POLL: CLV08 went through $91/bbl..so, in the next 60 days, the front month price of CL will...

hit $100 before it hits $82
33% (584 votes)
hit $82 before it hits $100
34% (586 votes)
stay in a trading range between $82 and $100
22% (382 votes)
it's still all geopolitics and other "above ground factors," so what does a price signal mean anyway?
5% (80 votes)
it's all about the varying dollar value and speculation...why bother?
7% (117 votes)
Total votes: 1749

In our last poll five whole days ago, 30% of you predicted that CL would hit $91 in the front month before it hit $113, and 35% of you predicted that CL would hit $113 before $91.

This is the fourth straight poll where our readers have failed to predict a decline, yet oil has dropped over 10% four straight polls in a roll before the 60 days have expired.

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.

If you were to flip a coin four times in a row, what are the odds that you would guess the result incorrectly all four times?

Maybe this poll shouldn't be taken as investment advice, but there is a lot to be learned from it.

If I were an oil investor, I would definitely use it as investment advice. Flipping a coin will make you more money than paying attention to the results of this poll. By a huge margin.

The big question I have is why the sentiment has now changed and participants are predicting lower prices only after being wrong the last four times. This is what I would like to see discussed.

What exactly has changed in the world of oil supply and demand that warrants this dramatic reversal of psychology?

The odds of guessing a coin flip wrong 4 times in four tosses is 1 in 16.

But, the polls don't get it wrong each time exactly since some people get it right and some get it wrong. Further, there are five choices not just two. In the last poll, 65% said the price won't go up so in that sense the poll got it right. A 35% plurality were wrong about that saying it would go up. I am suprised that anyone would pick the option of staying in a closed range given wars and rumors of wars these days, but people do and so we can cast the pole as those who think it won't go up, or those who think it won't go down with the middle group taking either side.

The thing that has changed that now has a 39% plurality (I haven't had all my usual 3 votes yet) voting with your guru now is that big banks are failing I think. This suggests that the third Bush recession may beat the other two. As an aside, even the properties of teflon defy providing any explanation of how one president could have two recessions if elected in an honest manner. That said, recall that your guru is only guessing that the price will go down and only based on a feeling that it has not gone down long enough. So, even though I've got more company now I'm on such thin ice here that my brief role as good guessing guru may be at an end.


"But, the polls don't get it wrong each time exactly since some people get it right and some get it wrong."

Not Exactly. I understand your point. Some people get it wrong, some right. "The Poll" gets it wrong, since it is represented by the largest voting block.

Bloomberg News runs this same scenario every week with a group of oil analysts. Its results are exactly as good as a coin flip.

1 in 16. Or 6%. Somehow Oil Drum respondents hit that 6% zone. I'm not sure how to describe this. Blind bad luck? If they hit 50% I'd say they were just normal opinions or guesses. If they were right all for times, I'd have to say they were brilliant analysts or at least knew what they were talking about. So what is the reason why they were so wrong? What mistakes did they make and why would I bother listening to them again?

Maybe a better way to do it would be to total the numbers of votes in each category (sorted by right or wrong) and then look at the results. Maybe you wouldn't get 6% percent, but a coin flip would still be a better judge of prices.

If you want to look at individuals, try T.Boone Pickens. Same results. In fact his have been horrible the last 6 months. His fund has lost investors millions. Not as bad as the banks, but a monkey could have made money in the energy margets the last few months. The banks were pre-disposed to lose.

Ironically, the investment bank/analysts who have constantly touted a return to $90 oil all spring and summer are Lehman Brothers.

We could say that the poll is just as good as a coin flip (taking the idea that there are only two real choices) if we take the last eight polls rather than the last four. In that realization the polls are half right and half wrong.


You could. But the key point there would be that the poll is never better than a coin flip.

There is still no proof that any of the "experts" here or anywhere else have ever had any actionable intelligence better than an inanimate object (the coin).

Look's to me as though we've given up on polls now. At $130/barrel right now we've missed two 10% steps: $110 and $122. Might miss $135 too....


I think the reason most oil drum readers expect the price of crude to rise is that, for the most part, we are looking at supply and demand. We have no access to specific statistics related to oil futures transactions--neither the quantity, nor the size. Why isn't that information public? Who knows and what do they know about the transactions that are affecting the price of crude? In my view, there should be transparency in these markets while anonymity could be preserved. We don't have that information and we are left guessing about what's going on. Are financial institutions, as many suspect, forced to dump holdings as their positions become compromised? Quite likely.

But besides that matter, we can consider the cost of production of a marginal barrel of oil. And on that basis, I suspect the price of oil is artificially low and will be shooting up as soon as we hit 'peak bankruptcy' of financial institutions holding commodities.

Are we having fun yet?

The cost of production of the marginal barrel of oil is pretty low if demand is low enough that ME crude can supply all of it. Somewhere around $5-15/barrel. It only gets high if you need tarsands and such to meet demand.



You can't throw out numbers about ME cost of production because that is NOT the MARGINAL COST OF PRODUCTION of world supply. Instead, I would point you to a cost analysis of crude derived from tar sands in Canada to get a handle on what I'm talking about.

Demand is NOT falling as dramatically as you are suggesting--far from it. Remember--tar sands operations haven't ceased. WHY NOT? There is where you find the marginal cost of oil!

Recent Canadian news reports seem to suggest that Chris Skrebowski is probably more right than wrong. A November, 2007 Toronto Globe and Mail article titled High costs trim forecast for oil sands production suggests that the NEB (National Energy Board) is now projecting a maximum production level in 2015 of only 2.8 million b/d, 200,000b/d lower than their own commonly used 3-million, because of industry discomfort with capital and operating cost overruns of up to 100% on all current tar sands projects. Assuming that Chris Skrebowski is right about peaking in 2015-2020, that suggests tar sands production will never be ramped up beyond 3-million b/d.

What is the real situation with the tar sands? How can there be such a disparity in the estimates for future tar sands production?

In his interview with Julian Darley, Chris Skrebowski highlighted several challenges for the tar sands industry over the foreseeable future. Three that may or may not be soluble are;
* the availability of the high volumes of water needed for tar sands processing,
* the availability of gas or alternative means of heating the tar sands. Greg Stringham, a vice-president of CAPP (the Canadian Association of Petroleum Producers), said the gas price used by the NEB for its main forecast – $7 per million BTU – is on the pessimistic side. "It would be too low to support investment in high-cost unconventional and tight gas projects and not high enough to reduce demand," he said.
* and; how vigorously the various levels of government choose to legislate and enforce environmental controls. Various parties, from the municipality of Fort MacMurray to a host of environmental organizations have called for a moratorium on new projects until environmental impact studies can be completed. Canadian governments have a dubious track record of allowing major projects to proceed before the required environmental assessments are completed only to find, when the studies are done, that they should have blocked the project. Having approved the go ahead they leave themselves with no option but to allow the project to continue.

The one challenge that Chris Skrebowski sees as insoluble, as it is a limit of geology, is that the tar sands have a wide variability in quality. Current operations are being conducted in the bitumen-rich central area of the tar sands deposits. Bitumen, not oil, is what the tar sands hold. It is a thick, tar-like substance which needs further, energy-intensive processing, after the energy-intensive extraction, to be converted into a synthetic liquid crude. In the central areas the tar sands contain about 12 percent bitumen, up to 14% in a few sweet spots. At that level of bitumen concentration tar sands oil production is economically profitable and also has a slightly positive EROEI for strip mining operations. Even in these areas, however, in situ production - which involves injecting steam into the tar sands to separate the bitumen from the sand so it can be pumped to the surface like crude oil - thus far has a negative EROEI because of the higher energy requirements and also because the bitumen concentrations, due to higher levels of biodegradation, are generally lower deeper in the tar sands deposits where in situ has to be used.

As the central areas currently being exploited are worked out, which Chris Skrebowski projects they will be by 2015-2020, operators will have to move out of these central areas into the periphery of the reserves. That is where the problem is. In these peripheral areas Skrebowski suggests the bitumen content drops off to about 8 percent. He sees an open question whether operations will continue to be profitable and have a positive EROEI at these much lower bitumen concentrations.

More here.

What's missing in this article is that tar sands are profitable at a certain threshold for the price of crude oil. What is that threshold? There's the bottom line.

If we reduce demand to the point where the ME could, in principle, provide all the oil that is now coming from expensive sources, then the price will get back to $20/barrel. A barrel from tarsands is not marginal if there is plenty of less expensive spare capacity. It may still get produced at a loss to try to recoup a portion of the inital investment, but there won't be any new investment in tarsands. And this is exactly what we should be aiming to accomplish. Investing in high cost oil is bad for us. We can substitute electricity for oil in transportation at lower cost overall and we can keep that cost down more by conserving strongly now to keep the price of oil low while we make that substitution.

The message of peak oil is that there is going to be less oil no matter what. The question is, do we allow the market to force us into going after expensive to produce oil that does nothing about decline? Since we have the regulatory mechanism to avoid this harm to ourselves, the Economic Regulatory Administration is, by law, part of the Department of Energy, we should use it.


How the mighty have fallen! The title of guru is lost. Luckily though, I only got to vote once in this poll so my stats are still great.


Hey hey Just Another Statistic,

Here is an excellent explanation to your question. Quoted from Bird and Fortune - Subprime Crisis:

Interviewer "During the summer there has been a great deal of turbulence and volatility in the markets. What has caused that?"

Investment banker "You have to remember two things about the market. One is that they are made up of very sharp and sophisticated people. These are the greatest brains in the world. And the second thing that you have to remember is that the financial markets, to use the common phrase, are driven by sentiment."

So far I have missed two of these polls. One at the top, where I guessed the price would go higher. And, the last poll where I picked the trading range because I thought Ike would knock out production instead of refineries. I picked the range again because I don't have a compelling reason to go either way at the moment.

Agree with You, it's very difficult to predict the price in our energy sources and economic situation. Some friends of mine suggested me to buy oil in forex market now that its price is very low.

Did someone really say "Drill baby drill!"? If we can manage to keep consumption falling, not even land-based Bakken oil is going to be developed.

Everyone keep carpooling and voting with your walking feet. We'll scuttle any new drilling project anywhere!



If the economy really has contracted enough to make this big a difference, we are in big trouble. Also, why the releases from the SPR now, and none at the height? The upcoming election wouldn't have anything to do with it, would it?

The last 8 years has made me extremely cynical with regards to politicians and markets. We are still at peak with oil, the signs are all evident, but, the manipulation is horrendeous.

Lives are being totally jerked around and destroyed with flagrant disregard. It's like everyone has found themselves on a giant battlefield, where a massive power struggle ensues, and we are mere insects being trampled underfoot.

Ragnarok comes to mind.

In Norse mythology, Ragnarök (IPA: /rɑgnɑrɔk/, Old Norse "Final destiny of the gods"[2]) refers to a series of major events, including a great battle foretold to ultimately result in the death of a number of major figures (including the gods Odin, Thor, Freyr, Heimdall, and the jötunn Loki), the occurrence of various natural disasters, and the subsequent submersion of the world in water. Afterwards, the world resurfaces anew and fertile, the surviving gods meet, and the world is repopulated by two human survivors.


If we can keep our consumption well below the rate at which cheap oil can be produced then it won't cost us all that much to transition off of oil because the price of oil will be low. If we consume in a way that encourages exploration for more oil, then oil is going to have to be expensive while we run out of it and our transition will be expensive. So, the best thing to do is to cut consumption to a level where we discourage exploration.


I like the spirit of what you are saying, but the reality is that, so far, demand has proven extremely inelastic. China and India are not on the same page with you. This is going to turn out very differently. The price of oil is headed up sharply. What is the price of 25,000 hours of human labor worth? $100? I think not, even if you can pump it out of an underground lake somewhere in the ME, that has little bearing on the future value of oil vis-a-vis other commodities. In the short run, paper beats oil, but in the long run oil trumps paper. Everything becomes expensive very quickly. Unrecognizable landscape in 5 years.

Because the US is the largest consumer, it can control price unilaterally until it becomes a non-consumer. China and India cannot grow their consumption over the next fifteen years fast enough to cause the price to increase if we are removing 25% of the current world demand over the same period. The world can't make ICE cars that fast and they can't buy them that fast. You can't ship our used SUVs to them because they don't have enough roads to use them. So, we are in a position to make sure that our transition off of oil is not accompanied by high oil prices because we dominate the demand in the market.


The current "realeases" from SPR are really just loans that get repaid in even more oil. No pun intended, but think of it as more "liquidity" than an injection.

There's actually too much crude to go around right now with refineries down. BUT... there are some refineries that can't get the crude that is available (port damage, etc), so the SPR is supplying that.

Cid I agree 100% everyone is trumpeting how much consumption is falling and its resulting in low prices but yet the number one indicator that reliable Vehicle Miles Traveled (VMT) has been falling since 2005 and prices have not fallen. Perfectly correlated with the housing bust and perfectly correlated with previous housing busts.

But even here I wonder if the numbers make sense.


VMT on all public roads for May 2008 fell 3.7 percent as compared with May 2007 travel, the Secretary added, marking a decline of 29.8 billion miles traveled in the first five months of 2008 than the same period a year earlier. This continues a seven-month trend that amounts to 40.5 billion fewer miles traveled between November 2007 and May 2008 than the same period a year before, she said.

So lets say your getting 30 miles to the gallon on average then 29.8 billion miles is 1 billion gallons of gasoline say 40 gallons to the barrel gives 1,000/40.0 = 25 million barrels.

Over 5 months thats 5 million barrels a month or 5000/30.0 = 166kbd decline.

Assuming the average is not 30 mpg but a bit worse the result fits well with this which indicates about 500kpd decline in 2008.


Once you consider some reasonable error bars demand destruction or decline in the US is barely significant.
At 25 mpd of oil consumption this 2-3% change is just barely outside of the error in the measurements maybe.

So even as overall consumption continued to increase and the US decline has just barely hit measurable levels
the demand destruction has suddenly caused the price of oil to fall dramatically even though the trends in consumption have been slowly changing over a period of years ?

Sorry don't think so. Next I think that the claims of demand destruction should be vetted what I see is simply the results of supply and demand in balance with and additional changes readily reconciled by considering the crash of the fuel intensive house building industry and associated business. Just like every other year housing crashed and VMT flattened.

You need to consider that much of the rest of the world is going into recession, or at least slowing down. US, EU, and Japan are all going into recession, while China and India are cooling. Decoupling just hasn't been the case.

Slowing from 15-20% to 10%. Sure growth is slowing I'm not saying its not but its been slowing since 2006 and will continue to slow and the increase in oil demand is declining but this is not yet a overall decline in oil consumption globally. And its not a fast process demand declines cannot be used to justify monthly changes in oil price. Demand did not suddenly decline in July-August the world economy simply cannot respond that fast.

And the graph I gave of the rest of the world does not show and overall decline.

Slowing growth rates is not the same as and absolute decline in demand and from the graphs its taken years of high prices to slow the worlds economy. It will take years before demand trends downwards.

People claiming demand destruction as the reason for the current pricing changes are using a variable that changes slowly over a period of years to explain events that happened over a few months.

These two variables operate over completely different time scales. And further more given the data we have on export land any changes in consumption patterns in importing countries have bee canceled by growth in producing countries.

Bottom line is in my opinion 2008 is not markedly different from 2007


ccording to the latest forecast, global growth would slow from 5.2 percent in 2007 to 4.8 percent in 2008, down from the 5.4 percent rate registered in 2006. The largest downward revisions to growth are in the United States, and in countries where financial and trade spillovers from the United States are likely to be the largest.

In the United States, growth is now projected to remain at 1.9 percent in 2008, the same rate as in 2007 and a markdown of almost 1 percentage point compared to the IMF's previous projections. U.S. growth is down from 2.9 percent in 2006.

Ongoing difficulties in the mortgage market are expected to extend the decline in residential investment, while higher energy prices and weaker house prices are likely to dampen consumption spending, the IMF said. In the euro area, growth has been marked down to 2.1 percent in 2008, and in Japan it is now expected at 1.7 percent.

These numbers are still not negative we are still talking about positive growth rates and implicitly increases in oil demand albeit at a slower rate. And further more outside of housing and the auto industry most of this decline is in the financial sector which is not a energy intensive part of the economy.
The only slowing part of the economy that uses significant quantities of oil is the housing industry.

But again this decline has been happening for some time and prices have been rising through out the decline period.

I'm not going to drag in a number of links but you have plenty of information available that show housing starts have slowed dramatically over the last several years. Outside of the decline of housing other economic indicators are just now starting to turn to slower and slower growth rates.

Bottom line is I see no indication that we have yet hit the point that significant overall demand destruction plays a large role in the supply and demand equation for oil. Demand is still quite healthy.

I do believe at some point as the world wide recession begins in earnest we will see demand decline in concert with supply declines if this results in lower prices long term slowing the rate of increases or flat prices for oil is almost impossible to predict. But I can't see how you can take the worlds current economic data and come to the conclusion that demand for oil has dropped. At best the rate of increase in demand has slowed some right now in importing countries. I even agree its gone slightly negative for the US.

reconciled by considering the crash of the fuel intensive house building industry and associated business.
The only slowing part of the economy that uses significant quantities of oil is the housing industry.

You keep claiming that oil demand destruction in the US is due to lower housing construction, but you keep not showing any evidence for that claim. So I went and looked.

Oil consumption does not seem to be broken out for the construction industry in the US, but it is for Canada, which should give a rough estimate of how the US industry works.

The Canadian construction industry consumed 36,000TJ of petroleum-derived products in 2002, or about 16kb/d. The US economy is about 10x larger than the Canadian economy, so the US construction industry would have used about 0.16Mb/d of oil in 2002. Presuming the US construction industry doubled in size between 2002 and its height in 2005, at its peak it would have used about 0.3Mb/d of oil, or about 1.5% of US oil consumption.

For reference, this is also about the amount used by the Australian construction sector, so the estimate of about 1-2% should be fairly robust.

Total private construction spending in the US is down about 15% from its peak. Accordingly, we would expect this to reduce oil use by the sector by 15%, leading to a drop of 15% of 2% of 20Mb/d, or about 0.06Mb/d.

Hence, evidence suggests that the drop in construction activity in the US can directly account for only about 10% of the drop in oil demand.

Just like every other year housing crashed and VMT flattened.

You're confusing correlation with causation. Housing crashes tend to happen at the same time as recessions, which tend to happen at the same time as people driving less.

Go with the trend. The trend is down.

Yes we are indeed in big trouble. Wealth and income in the United States has been so concentrated at the top that the economy no longer functions properly. The same thing happened in 1929 and in the former Soviet Union where wealth was de facto concentrated in the Polit Bureau. Collapse followed.

Money is going to money heaven on Wall Street and on Main Street with the decline in home values and the loss of jobs to cheap foreign labor. In addition money is being thrown away on foreign wars, oil imports and interest on debt and few seem to care very much. The McPalins who support Reagan-Bush policies have the support of about half the population.

Debt tends to concentrate wealth even more at the top since lenders are usually the more wealthy. In any case interest on savings is less than the rate of inflation which means that real purchasing power of savings is shrinking.

Many are against producing our own energy for various reasons and think we can continue to have a high standard of living without producing much except services. They are wrong. Power down appears to be happening involuntarily.

The meltdown should continue until it stops. October is notoriously scary. By Halloween at least a temporary bottom should be in, but don't count on it.

x - when you don't mention corn ethanol, your posts are quite cogent...;-)

October is notoriously scary.

A lot of the major world events seem to happen in the September/October time frame. I always think if you make it through to November, may get another year. The omens dont look good this year. Heres hoping.

I'm less surprised than you might think. Economies are reeling across the globe because of the financial crisises precipated by real estate markets. At the same time, margins are increasing in certain areas due to the refining capacity diminishment in the gulf coast. Thus, prices at the pump are increasing despite crude falling. I think the price will recover, but who knows how far we'll tumble before equilibrium is reestablished and the worldwide economic contraction slows. My advice, stay long on oil (buy and hold for atleast another year) and you'll see price recover because we're not replacing oil with other energy yet, we've merely tripped up due to supply chain disruptions and worldwide decline.

These were my comments on July 23. I think I called it very well:

"I have been an oil investor since the 1990's. I believe in peak oil. Over 50% of my porfolio was in oil and gas I have been greatly rewarded...
Last week I sold about 20% of my oil investments.
I sold shares in a natural resource fund that I have owned for a long time. Ten years ago I was buying the shares for $7. I sold for $42 I didn't quite get the top of $46. In Febuary, in the middle of the SoGen crisis, I was buying oil and gas mutual funds for $18 a share. I sold for $24. A very nice return for 5 months.

Sometimes you are so far ahead that you just have to take profits.

There is demand destruction out there. We have all sorts of stories about parked cars, increased transit use, etc...Higher interest rates and an economy in long term reccession may push the price of oil even lower. Who needs gas to get to a job, when you have been laid off? Better to spend the money on food, seeds and insulation.

I think I will be able to buy all my shares back with oil at $115. I will buy them back in small lots at a lower price. I think the Saudis will cut production at $100 and definitely at $80. They want to preserve their resources for future generations.
$80 to $115 could be the buying opportunity of a lifetime."

On August 11 I said the following:

Today on August 11, I think we will see lower prices.

In the short term, the price of oil can be about more than just supply and demand. I can be about interest rates and the strength of the dollar.
When real interest rates are negative, commodites are a great play. You lose if you sit in bonds. When the Fed really starts to raise rates, oil prices often drop.

…I also think some American Banks are liquidating commodities and oil stocks because they need the money to stay afloat. The market is being sold all at once.

I think this is happening now. Some of those oil winnings are even making it back into speculation in the U.S stock market.
All those discussions about Chinese and Indian demand, will matter less as those countries have benifited greatly from selling goods to America. Demand from other countries will not make up for the decline in demand from America. The American consumer is tapped out from the housing crisis.
In the short term, think oil will go lower. Let's see if the Saudi's cut production at $100. I will not buy back in until $95. I am going to lighten up in other areas and have lots of money ready incase we get $80 or less in panic selling.

Long-term, I love secure, dependable Canadian oil companies as an investment, but I want to buy them at bargin prices when the newest speculators are scared silly by all the selling.

Of course, Israel or Iran could change everything in an instant. That's why only sold 20% of my oil holdings back when prices were so high.

Today on September 16 I think we will see lower prices. We did have a small production cut, as I predicted

I think we are swinging from a potential hyper-inflationary future to one that is potentialy deflationary. All asset classes will go lower, but long-term, I still like owning oil companies

Right now, we have some panic selling. It's not about fundimentals right now. It's about having the money to buy. Lots of former players, like Lehman Brothers don't. They are are no longer in the game and you don't have to bid against them.

I will probably start buying today. I will do it slowly and in small peices. You always always want to have some cash. There can be further dips and you never know how long these things can last.

Baron Rothschild, the quintessential banking opportunist, said buy when there is "blood in the streets." I think I see some blood.

Right now, we have some panic selling. It's not about fundamentals right now

It doesn't have to be about fundamentals if a large part of the rise wasn't due to fundamentals either.

People need to take a hard look at the psychology of market bubbles. The true believers buy into the notion that the rapid rise makes some kind of sense (that things are “different this time”) and the thing just keeps climbing despite actual fundamentals that indicate it should be lower. When the “pop” begins, they’re actually buying into that weakness and when the fall accelerates faster than the then current news would seem to justify… they buy in even harder, expecting that news to eventually control and right the ship.

It doesn’t matter whether it’s the NASDAQ or commodities. It’s awfully hard to look at the charts and not recognize the shape of a collapsing bubble. When news that should be driving it up (like a company making a record profit or a major hurricane threatening oil production) can’t even keep it from continuing to decline… it’s a clear sign.

Though I think demand destruction is important beyond $125 This is what I think is important as the price gets lower and lower: supply destruction.

It inhibits the development of non-conventional sources, especially the oil sands. It should create some support or a floor price. Without the right price, new supply will sit in the ground:

"A new steam injection project now requires oil at $70 a barrel to make money. For a mine, which includes an upgrader to turn the bitumen into synthetic oil, $85 a barrel is needed for a project to make money..."

Oil sands economics under pressure


Oil isn't headline news anymore. Once the focus returns on oil and its fundamentals, people will begin to realize that that it is trading at a discount. Right now though, demand is falling due to the fact that we are in an economic downturn. Less people will be using airplanes, cars and businesses will be transporting less goods and supplies via truck. Short term oil will hit mid 80s, and long term... = up. Ofcourse, i;ve been wrong before and don't look forward to being wrong again :( .


Can someone tell me how relevant the contract expiry dates are on NYMEX based oil prices? If you look at spot prices of oil at the historic contract expiry dates, are they closer to the prices that traders are paying for physical barrels of oil? Or do the contract expiry dates have no dampening effect at all on oil price volatility?

Call me crazy, but winter is coming. People are going to be demanding heating oil.

I wouldn't call that crazy at all.

It raises an interesting question. Is consumer demand for heating fuels more/less elastic than for motor fuels? IOW, will they avoid a few miles driven to save on gas more or less easily then they will live with a chillier home during the winter?

The question is hard to entirely quantify. Fuel oil isn't the only means of heating a home and the demand for heating isn't just tied to personal preference... the weather plays a big role.

Then you have to consider that fuel oil and natural gas have plunged in price (nat gat being lower than at least the last two years).

Aren't the Para-Olympics over soon?

Late. Already over.

Well I predicted right for $91.

Let's see if I am right for $100.

Gut feeling, that's all.


I can see oil falling to less than $50/bbl within the next 60 days. I don't think it will ever rise to $200/bbl because credit has already been unwound by oil exceeding $100/bbl for a sustained period.

Perhaps $147/bbl will be the maximum that oil ever reaches. Once the price of energy causes a breakdown in financial markets, there will be no way to return to the equilibrium that we once knew.

Why on earth do you think this ?

Look around you this global credit bubble has a long long way to go before we even get back to normal economic levels. Most of the carnage right now is in the financial world and unless your a investment banker it has yet to have a major effect on the real economy which uses oil to produce goods and services.

Vaporizing a few fictional zeros on mega corps balance sheet is bad but its not even barely started to translate into a economic slowdown which even brings up back to a saner economic system much less one that having real problems.

Look at the integration of Countrywide and Bank of America that has yet to translate into to even a traditional number of layoffs from consolidation much less ones that reflect reasonable future economic activity.

Next as far as the price of gasoline right now in many areas its the highest its ever been but yet the demand seems quite robust. If the previous high prices really where responsible for true demand destruction then how come a few months later people are more then willing to pay similar prices if they can get the gasoline ?

The FDIC is predicting at least 100 bank failures right now we have only had a handful. Certainly one of the major banks like Citi or Bank of America or a big European bank will fail if not more this has not even happened yet.

I've written a lot about real demand destruction and done budgets for various income levels and always the results are that most people will be able to reasonably handle oil prices and gasoline costs until well over 300 a barrel its only when we pass 300 a barrel that real demand destruction begins to bite in the first world countries.

As far as the recent price drop all the info I have points to a beautiful job of engineering on the part of the Fed's and friends and the Saudi's. I'll freely admit I'm impressed and now have become a true believer of Don Sailorman who repeatedly warned that the feds can and will do what ever they wish.

However these moves do not change the fundamentals and although they can have a large effect its short term.
Look at the stock market by any reasonable metric it should have already dropped much lower than it is today if it was reflecting fundamentals its still insanely high but regardless it can and will head downwards manipulation cannot keep it up forever. And by manipulation I don't mean direct manipulation but simple things like setting the interest rates to low for the current economic conditions.

The point is yes at some point we will eventually see a serious economic meltdown but honestly what your seeing today is just barely the beginning. We have a long way to go.

Lets start discussing demand destruction and real economic turmoil once the US unemployment rate crosses 15% its foolish to think that things are going to stop here or the current price is a balance point. Once we see unemployment rise into the 10-15% range at that point we will finally see what oil prices will be in a damaged economy. I'm pretty confident that we will see 300 dollar oil exactly when we see 10-15% unemployment.

The real depression starts when we see the real end stage which is 500+ oil and 15-25% unemployment. We can argue on the price of oil but until we see serious unemployment numbers like this its impossible to assert that this or that price for oil or some financial event has resulted in the peak price for oil.

How is oil supposed to go to $500 when credit is drying up? This economy has been based on credit for years. The national savings rate is hovering around zero. How is anybody supposed to buy anything on no savings and no credit?

GM just unveiled the 2011 Chevy Volt. The other companies will follow with their own versions. Between now and 2011 the price of oil will bump up and down, but after 2011, the demand will wither away.

Personally i think it depends whether the Fed rescues AIG. If that is the case then the oil price should rise. I think ill go for the last one on the list as unpopular as it is.

Wise prediction...WTI crude is up tonight...94.51.

Over the course of the polls i've voted up, up, up (the last up being wrong because of the drop), and then i haven’t voted in the last few polls as the price has fallen, as i had no idea what would happen.

This poll i'm voting up again as i think that price is artifially down because of the hurricane induced drop in demand - and that is likely to continue for another week and a bit until the US refineries kick back in. When they do I think that there will be a demand spike/increase resulting smallish increase in price, pushing it back over $100.
The wildcard in all this is that shenanigans with the value of the $US could easily outweigh any fluctuations in the true value of oil atm.

Because of the decision of the US to not drop interest rates i think that the $US will remain relatively strong for now, which will keep a dampener on price on oil.

I think oil valued in the current $US will go up before down significantly, but i almost voted the last option, but I disagree with the speculation part of that option.

2c worth of ramblings from a university student.

Keep rambling Andrew. And keep learning. The intellegence and perceptions of today's university students will shape the future.

I better be right this time -- can't believe oil drop below $100.
I am thinking all this is to help McCain win the upcoming election. The Saudi would like someone in the Middle East to cross-check Iran. We are doing a good job for them under Bush. McCain is committed to troop in Middle East until 5341 with gazillion bases popping up everywhere. Once the election is over (<60days), all bet are off for the Saudi to support oil below $100.

As a producer, the Saudi has one of the worst LEM (ELM -- hmm whatever that model is), ie their consumption is going up a lot --- they can't have the price of oil dropping while they have to subsidize oil to their people. Where are they going to fill that revenue gap?

By Spring -- oil will be back to $150... The US economy will be close to collapse under the heavy loss of financial institutions -- facing the oil at $150/bbl will put the steak in the heart of our economy... I think we are closer to the doom scenario than most people want to see.

Hi, Wall St weenie here.

I think the assumptions in your poll are unreasonable and based on an inaccurate understanding of market realities.

The recent price runup was a textbook-classic market bubble, not (primarily) a supply/demand issue. Sorry. The bubble is now showing signs of unwinding, though it may take some time and some zigzags before a new level is found. I think support (e.g., where the price should end up stabilizing given current supply and demand factors as understood by hard-headed professionals) is somewhere between $50ish and $80ish, but we'll see. It may well be lower. Gas may yet get back under $2/gal, at least for a while.

I share your collective enthusiasm for a post-carbon future, but I think your predictions of doom have been premature. The shades of religious fervor here are actually kind of disturbing.

Being aware of reality, as you all like to think you are, involves questioning the tribal bonding stuff here ('we who are peak oil aware' - do you seriously think that most thinking people are unaware of the concept?) as well as external factors. I'm sure I'll get flamed, but I don't care. I probably won't be back to read them. Hopefully some of you will stop and think. Cheers.

Hi John,

I think your characterization of TODers as tribal and full of religious fervor is incorrect. There seems to be a wide variety of perspectives to me about what, when, where, why. Most do however, accept the idea that PO will happen sooner than later.

I think support (e.g., where the price should end up stabilizing given current supply and demand factors as understood by hard-headed professionals) is somewhere between $50ish and $80ish, but we'll see. It may well be lower. Gas may yet get back under $2/gal, at least for a while.

You won't get flamed if you supprt your "I think's" with data and reason.

Nymex oil now $101.80.

I think answers your position (and closes this poll).


Since oil just rose about $6 today, it just goes to prove how futile it is to predict. This is once again a "flight to safety" as the financial types say. I just don't see this lasting very long with a financial meltdown underway. Looks like another depression in the making.

The next great debacle, Credit Default Swaps, will be 100 times worse than what we have seen so far, has been ignited. And very few people have even heard of CDS. Its a form of interlocking credit insurance sold in an unregulated market to the tune of $62 Trillion worth. No mistake on the "T".

You know one day we'll all recognize peak oil, but when that day comes we may not have the internet to discuss it.

Outdated already hit 100$ at Nymex.

Great, I bought a bit more than I innitially planed before Tuesday's close. I might have caught a good chunk of the bottom.

Let's see if this holds. I'm quite sure there is still lots out there that could spook the market. It might not be all sunshine and daisies yet, but long-term I still like owning oil companies.