“What people need to hear loud and clear is that we're running out of energy in America.”
—George W. Bush, May 2001
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http://www.rigzone.com/news/article.asp?a_id=28214
Those of us who are in favor of windfarms and other types of alternative energy generation might send comments to the MMS to show that we care about making it easy for alternate energy providers to obtain the permits they need to begin operations.
In the U.S., many people will be getting their first real heating bills of winter this month. They'll also be facing up to a quadrupling of their minimum credit card payments, and many of those who signed adjustable ARM mortgages will see their minimum payments rise. We'll find out how strong the economy really is...
Good luck to all in the next six months. May your families be safe.
C
and head to $80/bbl as the driving season
starts in April - May. Until then we will
likely see it range bound $55 - $70.
The strategic reserve will need to be refilled.
European gasoline shipments are over.
Special Canadian natural gas shipments are
also over (1/1/6). The weather is the
big factor for nat gas. If it gets real cold
we will see $20/mmbtu nat gas!
The FED is pumping the economy full of liquidity.
the credit card problem will be quite manageable.
the housing bubble will slowly deflate.
prices will be soft for years, but no crash.
GM and Ford will file for bankrupcty, but
continue to operate. This will still be a big
negative, but not a crash.
Delphi employee liability aprox 7 billion
Burn rate with Delphi strike 1.5 billion/month
and they're already loosing billions/year on continuing operations.
I also don't think Toyota would want them...
Someone should call me a waaahmbulance; now I have to get gas payment cards from my credit card rewards rather than best buy gift cards ;-)
In the past 6 months the average daily move is over a dollar with about a $1 standard deviation, meaning $2 moves will happen almost 1 day in 3.
For you trivia curious, last 6 months of nat gas have an average 32 cent move with 21 cent standard deviation.
So Crude oil daily moves last 6 months are 1.6% with 1.55% sd and Nat gas daily moves average 2.48% with 1.6% sd. Nat gas is about 50% more volatile than CL.
U.S. consumers recovering from record high gasoline costs last summer may now face a nearly 60-cent price surge next year because of stricter environmental regulations, an industry expert said.
http://www.msnbc.msn.com/id/10533856/
Will this be the next public outcry? I'm dealing with one here in North Carolina as the gas tax gets a great big $0.03 increase and people are all bent out of shape. Nevermind the 23% increase in the price of gasoline this year here...
Unless I lose money. Kidding.
Gold is still a very good safe investment in my book. Rail, alternative energy, oil/natural gas exploration companies, and commodities businesses are good buys still in my humble opinion.
Perhaps we could have more discussion of financial issues here. I'll list off my favorite tickers here, some of which I own, some of which I would like to get at a lower price:
CSX, ESLR, GLD, LNG, PBW, RAIL, SNG, SU, TGA, TXCO
What's everyone else's portfolio look like?
Have been long since Dec o6 contracts where $20.00 (2000) used the profits to set up a low energy imput farm. Farm land prices are going crazey and in my region. Bucking the slow down trend in realestate.
Long gold, Long wheat july 07.
Stocks/ETFs: ERF, PVX, XLE, GG
Funds: ICENX
Looking at the new Euro-backed ETF, FXE, as a possible add in the not too distant future. Definitely a great new tool for small investors.
I figure that we Peak Oilers have about 7 years left to use our insight into what's coming. We should be able to leverage that insight into enough money to get us through a few years of the decline. I expect that as oil/gas supplies get tight a lot of money is going to pour in from other sectors to support Hail Mary drilling programs. Those who are already invested stand to make a lot.
As for investment advice right now, I don't have any except for the really basic rules I used for myself. Diversify within the energy sector, pick a range of company sizes and niches, check out their track records and fundamentals, do their charts, but plan to stay invested for a few years. For me the energy sector is too volatile to make it comfortable for day trading, though people who can stand the bumpy ride will make more money than I will.
I found that a portfolio of around 15 companies was the right size. It's big enough to diversify somewhat, but small enough to manage and also small enough not to dilute out from averaging if you make good picks. To ensure that last point, I rebalanced it a couple of times over the first three months to get rid of the dogs. Now that I'm happy with my picks I'm just going to let her ride.
NYSE/NASDAQ: EWZ, CEE, BNI, NSC, EWC, IGE, CCJ, SUNW
Paris: Areva Group
Frankfurt: EasyETF GSCI (commodity etf)
gagex - Guiness Energy
umesx - another energy fund I recently dumped; was consistently underperforming gagex
pcrdx - Pimco Commodity Futures - Isn't as heavily energy weighted as Oppenheimer QRAYX but pcrdx is no-load
PBW - Powershares Alt Energy
bni - Burlington Northern
cmc - Commercial Metals Corp - metal recycling
can't bring myself to buy a coal company directly
With the yield curve inverting; the beginnings of a bear market are likely upon us. These might be the best for a while
bearx - bear market/gold
dodix - intermediate bonds
Some traditional no-loads that I've done well with:
brsix - ultra small cap
braix - aggressive
brlvx - large value
brsvx - small value
RISIX - international
Think 1% of your money in physically possessed silver and gold as temporary emergency funds, 4% in actual cash, both in your home where they can't get grabbed by the government (as happened in Argentina and Russia recently), and one third each left in the stock market (diversified), residential property, and bonds (diversified maturity).
Don't buy commercial, forest, or royalty real estate. You don't know enough to pay a sensible price unless that's your business.
I wouldn't mind buying land that has just been lumbered, though. It's value is very low so it's hard to go wrong.
Gasoline prices over the last 6 months for Canada (Red), NY State (Blue) and USA Average (Green)
Look for some movement here in the weeks to come.
Matt Simmons makes a key point regarding the North Sea. He predicted that North Sea production would peak between 1998 and 2000; however, the 10 major oil companies operating in the North Sea were confident that the North Sea would not peak until 2010. The North Sea peaked in 1999, and production is crashing--down about 25% from its peak.
This is analogous to the major oil companies' response to Hubbert's prediction that Lower 48 oil production would peak around 1970--by and large they thought that Hubbert was nuts.
Based on the Hubbert/Deffeyes P/Q versus Q method, the Lower 48 peaked at 48% of Qt (total estimated cumulative production). Conventional wisdom was wrong. Hubbert was right.
The North Sea peaked at 52% of Qt. Conventional wisdom was wrong. The Hubbert/Deffeyes method was right.
The world is at 50% of Qt. Conventional wisdom says that we are not anywhere close to the peak. The Hubbert/Deffeyes method says we are at, or very close to the peak. We do know that world oil production is flat year over year.
We also know that conventional wisdom regarding the Lower 48 and the North Sea was flagrantly, 100% and absolutely wrong, while the Hubbert Linearization method was right.
He has long maintained that oil prices will spike to new highs this Winter, and they will never again be as low as between Labor Day and Thanksgiving 2005. This is due mainly to his theory that Saudi Arabia has peaked, though.
UKOOA - the United Kingdom Offshore Operators Association - insists there is still 20 or 25 billion bbl to recover. It won't happen.
For us, it will be a matter of years.
I'm also reminded of Hirsch's work. His analysis predicts that the peak will be sharp, sudden, and completely unexpected.
Gradualism is generally the rule in the natural world, but there are exceptions, and I wonder if peak oil is one of them. For the same reason Simmons was able to make his North Sea prediction: 80% of the oil comes from 20% of the reservoirs. Okay, I don't know if those numbers are strickly true, but something like the classic 80-20 rule does apply to oil fields. And once the giants start to decline, drilling more small fields can't make up for it.
Peak conventional oil?
Peak conventional + NGL?
Peak conventional + NGL + unconventional?
Peak conventional + NGL + unconventional + gas-to-liquid?
Peak conventional + NGL + unconventional + gas-to-liquid + coal-to-liquid?
That's the prob. Even ASPO-activist eminence grise Laherrere reckons conv. + NGL will not peak until 2015 or thereabouts -- and that only provided that supply is not constrained by demand (e.g. world recession).
When will the peak occur if you include EVERY fossil fuel that can be converted into oil? That's the super-size question.
Solar mega-obese fat-to-oil rendering technology: America's untapped energy reserves.
It reminds me of the movie 'Soylent Green'.
The daily price "bounces" off of it like it's an unbreakable barrier.
An alternative view is that the price is being set to that value. Oh but that can't be right. I forgot to stay "informed" by the news about
Yeah, rain, snow, sneezes, all the real news about the price.If there are delays for projects in the first half of the year or most projects are scheduled for the 3rd or 4th quarters, that would seem to indicate major shortfalls by the time the springtime arrives and Americans take to the road....
Does anyone have some specific information about this?
EIA just came out with its preliminary estimate of world oil supply for October (including liquids and refinery gain).
Oct number was 83.149 Million barrels per day, still 1.51 million b/d shy of the peak they reported for last April. Take this however you choose. Clearly we are not seeing any great supply increases, even apart from hurricane effects.
http://www.eia.doe.gov/emeu/ipsr/t14.xls
If the EIA was on the mark the Oct '05 peak would be almost as short as the April '05 one and the Jan '06 one would as short as the April '05 one.
The question is whether once conventional peaks, can non-conventional increase enough to offset the decline in conventional production? IMO, the answer is "no," but time will tell for sure. Case in point, total oil production in Canada (conventional + non-conventional) is down to flat year over year.
Maybe you in the US didn't hear the news: last days many EU nations (mainly east) announced they've switched from gas to oil to face the Russia-Ukraine gas crisis.
I think this is a reason for the price spike.
Suncor (NYSE)
Canadian Oil Sands Trust (in US is COSWF, Toronto COS)
UTS Energy (UEYCF, UTS)
OPTI (OPCDF, OPC)
Western Oil Sands (WTOIF, WTO)
All of these have been wonderful investments over time.
COS is up ten times since inception. It's partnered with ConocoPhilips, Imperial Oil (Exxon's Canadian sub), Petro-Canada and others. It's producing 125k bbs a day going to 350k in '06 and has just doubled its dividend.
Each of the companies is in a different stage of development. Look at their web sites, see who their partners are. Look at the charts. These stocks have gone up many time more than crude and should continue to do better than the commodity.
If you only want to hold US companies, Suncor is an integrated producer-refiner in both the US (Denver refinery) and Canada.
All of the companies have 50+ years of reserves in a politically safe country. As time goes on those two facts should become more important.
The SEC has a ruling pending that will permit oil sands reserves to be carried on a US-traded oil company's books as "reserves," thus giving balance sheets a boost and reserves a real boost. As soon as the SEC rules, some of the hoards of cash US companies are holding should go into buying up oil sands producers.
("Total", the French giant (4th largest in the world) just paid a big premium over market for Deer Creek, one of the Alberta companies.)
O.K., there's a little sci-fi for you, and let's all hope it doesn't come to that.
Look at the dialogue that begins here.
And here's my point:
There is no end to optimistic forecasts of future supply/demand curves which are based on unsubstantiated future projections. This open thread here, which deals with the short-term oil price rise--which is valuable--still misses the main point. I am only left to deal with the following question:
Whose best interest is served by providing these apparently delusional and happy forecasts cited by Bubba or is this mostly just human pyschology at work wherein it's just not possible to deal with possibly traumatic coming realities? This is also called psychological defense which Anna Freud had some interesting things to say about.
I admit the possibility that us Oil Drummers are wrong somehow, but I doubt it. Given the miracle technology of the internet, it seems to me that most (if not all) of the information we need to make informed judgements is available as regards non-OPEC production as cited in Bubba's post. However, private conversations between, to take some examples, Saudi Aramco or PEMEX on the one hand, and CERA or IEA (or other parties) on the other hand, does not change the current production figures or the acknowledged decline rates in major fields (eg. Cantarell in Mexico). This is all published information albeit with some uncertainties attached. I don't think the error margins we derive are significantly different from those used by the authorities and experts that are often cited.
Who are these Pollyannas trying to bullshit? Us? Themselves? Both?
I would bet both my keyboard and my wireless mouse that many of them routinely ask themselves and each other why there are so many Cassandras out here (like us) who can't see from history that there's nothing to worry about and this "peak oil" nonsense is just a lot of ignorance, fear mongering, and nihilism posturing as science.
Personally, I think the evidence is compelling that peak oil is real and imminent. For what it's worth, I side with ASPO and their current date of 2010 for conventional plus non-conventional oil.
The Pollyannas --or more correctly, the writers of "good news"-- are trying to earn a living just like you and me. They are giving to the power elite, that which the power elite wants, namely, good news. This is basic capitalism: give to the consumers that which they want. Lower and middle class people do not give the writers money, therefore the needs of those classes for "truth" are superfluous to the Pollyanna writers. They dance with them that brung 'em to the party.
There is no cabal. This is just a fundamental outcome of the capitalist system. The power elite want to hear good news, and they are willing to pay for it. Therfore it comes.
(Corrected quote from "Field of Dreams" movie: If you pay for it, it will come.)
Someone before equated american main stream media to Soviet Pravda news. Oh how true that is.
My new years resolution is to boycott all the news channels on TV. (as much as possible). They just spend too much wasteful time on very unimportant topics. Imagine Hillary as President, and Bill taking Koffi's job at the United Nations.
What amazes me most is that the Dow keeps rising even as oil prices continue to spike. What are these people drinking? Vodka with a dash of eggnog?
Finally, and this is the most important, the average person feels unaffected and powerless. They may not like having a house in the 'burbs, but without 'significant financial incentive' will not move. Also, what little they hear about peak oil is offset by the fact that gas prices have not increased THAT much. Ask people to take 5 minutes and figure out the MAXIMUM amount they would pay for gas. I think you'll find it between 2 and 3 times the current prices. Even a Katrina induced shock is of relatively little consequence, except to piss them off enough to complain; they may complain but they are not going to run out and convert their car to electricity. Here's some simple math; driving a vehicle which consumes 17 gallons per week, a HUGE increase of $1 per gallon will equal somewhere around $68 per month. Ok, now consider that the average person spends that on their cell phone minutes. Initially you may think not, but add up all those crazy taxes overages and if you have a teen.....double it. Bottom line, gas goes up kid gets a go phone, not dad gets a prius.
My parting thought: Things like nano-solar sound great to the average person, but can they buy it at Sears?
Investments in hydrocarbons will eventually be affected by awareness of climate change onset and calls for reduced CO2 emissions.
Stated another way, which will occur first - massive public concern over oil & gas depletion, or massive public concern over the accelerating pace of climate change and need for drastic CO2 emission reductions?
There are signs that climate change is occurring surprisingly faster than expected - e.g. last Atlantic hurricane season, arctic ice melting, and the reduced warm atlantic currents flowing toward Britain & Europe.
If this trend continues to accelerate, some of the high CO2/unit energy investments (e.g. tar sands) might start to look unattractive.
http://www.uruknet.com/?p=19201&hd=0&size=1&l=x
If the Ukrainian side hadn't been so obstinate it could have had the gas for $77.5 per thousand cubic meters. It is still getting the Central Asian gas for $50 and the current mix is 25% Russian gas and 75% gas from Turkmenistan, Uzbekistan, etc. Gazprom was giving Ukraine a price of $160 as late as early December, 2005. So 0.25*160+0.75*50=77.5.
The only way to explain the obstinacy is the re-sale racket. The BBC points to a greatly reduced volume of Russian gas imports but if you look at the volume from Central Asia it is still at 40 billion cubic meters per year. Ukraine has reduced gas imports by about 12 billion cubic meters of per year. I doubt that this is a volume of gas actually used by Ukraine. If Ukraine continues to improve its efficiency it can stop importing Russian gas altogether.