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Larger Than Expected BOE Drawdown Sends Crude Off To The $100/Barrel Races
After WTI passed the $90 barrier with firm determination, as we highlighted earlier, the most recent DOE Crude Oil Inventories number confirms that the far larger than expected draw down is accelerating. As readers will recall, after last week's massive drawdown of 9.854 million barrels which was the largest in 9 years, today's number was another stunner, coming in at 5.333 MM on expectations of 3.4 MM. The result: WTI spikes and is last seen at $90.64. And as a reminder every $1 rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year. The move in oil in the past week alone has almost entirely wiped out the most recent stimulus. Furthermore, as we suggest earlier, now that $90 is in the history books, $100 is coming, and may be here within a few weeks. At that point Bernanke may have some problems explaining how he is "100% confident" that the surge in gasoline prices is completely and totally not as a result of his deranged genocidal tendencies.Don't worry though, hedge fund managers around the world will be more than happy to afford the surging prices. Remember: wealth effect!
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I thought you said it was in the rear view mirror. Which is it?
Peak horse oats was a huge problem to. Along with peak whale oil and charcoal.
Those who claim that peak oil will produce an unending depression are doing nothing but creating an "out" for the politicians and bankers who destroyed our economy, making it seem as if death was the inevitable result of civilization, and that it wasn't their fault. Further, it gives more incentive to those same politicians to clamp down on the economy even more than they already have.
This depression was NOT caused by peak oil. It was caused by government interference in the markets, and their attempts to control money. Peak oil may or may not be real, but it is not the problem, never was, and never will be. It is regulation and taxation that are the problems. It is the dependency that is bred into the people by their governments through distribution of stolen and counterfeited funds.
But whatever. You Peak Oilers want, know, and understand nothing but death. Same god damn death worship as Climate Changers. Same god damn death worship as liberals. Same god damn death worship as neoconservatives.
Don't know about death, but I certainly understand Thermodynamics....
You might think you do. If you "understood thermodynamics" you would have thought that every stage of advancement in history since the first cell reproduced itself was an aberration. Guess what, humans aren't the entirely of the universe. We have plenty of power sources to tap. We just stop ourselves from doing so by citing "thermodynamics" incorrectly, worshiping death, complaining that there is no point, and pointing guns at anyone who thinks or says otherwise.
Wow.... "citing Thermodynamics incorrectly", please, elaborate! I have my beliefs, but I am always willing to learn, and if convinced, change my world view. I am all ears. Suprise me, you begger!
Peak oilers talk about Thermodynamics as though we need energy positive oil. They set this as a premise, and then talk about Thermodynamics as though that matters. They cite entropic decay as a reason that we must all die and civilization must be snuffed out. If they were correct, life never would have come about.
Thing is, we don't need energy positive oil, not any more than we need energy positive batteries. We have two gigantic sources of energy which are large enough to fuel growth for a VERY long time in the Earth and the Sun. All we have to do is let the price of these pre-filled liquid batteries go high enough to drive research and capital investment. Indeed, the research is already there, as I said in an above comment.
Begger? What's a begger? Did you mean beggar? Or bugger?
Touche, you got me on a typo... mea culpa
First off, I have never posted anything about die-offs, civilization collasping and other forms of doomer porn. Don't paint me with that brush. On the other hand, I am not a techo-cornucopian. There is a difference, learn to spot it. I am not going to defend the living in cave doomers, look elsewhere.
I hate to break it to you, but the world is doomed, the sun burns out in about 4 billions years. Deal with it. The sun has provided huge net positive energy flow to earth for a long time, the decay hasn't happened, hence, there is no inconsistency with the rise of life. None.
Regarding the sources of energy you cite, the sun and geothermal: Yes, they are the long term solutions that exist. I hope that we can solve the problems associated with them.
1) Solar produces electricity;
2) Geo-thermal provides HVAC, and where possible, can provide electricity.
Neither of them provide a liquid fuel that can be used for transportation.
If we willing to invest a tremendous amount of capital, we could electrify the North American rail system. Currently, no private company will perform that investment because of the ROE. Basically the same problem as nukes. This is a failure of the free market. The free market does not look more 3 years in the future, unless it is discounting a cash flow.
The mass scale electrification of the passenger vehicle fleet is a pipe dream. Unless of course you are willing to admit that driving will become a luxury limited to perhaps 25% of the population. This is simply a function of the technology, it is expensive, complex and requires relatively scarce elements. There is no Moores Law to the rescue, dealing in ppm ores puts a floor on the price. A similar example is solar produced hydrogen, it requires Platinum catalysts, cute.
On the whole, oil will always be net-energy positive for those that find it. (I refer only to liquid oil that flows without pumping, not kerogen and its ilk) but it will not be available at the levels we are accustomed to have. My concern is that when the free market figures this out, whether the oil that we can devote to powering the transformation in infrastructure will be there. That is the potential catch-22.
Duplicate Deleted
Hey, I'm still waiting. I wasn't shitting you. I want to learn.
peak oil "may or may not be real"?
wow...just wow.
Your attempt at a faith-based polemic was a failure.
The "government" caused the collapse. LOL.
You really are clueless.
TMosley wrote:"Peak horse oats was a huge problem to. Along with peak whale oil and charcoal."
Oats, whale oil, and charcoal were never the basis for a civilization. Modern civilization is based on oil. Everything from gasoline to fertilizer.
You cite "other sources" of energy. How will you run your car? We've been using gasoline for 100 years to run cars. And what's option B? Nothing better has come along.
If there are other sources of energy, when will you implement them? What are you waiting for? 20 dollar a gallon gasoline?
Which one of the following do you either not understand or disagree with:
1. Oil is limited in supply.
2. The modern world is critically dependent on oil to function.
3. There is no direct substitute for oil, and any semi-fungible energy source will not be able to be implemented in the short term.
4. Oil production has been flat, and, given that no major oil field has been discovered in many years, it seems implausible that oil production will do anything but decline, just like the U.S. did in 1971.
The funny thing about people who don't understand Peak Oil is that they are typically worse than religious zealots - they almost always reference "alternative energy sources" without understanding that there are not any other sources that can be readily used to run their SUVs and UPS trucks.
Peak Oil is funny - everybody has an opinion on it, regardless of how little they know about the subject matter. It's almost as if the mere fact that a person uses petroleum products, and is, in fact, critically dependent on them, equates with having a clue as to their long term production.
I love the whale oil reference! Whale oil lit the lamps of wealthier colonials. A nice alternative to candles.
Oil powers your world.
Oats ran the transportation system. Whale oil provided ~100% of the night light. Charcoal provided the heat which drove the industrial revolution. Study your history. Those things were EXACTLY analogous to oil today.
Oil can still be used as feedstock for chemicals and plastics, and as fuel for vehicles. Guess what? You don't have to have an energy positive process for those things! You need gas for fuel because it is energy dense. You use petroleum as a feedstock for chemicals because they provide a convenient source of hydrocarbons--something that can be gleaned just as easily from oil rich plants, microbes, or artificial processes, assuming you have the energy available.
Other sources of energy are all around you. Coal, nuclear, hydrothermal, natural gas, and the big one, solar. Solar sucks right now, but new processes have been developed in the last few months that allow production of perfect sheets of graphene on an industrial scale. These sheets can also be easily formed with doping agents, which means you have a substrate for perfect solar cell that costs as much to make as newspaper!
And for the record, oil powers 35.9% of the world. Let solar panels become so cheap that you can use them as internal wallpaper as well as fade and wear proof external coverings, and you'd be surprised how little you will need it. Hell, I can power my own home on less than $4000 worth of solar panels, or $5500 including all of the accessories, and that's with commercially available technology.
You know, it's funny. You write all those words about how peak oil will end the world next Thursday, but you mention NO solutions. Why is that? Probably because you are a death worshipper.
$5500 to get your own juice is a bargain, have you done it? Doesnt do anything to address other infrastructure issues, though.
I guess you invested in NENE....I did. Lets see how scalable it is.
If oil stays over $90 for any length of time, that's going to trigger a very, very bad chain of events.
nah... everything is fine. Consumers are delveraging meaningfully, banks are solvent, credit is flowing just fine, bank failures have slowed, jobs are coming back, dollar has bottomed, inflation is low, stocks are 80% off the lows... yeah, the worst is behind us.
"Double-Dip" didn't happen and is even more unlikely now. Dollar is fine.
Just sold 3 of my 6 ounces of Gold the other day (Bought in at around $1060)
^^^DEAD SERIOUS, FOlks
This thread is about oil.
A junk for not having your sarcasm button ON, knucklehead.
The folks here are getting educated about the numbers of oil production and I won't add much. Just two things:
1) If I said oil price isn't informative when it was $80, it's still not informative at $90+. Most oil secured for the long term by China is in bilateral contracts with a non public price. We don't really have much price discovery on oil, though you can probably rest assured that if those contracts committed to $110/barrel and the prevailing price was $175/barrel, the producer will demand renegotiation.
2) Russia. Saudi Arabia is not the big kahuna. Russia is the world's largest oil producer at 10 million bpd. How do they do it? 150,000 wells. No typo there. They have 150,000 wells. As they go dead each year, they drill 6,000 new wells. Each Year. That is an average production of 66 barrels per day, or $6000 in revenue per day per well at $90/barrel. If that well requires maintenance or has to be manned, $6000 is not much profit. They HAVE to have high price to produce.
Visualize 6,000 wells per year. Thats more than the US drills (with a lot more money available). It's 16 wells a day coming online as 16 die. If you were going to apply an adjective to this drilling, it might be "frantic", or dare I say it . . . "desperate". Putin recently said they could maintain 10 mbpd for the next few years if they got $23 billion in investment. The phrasing was "with $23 billion of investment, we can maintain production". The converse, of course, is . . . if we don't get $23 billion, we can't maintain production.
Where's that money going to come from?
Details... don't cloud up a perfectly emotional response with analysis. Are you new to posting on ZH?
Seriously, the US is the only major producer that does incentivize Maw and Paw wells. The Permian basin will provide a lot of oil for a long time for the right investor, abeit at 20 bbls a day. CYI the Saudis milking their fields the same way?
The Saudis are Aramco, a national oil company. There is no ma/pa aspect to them. Their production per well is down to about 70 barrels / day as best I know. It's been falling steadily, of course. They drill too.
People just don't understand oil. They don't want to grasp that is geology, not oceanography. An oil field is not a big ocean of liquid under 7,000 feet of rock. An oil field is just more rock. The rock has two parameters: porosity and permeability. Porosity is how much oil is in pores, and permeability is the interconnectedness of the pores. If you have high permeability rock, like the Saudis had in their unique geology, then a hole drilled will suck in oil from many hundreds or thousands of feet around it. But more typically you don't get those kind of distances and you have to drill more holes, and more holes and more holes, as the previous holes go dry.
This is why the Bakken and shale oil in general are all silly to look to for salvation. The permeability is horrifically low. You will have to drill holes very near each other, even when they bend to horizontal, because the oil just doesn't flow far to the low pressure hole to come up to the surface. You have lots of oil underground, but you can't get it to the surface becase the rock won't let it flow. That's just the way God arranged it. We can frack the rock to create more permability, but that's only going to get you a big more distance from the hole. You still have to keep drilling and eventually your holes just intersect old holes.
blah blah
Nice sermon.... but you are preaching to the choir :)
I still get a howl about people denying any oil problem that cannot descibe the difference between Green River, aka kerogen, and the Bakken. Call that my litmus test.
Well said. Oil field geology aside, my family owns 1600 acres of bakken shale in ND. An old coot down the road got a 3.2 million wildcat check for 90 days worth of oil. He might disagree with you.
Good for him, and you for that matter! Just hold them to their promises about the enviromental impact. I snarfed up a few shares on the cheap of some junior oils with Bakken exposure. So far so good...
Good for him. But look at your numbers. $3.2 million for 90 days is $35,500/day. At $90/barrel that's 395 barrels per day.
From 1600 acres.
The company kept a chunk, of course, and there's no way to know how much, depending on the field and local rules, but call it a 50/50 split. So 790 barrels per day flowed from 1600 acres.
Is it still flowing? Or was that it? One well or more than 1?
some milkshake drinking gonna occur, methinks
Interesting that oil prices have risen bout 10% since Nov 1 while dollar has strengthened bout 10% from the same time. I'm not seeing a significant rise in usage?
Hard to imagine that in the our blossoming recovery oil prices wouldn't continue to rise? Economic recovery heading for rising interest rates, higher taxes, unfunded's, increasing debt service, coupled w/ rising energy costs...headwinds...gale...hurricane???
Harry, Toathis, Gloomdoom, remind why it's all be good!!!
Look at how you phrased that:
Oil is up so why? Dollar fluctuation maybe? Or maybe recovery is increasing demand? Rise in usage?
All you left out was the ever popular "speculators".
It just seems to be inconceivable or somehow outside of the ability of people to dwell on . . . maybe it's just not coming out of the ground fast enough.
Are you implying that current available oil supply is not meeting current demand? I haven't seen this data anywhere. Have you? No doubt it's coming but haven't seen there is a shortage of currently available crude causing the price increases. BTW, speculators by definition are those that buy and sell future contracts and without speculators, pricing volatility would be wild.
I guess my point was what would the price of oil in dollars look like if the dollar returns to a weakening trend? Oil well over $100?
Tyler quit posting this shit. We don't count food and energy costs. They are of no consequence. Our government masters and the BLS tell us so.
sustained inventories declines are evidence of consumption>production
don't blame the Bernank for this one just yet
And there it is. Peak Oil gives government a free pass on their genocidal policies.
You might as well work for the government.
The USA has USED less oil this year, than I can remember, the world economy (sans Chingdow,India),same.
Whatever happened to DEMAND and supply?.
Those bitchez got those tankers anchored of the Gulf AGAIN?,with $30.00 oil, and now they are going to sell it for a $100.00.
Treason...............
Listen very very carefully. When the stories of tankers sitting with oil were all the rage, the total amount of oil being stored was 60 million barrels, about 17 hrs of world demand. Yeah, it was a lowhanded way to make money on the contango curve, but it was a pimple on the ass of an elephant.
Chinese imports of oil were up 25% yoy. The US is no longer the swing-demander. The decline in US demand is more than offset by Chindian rising demand, not to mention the rising demand in many net exporters of oil.
people have really no clue about the volumes of oil consumed by the world, so they say stupid shit about conspiracies with vast tanker fleets.
Stockpiling oil is a GOOD idea, especially for the can't eat gold crowd. Why the fuck WOULDN'T one do this if they had the means to do so?
Those who claim global depression need to monitor BRIC consumption as well as export land model consumption trends in producer States
exactly, tmosley. am still waiting for an intelligent explanation from the "oh, shit, we're gonna run out of oil on Tuesday" crowd. still waiting.....
You do know that they were using tankers because all the onshore storage facilities were full, right?
I am going to start a new mantra.
Repeat after me:
Demand is not the same as consumption.
Demand is not the same as consumption.
Demand will soon exceed consumption.
You'll be dead not too long after that.
Lindsey Willams on AJS 15 December 2010
“Oil will go to $150 – $200 a barrel”, says Lindsey Williams from his high up sources.
“EU will have a major problem”, “The Euro will collapse first before the American Dollar” (No Timeframe)
Buzz Words 1 - from Lindsey Williams on IMF:
15 major devolpement countries have to raise $10.2 trillion on interest alone. That's 27% of their total economical output.
Buzz Word 2 - from Lindsey Williams on Silver:
"Comex Silver Exchange have only $107 miljoen ounces on hand but have gave out obligations in Silver paper to the amount of $720 miljoen ounces of Silver."
Silver & Gold gonna explode in price says the elite.
About the FED:
The FED is buying $140 Billion in treasuries every 40 days!
Keep an eye on the Insider Trading ratio!
Lindsey Williams Returns: Confessions of an Elitist - Alex Jones Tv 1/4 http://www.youtube.com/watch?v=_YYTa075NJg
Lindsey Williams Returns: Confessions of an Elitist - Alex Jones Tv 2/4 http://www.youtube.com/watch?v=638nMiYoUuU
Lindsey Williams Returns: Confessions of an Elitist - Alex Jones Tv 3/4 http://www.youtube.com/watch?v=0CXi1C6v7Gw
Lindsey Williams Returns: Confessions of an Elitist - Alex Jones Tv 4/4 http://www.youtube.com/watch?v=7aw8-3J2t6Q
In the past decade, crude oil has ranged from $18 barrel (Jan '02) to $147 (Jul '08)...since the peak in '08 oil has ranged from $36 (Fed '09) to $90 (now).
The implication on US consumer discretionary from the low of '09 to now is a reduction of $72B annually.
Funny, seems like the price of crude oil over the last decade looks an awful lot like the Eur/Dol or inverse of the DXY over the same period? Seems this dollar fluctuation may have more to do with oil price changes than other factors?
Given this faily obvious relationship, why would BB push to devalue the dollar? Would seem plain this dollar weakening will result in another oil price spike! This will more than offset any positive export impacts.
So why do it? Who is BB serving?
And this is winter in the US and Gas is this high. Oil is going up because of inflation nothing more. As the poster put it we will soon see if Bernanke bet right on his economic moves.