levels, there was some sort of major supply disruption involved (war, hurricane, etc.). Oil more than doubling in price to $140 in a year while the US is effectively in a recession? It seems like there is no price ceiling despite the fact that americans are driving less, china raised its oil price, and we are beginning to see demand destruction everywhere. And I still don't understand why Iran has 15 or so supertankers full of oil just sitting in the Gulf...The oil market completely confounds me...
It is going to be mighty tough to destroy much demand. Instead of preparing for 'peak oil' for the last 10 years, we did the exact opposite. We inflated a housing bubble and built 15 million homes (that shouldn't have been built) in the far outer suburbs. Not to mention building many 10's of millions of low mileage autos.
We haven't even started to retool out auto plants yet. And when we're done doing that, there is a 16 year replacement cycle for the american auto fleet.
What's the time frame on a housing replacement cycle? 100 years? pipefit
"And I still don't understand why Iran has 15 or so supertankers full of oil just sitting in the Gulf.."
Because they ran out of storage space on land. At 150k per day per tanker it costs them a mere 2.2 million dollars a day to hold the oil off the market. If they have around 30 million barrels they only need to jack the price up about 7 cents a day to get a return on their money. Also the oil and the tankers might not even be theirs. Could have been bought by some bunch of funds for the same reason.
You can be certain that inventory is being horded all over the planet. We will only find out where it is on the other side of the bubble. One thing you can be certain of is that the manipulation has been epic.
Its interesting to note the frequency of the pump statements coming out now. They seem fast and furious. In just the last two weeks we have heard from a few opec honchos, the head of gazprom, morgan stanley, and goldman, not too mention a plethora of small fry. It would seem that the shrill meter is getting to the red line.
Yes!! And they've been hoarding since 2003!! There are massive, I say MASSIVE, underground caverns everywhere where those bastards are hoarding!
/sarc
Cheers
Is "hoarding" part of the daily consumption figure (85+mbpd)? How much do you reckon if it is?
Regards, Matt B
ccpo,
Who are they hoarding it from? The US has had a trade embargo on Iran since 1980. Maybe Iran is keeping the oil for its own people, or to sell to US, when the international community lets them use nuclear reactors for electricity generation instead of burning oil?
I suppose Cuba is also still hoarding all those cigars!
The real reason is probably keeping heavy crude until new refineries such as the one in India are built rather than sell at massive discounts to light crude. KSA claims to be doing the same thing, but keeping it shut in until heavy crude markets improve.
/sarc = End of sarcasm
Cheers
"...Because they ran out of storage space on land. At 150k per day per tanker it costs them a mere 2.2 million dollars a day to hold the oil off the market. If they have around 30 million barrels they only need to jack the price up about 7 cents a day to get a return on their money. Also the oil and the tankers might not even be theirs. Could have been bought by some bunch of funds for the same reason...."
Some say they intend to sell it on the market in Euros just to piss off America.
Not a very good idea, for better or worse Saddam made the same mistake.Ahmadenijad probably has no pity at all for his own people if this were true.Saddam promised the mother of all battles before Gulf War 1, and it ended up being the mother of all slaughters.I find it hard to believe he was actually that ignorant.
Pay close attention to this Iranian Oil Borse in Euros.
Something smells bad.
Peakoilers should watch this
http://www.youtube.com/watch?v=uljOLFyCjjc
The real news behind the news
From The Current Market Atmosphere
What is this going to do to the price of oil? I voted $154, assuming it will happen soon. But come September or whenever the markets start to get super-bearish, won't there be a plummet below $100?
Hey hey TheMagus,
The great depression took years to reach bottom. It didn't happen all at once one black day in 1929. The timing of our present economic 'downturn' has been similar thus far, slow downward slide.
To determine the effect on oil prices we have to know the rate of demand destruction due to economic hardship and the rate of export contraction due to ELM. It is entirely possible that the USA could shed 2% a year and exports could fall 4% a year pushing the prices up at the same rate we are seeing now. Of course global demand could contract by 4% and supply by 2% reducing prices.
The short term variables all get very complicated and difficult to predict. That said, I picked $154 because I don't see any macroscopic differences between now and the last three polls. We have a long term problem and and our behavior is exactly the same as it was at $100. I'm going to pick the highest price in future polls until I see meaningful action by business, the media, and government on the PO front.
Tim
-Peak Oil and Global Warming are not the problem they are the symptoms. The problem is one of collective action and an inability to make good longterm plans.
If there is a gulf hurricane this year, we could see a spike to half a DekaYergin! ($190).
For those who still believe that the price of oil is due to declining dollar, the price of oil has risen approx 39% this year, measured in US dollars.
Measured in US dollarindex, the price of oil has risen 46%, and measured in euro, the price of oil has risen 49%.
So in fact, the price of oil is rising faster in other currencies than the dollar.
Which other currencies are those?
There is something very wrong with your figures since dollar has fallen 7.4% this year against the euro.
There is no way the price of oil has risen more in euros than in dollars.
Please elaborate on your methodology.
I agree with you that the weakening dollar is only a small part of why oil price has risen.
Argh. I voted yes to each of the prior polls, without thought, and we hit them all in half the allotted time. This one is tougher. We've had several useful price drops in the last couple weeks, and 140 took longer than I projected (by about 2 weeks).
I'm gonna go lock in my vote for $154 anyway, but I think this one is going to take nearly the whole 60 days.
I also voted for $154 option. It really is tricky to call.
In the end I went for $154 because I am sure at the first signs of a hurricane in the Gulf the price will spike again.
However, I have on my wall WT's predictions and he only sees $150 for august. I feel betting against WT could be a bad move.
I'm with you all. I voted for $154. But I think we're all essentially rolling the dice here.
My reasoning:
1. The rate of annual inflation of WTI (price of WTI on the same days in 2008 and 2007) is now about 80% - 100%. It cracked 80% on March 12, hit 100% on May 16, and has oscillated between 84% and 110% since then.
2. As soon as demand destruction sets in, the inflation rate will come down to something more reasonable (50% or 60%, say, or even lower).
3. For us to hit $154 by August 26, the rate of inflation pretty much has to stay in the 100% to 115% range. A mere 80% inflation rate won't cut it.
This method is a bit arbitrary but is just a notch above rolling the dice to determine the price. The idea is that with a fixed amount of oil, oil inflation exists to make us not buy oil and will continue until someone gives up and stops buying it.
I don't think this rate of inflation can be maintained much longer -- gut feel based on reading TOD. At some point people are going to give up and not drive that extra mile. But you have some possibilities which could propel prices forward: (a) maybe a hurricane or (b) maybe Israel will attack Iran or some other political nonsense, (c) maybe the Fed will lower interest rates, just one more time. It's hard to bet for or against any of these mysteries.
Actually, after writing this out, if I had a chance I'd change my vote back to the trading range option just to be different. But in any event it looks like rolling the dice to determine the likely price. Even $126 is not that implausible.
Keith
I looked at "trading range" for a long time too. I do think the price is going to yo-yo quite a bit more than in april/may, but its going to keep climbing. I'd still say "$150 by Labor Day" without doubt, its the $4 extra in 10 less days thats the issue.
Given that we now appear to have broken out of the previous range there is the possibility that we could still hit $150 by 4th July.
$154 by the end of August seems extremely likely - particularly with a hurricane or two. However past that point really does depend on these megaprojects that are supposed to deliver much more oil this year. So far we are half way through the year and we've seen 0.5-1Mbpd net turn up. Even doubling this for the rest of the year, we seem to be short of the projections.
On balance, and with the election looming, I'd have to assume the next figure past $154 will be static or even down. I won't last, but it might get the neocon candidate elected.
In light of the latest oil price of $140bl we could very well see $155 in the next 2 months, folks thats 8 weeks, the end of August. That price would be 4 months earlier than I have planned for, if this accelerating trend continues our yuletide present could be $200+.
May I emphasise the escalating urgency of our circumstance.
Sometime soon some journalist or commentator is going to notice that if oil hits $156/bbl then it's one US dollar a litre. That perhaps will be another psychological "barrier" like $100/bbl was.
So oil is 156 liters per barrel, eh? I have somewhat of a technical background and I have a decent grasp of the metric system. Most of my friends, acuaintances and co-workers, however, cringe when they hear "metric system". They tune it out like a bad karaoke singer (and aren't they all?).
I don't see any psychological "barrier", or anything else there as far as the US public or media is concerned. Americans, as a rule, don't do metric. That's a psychological barrier through which no others can pass. For the financial types elsewhere in the world, well, maybe.
Have got it right everytime so far. The Long Emergency has begun.
Just to note. In the last poll I was invited to vote twice. In this one, four times so far. These seems to be a glitch.
Chris
I've been asked to vote twice, too.
In March, when oil was $100/bbl, I made a bet with a colleague who heads up a think tank, that we would see $150/bbl before $90/bbl.
My earlier guesses were based on the opinion that credit-based free market capitalism has no choice but to continue expansion until collapse, and so will borrow and buy at whatever price they are capable of meeting.
This time my guess (that price will continue right on up) is based on an additional factor: panic.
My hunch is that sufficient attention has been drawn to the "runaway train" nature of oil price that a large number of buyers actually fear their own ability to buy the amount of product that they need. It has become a game of musical chairs in which the one left without a chair after the music stops ... dies.
In such an atmosphere great nervousness and flat (or slightly down)prices will prevail for a while, with no one wanting to precipitate the next spike, but that when it is precipitated panic will ensue and the price will hit $200 virtually overnight.
60 days is a bit short of what I expect. I'm thinking more in terms of twice that span, but times are unsettled enough that 60 days is entirely possible.
(buyers actually fear their own ability to buy the amount of product that they need.)
I have seen the price of plastic 5 gallon gas containers go from $8.49 to $15.99 in a couple of weeks.
I casually asked an auto store clerk about the product
"STA-BIL" which when added to gasoline keeps it fresh
for nearly 24 months.
He responded "We sold out".
Iam not screaming "FIRE" in a darkened theater here...
Iam just feeling a bit warm and by the way....do you smell something burning?
This poll, as in the last 4 or so, i'm voting on up - the fundimential supply-demand mismatch still hasn't been resolved.
Is it a worrying trend that in each poll, a greater proportion of people are voting for the "up" option, with currently only 9% voting "down".
Having said that, i would also vote for both the last 2 options. Above ground factors, as Nigeria's 2% of world supply that is currently out, if it came back on would probably stabilize the price for a while, and the US$ isn't exactly the best performing currency atm either.
ps, unless something unusual happens wrt to oil demand, i think that it will be over 200 by the end of the year - its been doing $10 per 3 weeks, and there's more than 18 weeks untill the end of the year
Can You suggest me some sites where monitor the clq08 price each day?