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Guest Post: Former Shell Oil Chief Predicts $5 Gas by 2012

Tyler Durden's picture




 

Submitted by Mac Slavo of SHTFplan.com

Former Shell Oil Chief Predicts $5 Gas by 2012

Though he’s no longer running one of the largest companies in the
world, former President of Shell Oil John Hofmeister warns that the
outlook for gas prices in the coming decade is not looking good:

I’m predicting a worse outcome over the next two years,
which takes us to 2012 with higher gasoline prices, uncertainty as to
the future of hydrocarbons, more regulation on the hydrocarbon industry
based upon who the administration is today…

And what I fear the most is that by 2012 prices are so high that we
have a backlash from the electorate and we go into reverse and we go
back to a hydrocarbon only type of a future, maybe with some nuclear,
instead of moving on in the 21st century.

I’m predicting, based upon the moratorium in the Gulf of Mexico, up
to a million barrels a day of US production gone because of the politics
of freezing drilling in the Gulf.

The headline is the moratorium is lifted, the reality is you can’t
get a permit… I’m expecting no new drilling for two more years at least.

If we stay on our current course, within a decade, within ten years, we’re into energy shortages in this country big time. Black outs, brown outs, gas lines, rationing - that’s my projection based upon the current inability to  make decisions.

When the American consumers are short, or when prices are so high - $5 a gallon for gasoline by 2012 - I believe that’s going to happen
- that’s going to set a new tone, it’s going to be panic time on the
part of the politicians, they’re going to suddenly get some kind of a
sense we better do something.

The scary thing is that Mr. Hofmeister is basing his $5 per gallon
gasoline prediction on supply/demand issues, not even taking into
account the unfettered digital creation of dollars by the Federal
Reserve.

If we’ve learned anything in the past few years, it should be that
government is totally incapable of taking the necessary steps to prevent
a problem before it happens. We saw it in the housing crisis in
2007/2008 and we’re seeing it now in the state budget crisis. Meredith
Whitney explained it best in a recent 60 Minutes interview
when she was asked why government wasn’t taking action to mitigate the
state budget crisis, “because they don’t pay attention until they have
to.”

If Mr. Hofmeister is correct about supply tightening over the next
couple of years, we’ll begin to see global oil shortages. This is not
only going to raise the price of gas, but everything else dependent on
oil, which is, well, just about everything else - manufacturing,
transportation, food, you name it.

Watch John Hofmeister discuss oil shortages and the coming energy crisis:


 

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Tue, 12/28/2010 - 17:14 | 834306 ZeroPower
ZeroPower's picture

This will simply further decrease the difference between what lucky Americans pay versus Canada ($5.25/g) and Europe ($8/g).

Tue, 12/28/2010 - 17:45 | 834423 trav7777
trav7777's picture

Gasoline will be going up in those places too, doofus

Tue, 12/28/2010 - 17:58 | 834454 malikai
malikai's picture

$5USD gasoline would be a pretty damn good thing in Canada. Especially when you consider the fact that the USDCAD would probably be about $.80 or less by then. Remember, Canada exports about 2Mbbl/d mostly to the USA.

Wed, 12/29/2010 - 01:03 | 835127 Malcolm Tucker
Malcolm Tucker's picture

Then good luck getting across the border to fill up or buy anything. Speaking of getting across borders, when is the US going to finally cave and institute Israeli style profiling? the Germans are thinking of doing it:

http://fedupmontrealer.blogspot.com/2010/12/german-airports-want-to-upstage.html

I wonder if they can profile mortgage fraud...

Tue, 12/28/2010 - 18:16 | 834501 ZeroPower
ZeroPower's picture

Sure, but by a lesser amount thanks to 1) a stronger CAD for an oil producing nation and as for Europe, considering where prices are currently, theres little higher they can go without completely collapsing the demand for the region.

Tue, 12/28/2010 - 21:04 | 834806 Mark Beck
Mark Beck's picture

ZP, The stronger argument is available Canadian reserves per capita. Which is very attractive.

Also, with the unfreezing of the northwest passage for all year shipping, tanker convoys can transverse the country year round like never before. In fact, IMHO Canada should commission a new fleet of ice tankers for shipping of oil.

Mark Beck

Tue, 12/28/2010 - 18:29 | 834534 CrashisOptimistic
CrashisOptimistic's picture

Sigh and facepalm.

Tue, 12/28/2010 - 18:33 | 834547 clymer
clymer's picture

 

John Hofmeister: "Who do the politicians listen to? They will listen to the people that put them in or take them from office."

Wha?


Wed, 12/29/2010 - 18:10 | 836703 Geoff-UK
Geoff-UK's picture

Maybe Hofmeister is unfamiliar with the Goldman Sachs/JPM "rent to own" style of politician management.

Tue, 12/28/2010 - 18:37 | 834551 Confused
Confused's picture

Yes, but my guess is, it will not be as disastrous for them as for Americans. Different cultures is all I'm saying.

 

Maybe bikes will become as popular in America as they are in Europe? 

Tue, 12/28/2010 - 21:37 | 834867 philgramm
philgramm's picture

Highly doubt it..........mostly b/c we americans live in a suburban wasteland.  Most ppl commute long distances to work (so they can live in gated communities).  No good public transportation in most places either

Wed, 12/29/2010 - 09:17 | 835388 Confused
Confused's picture

Thats fair. But there are some cities that do have fairly decent public transportation. I know alot of people that drive around the NY area. But your point is well taken. 

Tue, 12/28/2010 - 23:58 | 835049 trav7777
trav7777's picture

riiiight...because Canada's culture is miles apart from the US's.  They have all their own TV channels and they walk and bike everywhere.  BTW, what's the mean temperature in Calgary in the wintertime?

Wed, 12/29/2010 - 02:28 | 835194 Printfaster
Printfaster's picture

In knew two people in Minnesota that bicycled to work.  One ended up in a snowbank, the other in a body cast.  Both had black streaks down the middle of their back.

I knew another that used a motorbike 365.  He found that it took five minutes to get his hands unfrozen from the handlebars.

 

Wed, 12/29/2010 - 10:49 | 835383 Confused
Confused's picture

.

Wed, 12/29/2010 - 06:23 | 835292 Bokkenrijder
Bokkenrijder's picture

You're forgetting that taxes make up for a lot of the gasoline price here in Europe.

Wed, 12/29/2010 - 06:46 | 835295 fockewulf190
fockewulf190's picture

Indeed.  The European governments don´t give a crap about the tax  burden they heap onto the price of energy.  Have taxes on oil and gas ever gone down in Europe?  Not here in Germany.  The sheeple put up with it and allow the unlubed raping to continue year after year.

Tue, 12/28/2010 - 17:49 | 834427 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Why?  Because of Tar Sands?  No way.  The EROEI of tar sands is worthless.  Have fun destroying your old growth rainforests.

Tue, 12/28/2010 - 17:55 | 834448 Freddie
Freddie's picture

Canada has old growth rainforests?  Global warming 

If you are thinking of Chavez or Lula's predecessor in Brazil chopping down rain forests - they don't give a shit. They are fascists like Hussein.  

Tue, 12/28/2010 - 18:09 | 834480 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Canada has old growth in their rain forests.  Global warming?

Tue, 12/28/2010 - 18:18 | 834510 Drachma
Drachma's picture

AGW cult-induced dyslexia?

Wed, 12/29/2010 - 02:47 | 835203 UnBearorBull
UnBearorBull's picture

But the oil sands are nowhere near Canada's rain forests, which are all in British Columbia. They are in the northern boreal forests of Alberta, which looks more like Siberia.

Wed, 12/29/2010 - 03:48 | 835226 johan404
johan404's picture

Siberia is mostly planes and pastures, with little forests here and there, nothing like the boreal forests in Alberta. They are more like the ones in central Finland and Sweden. Canada is shooting itself in the face in the long run by strip mining those forests for oil sands. Stupid as fuck.

Tue, 12/28/2010 - 18:15 | 834499 Flakmeister
Flakmeister's picture

Typical.... another fucking moron

Yes, Canada has old-growth rain forests: Sitka Spruce, Western Hemlock etc... Any place that averages 12 ft of rain a year and has a higher biomass density than the Amazon is in every sense a rain forest. Temperate, mind you. Go back to school and take a geography course.

Sat, 01/01/2011 - 17:04 | 841758 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

"... they are fascists like Hussein..."

You've got to remember that, sure, they are "fascists" in a truer sense of the word than most other people are fascists, but there is a bigger, badder fascist out there, hidden in plain sight.

The fascist that has a long history of supporting puppet strongmen dictators extensively in the Middle East and Latin America, where those puppets would enable his agenda. Saddam Hussein was put in power and removed from power precisely on the whims of this fascist.

Venezuela's "president" since 1998 is exceptional, much like Iran, in that he maintains power despite defiance of this fascist. He is not at all exceptional for being a "fascist" himself. 

Who is this fascist, hidden in plain sight, who I am talking about?

Well, he has no one personage. He has lived longer than any man living today. You can call him "the Stars and Stripes", you can call him "Rockefeller capitalism", you can call him "business as war and war as buisness"... I call him "The New World Order".

He is mostly defined by his imposition of power and control over as many governments around the world as possible, bankrolled (and generally directed) by an international banking cartel, sustained by corporations which succeed terrificly only when they start to behave like psychopaths — private gains, negative externalities, total disregard for human life. And a populace he controls in the so-called First World, Developed Countries which has been receiving historically plush lifestyles from the scraps that trickle down to them, in total, blissful ignorance of the big picture of the globe.

Excuse me for waxing prosaic... I just tend to laugh at and then point out the absolute irony of members of the subsidized, ignorant populace who don't see the fascism that is operating at the level above people like Chavez and Hussein.

The secret of wealth and opulence in our wealthiest and most opulent societies is to take part in a fascist machine that exploits peoples and resources and calls it business as usual, natural, and inevitable.

... oh hey, cool, the new Zeitgeist installment is coming out soon...

 

Tue, 12/28/2010 - 18:26 | 834526 ZeroPower
ZeroPower's picture

Yes tar sands, and as I mentioned above, we are an oil producing nation and coupled with a stronger $, gas won't be as inflated in price here as it will be south of the border. I agree w/r/t to the EROI of the tar sands, though in the short term, we'll still benefit greatly from the immediate exports.

Tue, 12/28/2010 - 21:05 | 834807 gkm
gkm's picture

Yeah, $145/bbl did wonders for USD.CAD.

Wed, 12/29/2010 - 00:00 | 835051 trav7777
trav7777's picture

forex doesn't fix supply and demand

Tue, 12/28/2010 - 18:02 | 834466 Cdad
Cdad's picture

ZP,

Who cares about energy prices, anyway?  What is the big deal?  Without jobs, gasoline will be discretionary.  And who cares about nat gas, too.  I mean nat gas prices are a reflection of manufacturing.  We don't manufacture things anymore.

All we need is Bernanke bananas.  Nothing else.  So let's quit this old fashioned notion that cheap energy creates growth and expansion in the economy because the economy doesn't matter anymore anyway.

Quit interrupting my repeat viewings of Julia Borstad's important cut today on "Glee" and how that enterprise is the new solid gold real estate in the media market.  That is important stuff.  No energy prices, buddy. 

After all, Joe T has been telling us over and over that the really hard trade is being long the S&P. 

Drink your "juice" ZP.

Tue, 12/28/2010 - 18:18 | 834511 ZeroPower
ZeroPower's picture

Gasoline will be discretionary just like that 52" flat screen you watch Glee on! Im enjoying the koolaid, thanks:)

Tue, 12/28/2010 - 21:58 | 834899 bigelkhorn
bigelkhorn's picture

This is a sign of what is coming for the economy. WTF? Shitty Economy - Shops selling human excrement In North Korea => http://www.forecastfortomorrow.com/news/2010/12/human-feces-fertilizer/

Wed, 12/29/2010 - 03:55 | 835232 johan404
johan404's picture

That's what we should be doing. Composted shit is a valueable resource which we are throwing away. You can put shit in a biogas digester and get methane (nat gas) from it to cook your food, heat your home, produce electricity etc., then after that you can use it as fertilizer. It's fucking beyond stooooopiiiid to be pumping it in the rivers and oceans where it doesn't do any good.

Wed, 12/29/2010 - 12:08 | 835723 goldsaver
goldsaver's picture

http://www.youtube.com/watch?v=SrVC4XKR2s4

Too bad we are designing homes re-saleability and not for sustainability

Tue, 12/28/2010 - 17:16 | 834314 NotApplicable
NotApplicable's picture

If we’ve learned anything in the past few years, it should be that government is totally incapable of taking the necessary steps to prevent a problem before it happens.

It's known as government creating its own demand. There is absolutely nothing they do that isn't better to do after the fact, as it creates the so-called "mandate for change."

Tue, 12/28/2010 - 22:39 | 834954 GreenSideUp
GreenSideUp's picture

Heh, government creates all the problems.  Of course they do nothing until a problem becomes a big, festering, oozing sore.  And they always have such fabulous solutions.

Tue, 12/28/2010 - 17:18 | 834322 Internet Tough Guy
Internet Tough Guy's picture

Gas bludgeoned upward again? Say it ain't so robo. LOL... 

Tue, 12/28/2010 - 17:17 | 834323 Xibalba
Xibalba's picture

The dollar menu on McD's goes up to $5 as well....

 

 

 

Gotta slap these Americans outta their stupor.   

Tue, 12/28/2010 - 17:21 | 834335 downrodeo
downrodeo's picture

i think we're going to need a bigger paddle...

Tue, 12/28/2010 - 17:23 | 834344 furieus
furieus's picture

Price is and always will be the best "signal"

Tue, 12/28/2010 - 17:29 | 834369 Motorhead
Motorhead's picture

What, you mean the stupor of not having gasoline taxed as much as in the UK, mainland Europe, or elsewhere?  Jealous!  Geeesh, the average citizen is taxed enough.  But boy, oh, boy, I'm sure glad that we are getting something for all the taxes we are paying.  In fact, it is so successful, we usually just get taxed more.

Tue, 12/28/2010 - 17:20 | 834334 mauistroker
mauistroker's picture

$5 gallon? $2/gallon? $8/gallon? No one knows. And it won't matter. Out of work, underwater, indebted J6P won't be able to able to afford it. Here comes the suburban ghetto.

Tue, 12/28/2010 - 17:25 | 834355 Internet Tough Guy
Internet Tough Guy's picture

Forget price, let's talk availability. Economy collapses with any kind of widespread shortage/rationing.

Tue, 12/28/2010 - 17:39 | 834399 Missiondweller
Missiondweller's picture

In much of California, the urban ghetto is already here.

Wed, 12/29/2010 - 01:16 | 835135 mtomato2
mtomato2's picture

Well-written article.  Thanx.

Tue, 12/28/2010 - 17:21 | 834338 RobotTrader
RobotTrader's picture

Natural gas is now at world record lows vs. crude oil.

Either crude oil is going to crash, or natural gas is going to catch up.

If you believe in reversion to the mean, then here are a couple of setups you can play on the long side.

 

Tue, 12/28/2010 - 17:23 | 834345 Johrny Bravo
Johrny Bravo's picture

Natural gas going to catch up, time to go long on nat gas...

Tue, 12/28/2010 - 17:59 | 834461 Freddie
Freddie's picture

Most people do not realize that the USA is now the largest producer and holder of nat gas thanks to horizontal drilling.  This is happened in just the past 3 years.  F*** the saudis.

Tue, 12/28/2010 - 18:05 | 834472 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Natural gas cars?  The problem to service the American car/truck highway infrastructure is 20 years behind mitigation.  World natural gas production will peak in 2040 at the latest.

Tue, 12/28/2010 - 18:59 | 834596 Sudden Debt
Sudden Debt's picture

In Europe LPG cars used to be the future 5 years ago.

It's been over a year since I've seen one and all the installers went or are going bankrupt fast the banks can say "BONUSTIME".

And the electrical car?

HA!

A 100 miles radius if you drive like a retard? Won't happen.

We lack about a decade of research to replace fuel cars.

And 100 dollars a barrel of oil will be like a crossfire Kennedy headshot for the economy.

 

 

Tue, 12/28/2010 - 19:07 | 834606 Shameful
Shameful's picture

At least you guys live in an setup that is less car dependant.  Living in the American West and it's 100% necessary for most to have a car, and along with it cheap oil.  The Western US just dies at really expensive fuel.  Look at Phoenix AZ, massive city and covers a huge area as the people spread out.

Tue, 12/28/2010 - 19:14 | 834625 EscapeKey
EscapeKey's picture

LPG has been a spectacular failure over here due to the lower energy/unit ratio. Lots of stories about people getting stuck driving up hills with a 10% incline.

Tue, 12/28/2010 - 19:16 | 834629 velobabe
velobabe's picture

well ii know your from phoenix, but boulder pedal power and walking power is taking over.

desert cities like marana, AZ.

Tue, 12/28/2010 - 19:26 | 834647 Shameful
Shameful's picture

The Tucson and Phoenix metro area basically turns into a giant furnace in the summer.  The chance of most people moving to bikes willingly is next to 0.  When it's 105 Fahrenheit outside and the sun is shining it's hard to work up the energy to bike 10+ miles to work.  Might also need to explain to the boss why they need to install a shower so you can clean up in the mornings :)

Basically high oil/energy costs kills urban AZ and other places that are only habitable with high energy output.  I can only shudder thinking about living in Phoenix/Tucson in the summer without air conditioning.

Tue, 12/28/2010 - 23:50 | 835039 Mr. Mandelbrot
Mr. Mandelbrot's picture

Lived in Tucson for a few years.  Most modest houses employ evaporative cooling units rather than traditional AC, which works surprisingly well in 5% humidity.  Traditional AC is prohibitively expensive for many already.

Tue, 12/28/2010 - 19:24 | 834642 Hulk
Hulk's picture

Absolutely, 2 to 3 hour commutes, each direction, not uncommon. At 4 bucks a gallon and above, that was a real killer 2 years ago for a lot of folks...

Tue, 12/28/2010 - 19:46 | 834661 Shameful
Shameful's picture

Nailed it.  Had a boss that used to commute 40+ miles each way.  Current boss IIRC commutes around 100+ miles a day to work, good thing he has a company truck and gas.  Hell my dad commutes 60+ miles a day to work, also with a company truck and gas.  I moved to the closest place to my office I could find, but I saw the rising costs coming and wasn't tied to a mortgage, and sadly have to pay for my own fuel.  It's just a way of life out west to drive around a lot.

It's going to be a real killer again.  Even if production wasn't leveling off the money printing would catch up with us.  Should do wonders to the housing market for all the homes built far away from any kind of real employment.

Tue, 12/28/2010 - 20:23 | 834745 UGrev
UGrev's picture

I used to work for a utilities services company back just before the 2008 crash. Hired 15 developers in a 9 month span.. they were all let go because of financial problems of which the biggest was fuel costs. I can't imagine the spot they're in now with gas approaching $3.20/gal in our area. A $4.00/gal cost would ground 50-60% of their fleet easilyl. They rely on trucks to get around the state to service utilities.. a $5.00/gal price crush their margin to bits. 

Wed, 12/29/2010 - 09:56 | 835441 RKDS
RKDS's picture

Not just the west, the east coast is pretty bad too.  I carpool about 20 miles to and from work.  $5 gas is still going to hurt.  No idea how anyone can afford to do 2 hour commutes alone

Wed, 12/29/2010 - 09:59 | 835442 RKDS
RKDS's picture

duplicate

Wed, 12/29/2010 - 10:00 | 835443 RKDS
RKDS's picture

triplicate

Tue, 12/28/2010 - 19:39 | 834669 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

There are electric cars worth driving.  They can charge 500 miles in 6 hours.  Top speed nothing special.  And the price is higher than the leaf and dolt.

Tue, 12/28/2010 - 20:14 | 834735 Landrew
Landrew's picture

In the midwest, electric cars are useless. Turn the heat on battery dead, turn the air on battery dead. We got rid of our fleet of electric several years ago. Nat. gas, joke in the midwest below zero they don't start. We got rid of the nat. gas years ago as well.

Tue, 12/28/2010 - 21:24 | 834845 malek
malek's picture

Nat. gas, joke in the midwest below zero they don't start.

That's a joke right? Just stir the tanks a bit (but not too much like on Apollo 13), warm up the intake and no problem. You aware how Diesel engines are started at zero degrees?

Wed, 12/29/2010 - 00:38 | 835099 Slewburger
Slewburger's picture

You aware how Diesel engines are started at zero degrees?

KBI and ArticFox.

Tue, 12/28/2010 - 23:53 | 835045 Oh regional Indian
Oh regional Indian's picture

SD, actually the electrical car (cool eurpeanization, I like your english) has a future. A very bright one. I've said it a few time here before, I'll say it again. Even before that, intelligent utilization of human power has a brighter future. 

It's 'legislated" death of innovation that has a world of alternatives in a death grip.

Jaded word, but this paradigm is dead. The explosive paradigm is dead. The century of oil is effectively over. Deepwater horizon was the death knell for that. 

I have an alternative  human transport design, true hybrid power as opposed to the ugly overtechnical Prius and it's sisters.

But clearly the time is not now. Because even an intelligent person like you will laugh if I say 1000 kilometers per charge is here. Cognitive dissonance, you cannot accept anything outside the bounds of "known" or "accepted" boundaries.

It's a false paradigm, built on the worst understanding of power/energy and their utilization, not their exploitation.

Like phoenix, ideas like mine will rise or even be allowed to rise, only when this edifice is crushed, burned and deposited into the dustbin of history as humankind's singular, colossal error.

ORI

http://aadivaahan.wordpress.com/2010/09/03/the-curse-of-free-energy/

 

Wed, 12/29/2010 - 00:07 | 835060 trav7777
trav7777's picture

it's amazing you aren't a billionaire with all this revolution paradiggum changing stuff you come up with

Wed, 12/29/2010 - 02:26 | 835190 Oh regional Indian
Oh regional Indian's picture

A billionaire in fiat money? In bed with General Motors and Ford? Selling shoes with Nike? More efficient armament so armies can kill better?

I'm a holdout for a better world Trav, something a person like you may never understand.

All good though. We each need to find our own peace.

ORI

Sat, 01/01/2011 - 17:09 | 841762 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

Assuming you aren't being ironic intentionally...

... billionaires are a concept from the old, destructive paradijum.

Tue, 12/28/2010 - 21:28 | 834854 Dave
Dave's picture

Just so you know, horizontal drilling is unlocking some otherwise

unproductive oil formations as well. The gas reserves we have are

tremendous and as long as we're allowed to produce it without stupid

environmental regs. the better for our own economy. Gasoline is still

the most efficient fuel for an automobile. Tough to get around physics.

Until something more efficient comes along and the supply remains

abundant enough we'll use it. Oh, and by the way, the source for all

those hydrogen fuel cells... natural gas. I worked in Saudi awhile back

and I agree with your opinion wholeheartedly.

Tue, 12/28/2010 - 22:51 | 834962 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Improvements per technology will only gather the low hanging fruit and steepen the production output.  This quickens peak production.

Wed, 12/29/2010 - 04:00 | 835237 johan404
johan404's picture

Yeah, but now your groundwater is ruined due to methane and fracking fluid seepage from hydraulic fracturing. Way to go USA!

Who gets natural gas from Saudi Arabia anyway? Natural gas is mostly transported via pipeline and as I recall it there is no such pipeline to the US or Europe from Saudi Arabia.

Tue, 12/28/2010 - 18:50 | 834575 Id fight Gandhi
Id fight Gandhi's picture

Nat gas is used domestically and supply exceeds demand. Used in dollars purchased in dollars.

Oil is globally shipped priced I'm dollars bought in other fiat shit paper.

$5 gas will lead to world war.

Tue, 12/28/2010 - 17:33 | 834378 Xibalba
Xibalba's picture

Looks like the Silver/Gold ratio last year.  

Tue, 12/28/2010 - 17:43 | 834411 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

+1

Tue, 12/28/2010 - 18:29 | 834535 Flakmeister
Flakmeister's picture

Yes, NG is a bargain presently. Buy the underlying, HGT, SBR and to a lesser extent SJT. Avoid UNG like the plague except for day trades. I like EXXI, they have a nice stake in the conventional Davey Jones play. Recently had a nice breakout and the options indicate someone really likes their upside. Caveat, most NG producers have shittly balance sheets, a number will go tits up. They paid too much for the shale gas leases; they are losing money on every mcf they produce. The strong ones that survive will be 3-4 baggers. The CHK convertible preferreds are also a nice way to play.

Tue, 12/28/2010 - 19:35 | 834666 DaveyJones
DaveyJones's picture

Neil Diamond said play me

Tue, 12/28/2010 - 21:11 | 834816 razorthin
razorthin's picture

FCG

Tue, 12/28/2010 - 21:29 | 834855 Flakmeister
Flakmeister's picture

Sure, as a trading vehicle. I was talking about investments. Own the underlying cashflow generated by the commodity. Cut the pigmen out of the equation, deny upper management the ability to fleece you with backdated options.

Hell, I picked up 2000 shares of HGT at 10.05, now at 21, not to mention 1.80 or so dividends along the way. It is paying .12 per month, so I am getting an effective yield of 14% or so. Not to mention, if the the NG price rises back to $12, which it will, the divvy will be about 0.40 per month. Now that is yield.

Tue, 12/28/2010 - 21:56 | 834892 razorthin
razorthin's picture

It does look good technically.  If it breaks above that brick wall of a 200 WMA, I'll sock some away too.

Tue, 12/28/2010 - 22:58 | 834971 Flakmeister
Flakmeister's picture

Read up on the tax treatment, this is more buy and hold. If NG breaks out to $6, it will go to $30.

Tue, 12/28/2010 - 21:49 | 834884 Dave
Dave's picture

Flakemiester

I drill those shale gas wells. You're correct, some of the producers

paid way too much and to make matters worse agreed to a drilling

commitment. Not all are losing money. We're not and my drilling

program stretches through next year. Avg. well cost $8mil. with the

frac job. Payback isn't quick but these wells will eventually pay out.

Tue, 12/28/2010 - 22:54 | 834968 Flakmeister
Flakmeister's picture

Thats Flak....

I hear what you saying, there are some good producers. When investing in NG producers you have to do your homework, gotta dig into the balance sheet, look at the long term debt and the leverage. Some of these guys will shoot themselves in the foot if/when their hedges backfire. I am leery of producers overdependent on shale plays, too many assumptions about the decline rate. Give me a producer with some solid conventional plays and modest  leverage.

Tue, 12/28/2010 - 23:55 | 835048 Dave
Dave's picture

Sorry about the spelling. It was unintentional. You sound like you

know this business well. Decline rates are dependent on the frac

job. Good ones will produce a long time.

Tue, 12/28/2010 - 17:33 | 834380 UGrev
UGrev's picture

Americans will follow the path of least resistance here and go with natural gas when/where possible and more importantly, AFFORDABLE. The problem is "Who can afford the transitional costs?" Out of a job and can't find work? who's going to pay for the equipment and installation of the systems?

I don't see natural gas catching up THAT much..maybe a little, but so long as cost is sufficiently prohibitive, unemployment is high, people can't get credit, most people are fleeing credit and paying down debts.. IMO, that these are just nails in the coffin. You can't move to natural gas if you can't afford the initial hit upfront. 

Tue, 12/28/2010 - 17:48 | 834424 dark pools of soros
dark pools of soros's picture

maybe last summer SOME people still had a chance for a HELOC and energy tax kickbacks to add nat gas or electric heat..   but now???  no credit and no equity?? i guess we need an upfront credit like the home buyers credit to get people to switch

 

more bleeding to keep it going!!

 

 

Tue, 12/28/2010 - 17:58 | 834457 UGrev
UGrev's picture

i guess we need an upfront credit like the home buyers credit to get people to switch

Fat chance on getting that. People whoo took that 8k incentive and got booted from their house because they couldn't pay the mortgage before the 3 years was up, are now destitute and left with an extra 8k burden. The demographic of people who took that bait are the same demographic of people that would probably look for credits like what you suggested. After seeing their peers get corn-hole-fisted, I doubt they would fall for it. Maybe they would.. I don't know.. stranger shit has happened. 

Tue, 12/28/2010 - 17:37 | 834395 Robot Traders Mom
Robot Traders Mom's picture

Son if I could afford it I would buy you a bloomy terminal so you could chart with the real players. I also wouldn't make you take pictures of me for my craigslist personal ads.

Tue, 12/28/2010 - 17:38 | 834398 Air_BernanQE
Air_BernanQE's picture

i agree with robo, oil should crash again after it crosses irrational 120.

Tue, 12/28/2010 - 17:51 | 834430 dark pools of soros
dark pools of soros's picture

the last time it crashed was before the QE's sailed

Tue, 12/28/2010 - 17:40 | 834403 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I would be a buyer of Nat Gas here.  I have thought that Hess would have a great '10 and onward because of their natty gas exposure.  Natural gas will be important past oil's production peak.  Hess have reserves in Africa, Iran and Colombia.  Oil corporations are set to inherit bushels of cash from the world's addiction to petroleum and other fossil fuels.

Tue, 12/28/2010 - 17:52 | 834432 dark pools of soros
dark pools of soros's picture

you sound like a terrorist

Tue, 12/28/2010 - 18:01 | 834464 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Well what can I say?  You are either with Bush, or with me.

Tue, 12/28/2010 - 19:19 | 834632 velobabe
velobabe's picture

i am with a bush†

Tue, 12/28/2010 - 20:40 | 834761 Cheesy Bastard
Cheesy Bastard's picture

Will you hold it against me if i'm not?

Wed, 12/29/2010 - 17:39 | 836651 RockyRacoon
RockyRacoon's picture

Hey! Get a room...

Tue, 12/28/2010 - 23:35 | 835016 Best Satan in Town
Best Satan in Town's picture

Pics?

Tue, 12/28/2010 - 21:59 | 834898 Dave
Dave's picture

You're just jealous 'cause you're not in the oil bidness.

And I don't like him either.

Tue, 12/28/2010 - 17:42 | 834408 keepmydollar
keepmydollar's picture

I agree that nat gas is to low, but the one difference is that it's easy to drill a gas well there are still many pockets no deeper than 2500 feet, but it's almost impossible to get oil above 10K feet.  So as soon as prices come back up you will have everyone drilling new wells.

I know of anecdotal stories here in Oklahoma where people have drilled gas wells and then capped them for later use when prices go back up.  I think gas needs to go back up, but I see additional supply coming back online at about $7 which is slightly over the breakeven on drilling costs.

Tue, 12/28/2010 - 18:01 | 834465 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

And while investment picks up the reserves are depleted that much quicker.

Tue, 12/28/2010 - 22:15 | 834919 Dave
Dave's picture

Nature has a way of balancing things. If reserves get too far out of

balance nature will square things up. One way or another. And there's

nothing humans can do about it. So enjoy life as best you can.

Wed, 12/29/2010 - 00:05 | 835058 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Considering people have squandered the first 150 years of oil, I am sure the final 150 years (at best) will be wonderful. 

Tue, 12/28/2010 - 18:12 | 834488 Seer
Seer's picture

Anyone contemplating "reversion to the mean" should do this:  go look into the mirror and say "reversion to the mean, peak oil."  If the expression on your face looks like you're chuckling, it's because you're seeing how silling "reversion to the mean" means in context.

Here, here's "reversion to the mean": http://dieoff.org/Olduvai.gif

Tue, 12/28/2010 - 19:50 | 834688 EscapeKey
EscapeKey's picture

Think about this - if you were the elite, and knew you could avoid this fate of humankind by killing off 95% of the world population, would you?

Tue, 12/28/2010 - 19:58 | 834709 Shameful
Shameful's picture

Well if I was in that oligarchy I think I might be busy talking in a bad Russian accent and playing with my genetically engineered mini giraffes :)

But of course in a world of Social Darwinism this makes sense.  By eliminating fellow competitors for resources one would secure those resources for oneself and ones progeny.  To bad I missed out on getting one of the top 5% tickets...

Wed, 12/29/2010 - 00:15 | 835073 trav7777
trav7777's picture

this makes no sense.

If the hosts were all dead, how do the parasites collect rent?  These fucking pussies would have to go work to create their own food, dig up their own oil, and wash their own Bentleys.

The elite isn't all powerful; there were several massive purges of aristocracy and banker clans just in the past century in lots of countries.  Hell, Putin just turned out his oligarchs not even 20 years ago

Wed, 12/29/2010 - 04:59 | 835263 EscapeKey
EscapeKey's picture

Who said the elite = 5%? And as for saving resources, how exactly does it not make sense?

Sat, 01/01/2011 - 17:11 | 841765 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

EscapeKey:

Yes. I would.

Tue, 12/28/2010 - 23:51 | 835040 samsara
samsara's picture

Fig. #4 is still the best.

http://dieoff.org/page224.htm

Tue, 12/28/2010 - 18:25 | 834521 RunningMan
RunningMan's picture

So which is it? I was guessing NatGas to rise in 2011, and play catch up a little. Seems more likely than declining oil prices, even with all the so called headwinds for NG. Energy is energy, and cheap sources only stay so for so long.

Tue, 12/28/2010 - 18:29 | 834533 Catullus
Catullus's picture

Long: refiners.  That's all margin in a $5 gas world. 

I need more pictures of crack spread.

Tue, 12/28/2010 - 20:56 | 834789 Dr. Sandi
Dr. Sandi's picture

I need more pictures of crack spread.

Hey pal, this ain't no porn site. Of course, if you're really nice to robo, you might get some cheesecake.

Tue, 12/28/2010 - 19:14 | 834624 velobabe
velobabe's picture

met your mom this morning. i think she is in denial, if she thinks she looks like your avatar.

Tue, 12/28/2010 - 17:21 | 834339 Johrny Bravo
Johrny Bravo's picture

Infinite supply of the shit, prices under a buck a gallon by 2012,

No worries mate!

 

Wed, 12/29/2010 - 00:11 | 835065 undereducated
undereducated's picture

I wanted to reply but you make no sense.

Tue, 12/28/2010 - 17:23 | 834342 Sean7k
Sean7k's picture

Yawn. The price will go where it goes. People will change their priorities and make do with less. Stations will experience more theft and pay more for security, cutting into profits. People will find new ways to make energy or live without it. 

All those that bought and kept the big gas eaters will end up with worthless cars. Higher mileage cars will proliferate. We saw the same in the seventies. 

The world will see austerity for the first world, better conditions for the third world and the second world will get both. The only winner here is: Surprise! The Elites.

History is replete with examples. If you want change- kill the elites and invest sovereignty in the individual and allow no legal tender laws. Otherwise, suck it up, because it isn't going to change.

Tue, 12/28/2010 - 17:55 | 834444 dark pools of soros
dark pools of soros's picture

'no legal tender laws'

does that mean if she's tender, she's legal?

Tue, 12/28/2010 - 18:18 | 834503 Seer
Seer's picture

"Higher mileage cars will proliferate."

Ah, no.  Not without the cheap energy to build them, that and the cheap credit to buy them.  "Economies of scale" also work in reverse, in which case this shit will unwind pretty quickly.

The transportation meme is how the elites rule us.  Not like this is anything new: refer to Khyber Pass.

Tue, 12/28/2010 - 19:51 | 834691 EscapeKey
EscapeKey's picture

Food prices have huge input costs of energy.

Tue, 12/28/2010 - 20:07 | 834728 Id fight Gandhi
Id fight Gandhi's picture

Last time gas was this high we had a global financial crash.

70s too. History will repeat.

Tue, 12/28/2010 - 17:29 | 834359 goldmiddelfinger
goldmiddelfinger's picture

Abiotic Oil bitzhez....but for now paddle faster, I hear banjo music

Tue, 12/28/2010 - 17:52 | 834434 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Abiotic oil....no such thing...the term means as much as Santa, leprechauns, and unicorns.

Tue, 12/28/2010 - 17:59 | 834460 UGrev
UGrev's picture

you even get a free bag of skittles with each purchase! :)

Tue, 12/28/2010 - 18:12 | 834491 malikai
malikai's picture

I doubt abiotic oil too, but I recently learned about the Kola Superdeep Borehole.

http://en.wikipedia.org/wiki/Kola_Superdeep_Borehole

 

"...This water, unlike surface water, must have come from deep-crust minerals and had been unable to reach the surface because of a layer of impermeable rock. Another unexpected discovery was the large quantity of hydrogen gas, with the mud flowing out of the hole described as "boiling" with hydrogen"

If this is true, it could lend possibility to abiotic oil(at least methane). If there is an adequate elemental hydrogen and carbon around, combined with lots of heat and pressure it is possible to create hydrocarbons. It may in fact be a process similar to TDP going on down there. This is all just speculation of course.

 

Tue, 12/28/2010 - 19:53 | 834697 EscapeKey
EscapeKey's picture

Even if there is a such thing as abiotic oil, replenishing rate still comes into question. And if replenishing rate is as arbitrarily high as the rate at which we remove oil, then please explain the largely tapped oil fields of the North Sea (and all other largely depleted oil fields).

Tue, 12/28/2010 - 20:50 | 834778 palmereldritch
palmereldritch's picture

Peak Oil like Carbon Taxes are frauds perpetrated by the same global social engineers.

When they start blindly citing Hubbert, ask them to explain his contribution to the concept and implementation of smart grid technology:

http://www.thedailybell.com/864/Smart-Grid-Trojan-Horse-of-the-New-World...

[snip]

 

The Technocracy Study Course, written by Howard Scott and M. King Hubbert in 1932, established a detailed framework for Technocracy in terms of energy production, distribution and usage. According to Scott and Hubbert, the distribution of energy resources must be monitored and measured in order for the system to work -- and this is the key: monitoring and measuring.

They wrote that the system must do the following things:

- Register on a continuous 24 hour-per-day basis the total net conversion of energy

- By means of the registration of energy converted and consumed, make possible a balanced load

- Provide a continuous inventory of all production and consumption

- Provide a specific registration of the type, kind, etc., of all goods and services, where produced and where used

- Provide specific registration of the consumption of each individual, plus a record and description of the individual. [Scott, Howard et al., Technocracy Study Source, p. 232]

In 1932, such technology did not exist. Time was on the Technocrat's side, however, because this technology does exist today, and it is being rapidly implemented to do exactly what Scott and Hubbert specified: Namely, to exhaustively monitor, measure and control every ampere of energy delivered to consumers and businesses on a system-wide basis.

The dominant social themes that have been flogged throughout the 20th century – overpopulation, peak oil, the scarcity of potable water – all are intended to justify an upcoming technology-driven regulatory scarcity. Naturally, there will likely be taxes involved but there may also be (or so it is intended) a level of criminalization when it comes to even basic necessities. It is most unfortunate that this vision now dovetails apparently with that of the leaders of China whom, it would seem, enthusiastically endorse the technocratic vision, which means the movement (and its implementation) is truly global.

We can't resist pointing out as we have before that M. King Hubbert, the initial author of the "peak oil" meme, turns out to be a driving Technocratic force. We would hope this would be enough to discredit the fear-based peak oil meme once and for all. He very obviously had an ulterior motive for advertising potential energy scarcity. His speculations were intended to provide a rationale for metering and measuring energy consumption and to otherwise advance his strange economic theories – including "non-market economics." 

 

 

 

Tue, 12/28/2010 - 21:00 | 834798 Flakmeister
Flakmeister's picture

Denial is not just a river in Egypt....

Tue, 12/28/2010 - 21:06 | 834812 palmereldritch
palmereldritch's picture

and Egypt is not just a new App for your iPhone

Wed, 12/29/2010 - 00:17 | 835077 trav7777
trav7777's picture

is your middle name "stupid"?

Wed, 12/29/2010 - 00:34 | 835095 palmereldritch
palmereldritch's picture

Ha!

No it's not... but I was clever enough to find an App you could use, tho I suspect the lite version may not be up to the task for your self-diagnosis

http://www.apptism.com/apps/dsm-iv-ref-lite

 

Wed, 12/29/2010 - 03:46 | 835223 mauistroker
mauistroker's picture

fuck off, you STUPID CUNT

Wed, 12/29/2010 - 20:59 | 836989 palmereldritch
palmereldritch's picture

lol

Do you think maybe you OVERPLAYED YOUR HAND there Trav?

 

dummy

Wed, 12/29/2010 - 04:14 | 835244 johan404
johan404's picture

You're a dumb fuck, my friend. A dumb fuck.

Wed, 12/29/2010 - 12:44 | 835807 benb
benb's picture

palmereldritch – “Peak Oil like Carbon Taxes are frauds perpetrated by the same global social engineers.”

One hundred per cent correct. For the most part we only use oil because the Syndicate wants it that way. Energy discoveries/advances are made on a regular basis and suppressed. And that is a fact for anyone to understand who can turn off their TV and get off their duff and look. However, Artificial Scarcity will still feel like the real thing when gasoline prices in the U.S. go to $5 later this coming year.

 

Tue, 12/28/2010 - 22:36 | 834950 Dave
Dave's picture

There is a question concerning results of the DST (drill stem test) on

that well. I would imagine at that depth there were all kinds of unusual

findings due to temperature and pressure. I don't have access to the

fluid data to make my own calculations. "Hydrogen boiling out of the

mud" I have my doubts. Abiotic oil... bullshit.

Tue, 12/28/2010 - 18:12 | 834493 Dr. Porkchop
Dr. Porkchop's picture

The earth has a creamy nougat center! You just have to frack it first with super-heated corn syrup gas to get the oil out.

Tue, 12/28/2010 - 18:18 | 834509 Seer
Seer's picture

LMFAO!

Tue, 12/28/2010 - 18:15 | 834494 Sean7k
Sean7k's picture

There is some new research out of UW that indicates it might be possible after all, but not in the amounts we would need to replenish our current use levels.

Tue, 12/28/2010 - 17:28 | 834364 DavidPierre
DavidPierre's picture

What the hell!

Make it $10/gal. in 2011!

Let's get this show on the road.

Enough of this heming and hawing.

Time to "Kick out the Jams"*...MoFos

http://www.youtube.com/watch?v=iM6nasmkg7A

 

Tue, 12/28/2010 - 17:32 | 834377 Uncle Remus
Uncle Remus's picture

OMG MC5

Tue, 12/28/2010 - 19:06 | 834406 DavidPierre
DavidPierre's picture

Was stoned out... in the crowd some place... living in Wayne State's student ghetto ... packing my hippy van ... before bugging out to Vancouver for good.

The Grande Ballroom... 40 yrs. later

http://www.youtube.com/watch?v=sGQ5NZnzlLA

F... this growing old shete!

Tue, 12/28/2010 - 18:05 | 834470 vote_libertaria...
vote_libertarian_party's picture

My favorite rock song of all time.  As good at '11' as anything Lead Zep or Nirvana has put out.

Tue, 12/28/2010 - 23:47 | 835029 samsara
Tue, 12/28/2010 - 17:28 | 834367 nate28jf
nate28jf's picture

Commodities casino

Tue, 12/28/2010 - 17:29 | 834370 Boilermaker
Boilermaker's picture

Chevy Volt ain't so fucking stoopid now.

Tue, 12/28/2010 - 19:09 | 834611 Freddie
Freddie's picture

BS. Ford's hybrid Fusion costs $27K versus over $40K for Obama's Volt.  It is probably the best hybrid made using Ford's own technology.  The Volt is a joke.

Tue, 12/28/2010 - 21:18 | 834833 Boilermaker
Boilermaker's picture

The Fusion hybrid IS a great car but it's not an electric car.  It's basically the opposite idea which is to use a gasoline powerplant as the primary power source and use the electric under low usage situations.  The Volt is the opposite thought.

Both are good purchases at $5 per gallon.

BTW..."Obama" Volt?  The Volt was in development and completed well before the 'Obama' part of the equation came in.

You can hate Obama but the Volt is a good vehicle and makes sense (barely) at $5 a gallon.  I'm not rooting for $5 per gallon mind you...just saying it's a deal maker for the Volt.

Tue, 12/28/2010 - 17:29 | 834371 Boilermaker
Boilermaker's picture

Chevy Volt ain't so fucking stoopid now.

Tue, 12/28/2010 - 17:47 | 834417 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The electric car is 10 to 20 years behind because corporations stifled its ascent by buying prototypes and shelfing them.  Also the legislation that California had was then put down by corporate interests.

Tue, 12/28/2010 - 18:38 | 834552 DaveyJones
DaveyJones's picture

Hard to believe they'd do that :/

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