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Andrew Hall On Saudi "Excess Production Capacity" Promises
When it comes to energy, and specifically crude oil trading, few names are as respected, if controversial, as former Citi star trader, Andrew Hall, whose $100 million pay package in 2008 forced Citi to sell energy unit Phibro to Occidental. He currently is primarily focused on his own fund Astenbeck, where he trades what he has always traded - commodities, and primarily oil. As such, his view on the oil market is far more credible than that of the EIA, or any conflicted Saudi Interests. So what does he have to say about the biggest wildcard currently in the energy market, namely whether or not Saudi Arabia, can push its production from its recent record high of just under 10,000 tb/d to the 12,500 tb/d that would be needed to replace all lost Iranian output (a question we asked rhetorically two weeks ago). The answer? Don't make him laugh.
Here is where Saudi oil production has been, and where Saudi promises it can take it.
From the recent Astenbeck investor letter:
Contrary to what various pundits and politicians assert in the media, OPEC is not sitting on 2+ million bpd spare capacity. The news last month that Saudi Arabia was planning to demothball the Dammam oil field after 30 years because of "tight market conditions" has a whiff of desperation. The plan will reportedly add all of 100 kbpd of heavy crude to Saudi Arabia's capacity.
In other words, forget Saudi Arabia pumping more. The only hope should there be escalation in Iran will be how much oil is extracted from the SPR. And as everyone knows, the only one who benefits from that particular idiocy would be China.
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LUCKELY WE STILL HAVE WIND ENERGY!!!
....
Algae, bitchez!
Ah yes, now if only we can get them to grow faster. Better yet, is there anyway to turn up the sun? Flux is a bitch.
We should print a trillion dollars to upgrade the 100 year old antique that is our power grid, print a couple more trillion to put solar and wind everywhere, and pretend that in 30 years we will be able to feed more than 2,000,000,000 people without fossil fuel based agriculture.
I thought that was what we were already doing?
The fact that it has been oscillating about a fixed value of production for 30 years tells me (1) they have control over production numbers, and (2) they will not ramp them up.
The energy situation answer is just around the corner. Juuuuuust around the next one.
Mark my words.
ori
/police-state-descends-on-america-things-get-nutty-in-india/
(3) when it will go down, it will be almost vertically
Do you understand how OPEC works?
Their output is "regulated" based on their reported reserves. And, before people start blaming OPEC for everything, consider this http://www.tshaonline.org/handbook/online/articles/mdr01:
After an involved, protracted, and occasionally violent political struggle, the Railroad Commission won the authority to prorate, that is, to set the rate at which every oil well in Texas might produce. By limiting production in East Texas and elsewhere, commissioners succeeded both in supporting oil prices and in conserving the state's resources. Under the Connally Hot Oil Act of 1935, the federal government undertook to enforce in interstate commerce the production directives of the Texas commission and its sister state agencies. When the Organization of Petroleum Exporting Countries was organized, the Railroad Commission was used as a model. Because of its ability to prorate Texas oil production and because of this state's crucial role in the petroleum industry, the Railroad Commission was until the early 1970s of vital importance to national and international energy supply. With the decline of Texas oil reserves, the great increase in world demand, and the rise of OPEC, however, the commission's influence over oil has dwindled. Today, its responsibilities in this area consist mainly of enforcing cleanliness in the fields and maintaining equity among producers.
Here's a sample of how this comes out:
http://uk.reuters.com/article/2009/03/11/opec-history-idUKLA46947620090311
I suspect that you'll find that most OPEC members' output levels have been similar (but mostly on the decline). It was in the 70s or 80s (can't recall off-hand) that most of the OPEC members drastically bumped up their reported reserves (the odds of them ALL "discovering" more physical stuff is questionable, likely they discovered paper manipulation) in order to increase their production (extraction) levels.
The West, US in particular, can stomp up and down all it wants, but this is primarily all show (and anyone should be surprised, why?).
Ah, the "Their holding out on us," mentality. There are such things as limits.
Of course, how else can you live in the land of make believe and deferred maintenance if you don't pretend?
http://www.youtube.com/watch?v=sfGfR4_0Lhg
*fart* [in no particular direction]
Polluter. Don't you care about global warming? Farts are anti-environmental. Save them for future heating purposes.
LUCKELY WE STILL HAVE WIND ENERGY!!!
$21,000 wind turbine saves city $4 on energy bill ........ too funny
Yup, like all that wind energy in europe, being paid to stay shut. Too funny in a sad kind of way.
ori
Not sure what youre refrring to, but if its correct, its likely due to the near-breakdown situation of the German power grid after the idiotic decision of Merkel & Co. to shut down nuclear plants. Its a termporay situation anyway, as the power grid all over Europe is receiving a lot of attention these years.
If this is NET, then, it really did improve the bottom line. No idea on maintenance etc..
Beats most govt contracts, no? Cash for Crankers, comes out better than Cash for Clunkers...
Wot?!! ... but ... where's my unicorn?!!
I'm so appalled by the absurdist pretences of the "green-energy future" horseshit.
It's been nothing but a massive feast upon the collective abject stupidity from the out-set.
I went to a swanky new University science campus last week and there was this row of about 4 x 400 watt wind turbines (and a very expensive installation) along the entrance, each barely turning, contributing NOTHING to the epic base-load power usage occurring there-in.
It was all a facade, a facetious little shop-front, a mere ruse to appear 'environmental' and to have viable technology answers to what is a non-problem, for we have no hint of a lack of electrical energy, and won't, for many centuries.
'Paid for' ... by my taxes.
If the measly expenses for something like wind turbines that actually produces something *useful*, is enough to get your goat the way this post suggests, considering the rest of the horseshit that your taxes are funneled into (perpetual war, full price big pharma meds via medicare, a number of jackboot alphabet agencies, etc), then you have your priorities certifiably fucked up, dude.
Ok, I get it, you actually like to loose money on non-returning infrastructure 'investments'.
Fine, by all means, go broke then, you pathetic fucking fool.
Two words for you, smart guy:
Peak oil.
We'll see who the pathetic fool is a few years down the road. The peeps who are investing in renewable these years at an appeareant premium, or the suckers down the road who didn't in their assumption of an eternal supply of cheap crude.
You're still going to go broke, in fact don't look now but I bet your country already has gone broke--from listening to dopey fools with non-economic and technically farcical answers to practical matters.
And you soon will personally go broke as well, if you haven't already, and I suspect you have--if you ever had anything to go broke with in the first place, and probably you didn't, if the best you can come up with as an alternative is to invest in what is an obvious market and technical failure.
Uneconomic and ultra-inefficient style-over-substance and immature technologies that offer only a partial and usually temporary or comprehensively inadequate 'solutions' to energy needs. And that also relies on an oil-dependent economy existing to even be created, and to be maintained and replaced in service--this is NOT a solution to any fucking thing, you blithering idiot.
And shove your "peak-oil" mantra sport, I'm a geologist and don't need the inebriating pointless ideological catch-phrases you what to push out your transom.
My initial comment was and is valid and my 'values' don't require vetting or adjustment, especially according to the dictates of some self-appointed extraneous smart-arse, who thinks he knows what values I should have and hold.
Sincerely,
Fuck you
What ever happened to Haywood Jablowme?
That wind stuff blows!
Oh, the areas of the USofA with nearby wind farms will consider themselves happy 5 years down the road when 5$ gas and 150$ crude is the norm.
Former PMICO whore as reprised by the "pink" paper
At the macro level, deleveraging must be a managed process: for the private sector to deleverage without causing a depression, the public sector has to move in the opposite direction and re-lever by effectively viewing the balance sheets of the monetary and fiscal authorities as a consolidated whole.
and the money shot...
"In this “topsy-turvy” world, traditional textbook orthodoxies, the authors argue, do not apply. Simply put, inflation cannot and will not ever be the problem. Cooperation between the fiscal authority and the central bank, on the other hand, becomes essential — even if it comes at the cost of central bank independence."
Crowding out, overheating and rising interest rates are also not likely to be a problem as there is no competition for funds from the private sector. For evidence, look no further than the impact of government borrowing on long-term interest rates in the U.S. during the Great Depression, or more recently, Japan. A buyers’ strike is also unlikely, especially in the case of the U.S. This is because countries with mercantilist policies tied to the U.S. dollar are de facto piggybacking on the U.S.’s internal demand, and simply have no option but to continue to accumulate U.S. Treasuries to moderate the real appreciation of their exchange rates so as to hold their shares of U.S. demand.
http://ftalphaville.ft.com/blog/2012/04/04/949241/why-qe-is-being-mis-sold/
More...
Critics invoke the orthodoxy that printing money is inflationary. But in a liquidity trap it is not. Money is as money does, and judging from the trillions in excess reserves on banks’ balance sheets, money isn’t doing anything. Printed money is unlikely to become inflationary until after the private sector has finished deleveraging and is bidding for funds again.
Rather than “policing the government to keep it from borrowing too much” the central bank should help it “to borrow and invest by targeting to keep long-term interest rates low by monetizing debt, with the aim of killing the fat tail risks of deflation and depression.”
Breathtakiong in its idiocy.
The only thing missing is Ceterus Paribus sh$thead
If you have physical assets, it matters not. Get physical, cue the deer, and may the lord have mercy on our shorts on this day of days.
Get physical, cue the deer ..........
Yeah, we're about ready for the "Deer In The Head Lights" it has been a long time and I miss the cute little guy.
BURP!!
Yeah... we all do...
Somebody please pass me the gravy and a bit more of the soft meat?
I know. Unfortunately retards think that when a bank loses a derivatives bet and pays down debt, there is no one else on the other side getting paid that money. Or when the banks have an asset that has lost value, and they get bailout money to compensate, that the money somehow makes that losing asset gain in value like magic instead being levered up and used like all the other money they have. It is quite clear that the bailout money the banks recieved was multiplied via leverage and thrown into the derivatives and asset markets.
A liquidity trap is when rates don't drop on fresh money injections. We don't have a liquidity trap. We have a dying economy that is not being helped by low rates because banks have zero reason or motivation to serve the economy. The banks have become the financial customer because we let them participate in the general markets.
Yes I think the author has failed to account for the effect on commodity and equity markets of QE. It has not been negligable as he thinks and puts real limits on what the Bernanke can now do. Also any uptick in velocity of money could rapidly trigger severe inflation.
QE I think has had its day as an effective vehicle and was probably wrong from the start. Correct approach? Still not sure but I think issuing bonds with a negative coupon is/would have been a better way. But I havent fully thought it through. anyone know if this would work? Oh how my brain hurts!
As for the Saudis, they'll say anything to help promote a war against Iran. But oil production in Saudi and as a whole is on a classic multi-year peak plateau. Heaven help us when that plateau (which we are lucky to have) ends.
My thinking is this. Negative coupons would force banks to seek yield by making customer loans at lower rates. They could not just sit on their money as they seem to be doing. Secondly negative rates would supply some money to the govt to amortize some debt. However, crucially, and unlike QE negative rates would not permit wholesale monetisation. Why? Because the true market for govt debt would quickly find its true level, leading to an eventual and naturally occuring rebound in nominal rates.
Probably an incomplete appraisal, but best I can do for now.
My take is that all the bailout shit is no more than Bondo on all the dents. It covers over shit, but really doesn't change the underlying fact of all those dents. And, it's fixed in place, it HAS to stay there (lest it be harder to sell the entire vehicle).
This money isn't being circulated. It's questionable whether it ever will. Try as they might, asset depreciation is forcing this money still, as it is necessary to keep the books from taking on water and sinking.
It really IS about the velocity of money. Can't push on a string. This money will be sat on until it's of ZERO value. Even at negative rates. Can't push on a string. Velocity is most impacted in the "positive" manner by the generation of a new loan; this usually creates rapid circulation of money as projects and whatnot take off (materials purchased, labor cranked up).
The RESULT of all this (stagnation) will, however, always tend toward the same: devaluation of currencies, which, if not by theory, by practice, appear as inflation when measured in real things.
Yes I agree with you that the secret of avoiding a liquidity trap (pushing on a string) is to find a way to spike the velocity of money but without triggering hyperinflation. I think negative rates could achieve this in the following manner and with the following drawbacks:
http://pearlsforswine.wordpress.com/2012/04/05/new-thoughts-on-quantitat...
Apologies for some redundancy viz my earlier two posts.
China and JPM.
- Dr. Kent Moors
another fallacy. If you are in business to make profits, every "next barrel" will be a bit more expensive in nominal cost.
So isn't every next barrel more expensive in nominal cost during times of crisis, i.e perpetual military actions in Middle East.
Considering that normal market conditions are almost non-existent, isn't every boe's price affected by accumulation of contracts of future inventory production by investment banks commodity indices, in order to offload during periods of excessive liquidity-induced high commodity prices, i.e post-QE effects, as an "inflation hedging" ?
Quelle suprise....
All i know is that the Saudi's have been lying about that field for more than ten years. Fortunately, in today's world, every one completely sucks ass at math.
You don't want that to change... (the math part).
Like Costanza, take whatever the Saudis say and believe the opposite. Their ability to provide excess capacity = DICK.
Hey, that's fine, because, just like Costanza, our ability to pay is just about as dependable as their ability to increase production.
I love this oil stuff.. the challanges it will create will unleash creativity for the betterment of mankind.
I agree, we simply need to clear all the bad debt first, remove all the idiotic puppet "leaders", prosecute the fucking fraud, and restore the rule of law first. After that is done, then yes, opportunity will be everywhere.
As President, my first act would be to have a gallows erected on the Whitehouse lawn. That would send the proper message. Then I'd get to work doing my Constitutional duty.
Can this be done by noon? Have lunch to catch!
I agree with your statement to a certain extent. As long as there isn't a big misdirection of capital to projects that aren't cost effective and that can't make a big impact on current energy needs.
In other words, end the fucking mis-allocation of resources and captial as well as the captial mal-investment. Again, prosecute the fucking fraud, restore the rule of law (especially for property and contracts), and let the bad debt and bad business models fucking die already. Any bets on any of this happening any time soon?
As much as I would like to see it happen.....I don't believe it will.
Agreed, and hence, those "opportunities" are a few years out.
Sadly, "fraud" is a built-in in humans. Nature works by deception.
Sellers and buyers are trying to get the best deal, and you cannot do that if the other half of that transaction knows everything about your position.
The basis of everything really is that it's based on fraud. What we're really talking about is how much is allowed.
TPTB cannot let the masses know what the true state of things are lest it lose its position of power. Prosecuting higher-level fraud would disclose TPTB's skeletons.
Restoring the rule of law is, well, which one would that be? Speaking of the US, would it be for the natives? slaves? etc... There has ALWAYS been two sets of laws, if not then TPTB couldn't be TPTB.
If France , Spain and to a lesser extent Italy gets out of the Euro cage they can increase their rail passenger numbers enormously as their rail is running well below capacity because of Germanic deflationary policies. (they wish to keep us buying cars)
http://www.riagb.org.uk/images/news_documents/1311241760.pdf
Not much rail in Ireland. If she leaves the Euro cage, then what would you expect? Are you going to use all those great canals and rivers again? Pretty sweet in a post-oil world to still be able to move all those ag goods to coastal markets with a few oxen pulling some barges. Now that would be a pleasant livelihood.
Eventually, it will be back to goat herding for the Arabs that are left in Arabia after the wealthy princes have all abandoned it for London.
@Hedgeless
You could be surprised........ besides the Cork to Dublin route has always be profitable.
We have many other routes little used......
www.nationaltransport.ie/downloads/NTA_position_on_proposal.pdf
And others that can be brought on line with little expense yet have access to very deep sea ports
www.ironroadaaron.com/foynes/index.htm
www.youtube.com/watch?v=KtzIUAF9nBo
Oxen where quite expensive back than.
It where mostly people who pulled the barges.
@Sudden
Ha - it does not have to be quite that bad.............. Irish rail freight died after EMU - it was competing with too cheap oil as a result of European monetary games.
We now have the best Diesel fleet in Europe but many of our trains lie idle.............. they don't even carry liquid goods such as Beer or Oil anymore.
Just a bit of timber from the North west to Waterford now.
en.wikipedia.org/wiki/IE_201_Class
This is a monetary crisis
When the Euro disappears we won't be transfering our money to Saudis who spend it on concubines.
Big fucking deal.
Uh oh.
Rocket fired from Egypt hits Israeli city of Eilathttp://www.bbc.co.uk/news/world-middle-east-17620925
Bibi called Egypt's Sinai a ``terror zone``... cue Israeli troops in Egyptian territory... uh oh.
When I see stuff like this the first question I ask is; is this another false-flag operation?
Who benefits?
Nobody thinks Saudi has anywhere near 2 MMbpd of spare capacity.
Complete propoganda, created by US and Saudi, to offset effects of US monetary policy.
The 2 MMbpd is probably there but it's really nothing. Even in the summer of 2008 when oil spiked to $150 a barrel there was 1-2 MMbpd of spare capacity. The issue was it was unusable in the context of refinery setup for summer production. Nobody wants excess heavy oil in the summer when they are trying to crack oil for maximum gas output. Oil prices will be stable when we have 4-5 MMbpd of excess capacity.
Does anyone realize that much of this might just be a storyline to disconnect the Saudis from OPEC? OPEC sets production levels. Saudi Arabia is the biggest producer in OPEC's block, they therefore could be said to hold the greatest weight. By them staying in OPEC it says that they fully endorse the notion of setting production numbers. The Saudis, whether they do or don't have extra capacity, CANNOT just crank on the valves any time that the US or other nations bark.
The irony in all of this is that the Western World's paradigm demands price stability, especially in oil/energy. The very nature was captured in the mandate of the Texas Railroad Commission, of which OPEC was modeled.
#Contrary to what various pundits and politicians assert in the media, OPEC is not sitting on 2+ million bpd spare capacity
why would anybody believe anything being told by oil trader? doesnt he have a book to run?
I GUESS HE'S LONG.. and somehow he is saying about capacity the exact moment $WTIC is breaking 50avg..
jsut saying
alx
Maybe because he knows bullshit when he hears it. As a trader he is going to take either side of the trade,depending on the fundamentals. It's just some more information to process. Do with it what you will.
Ah, the "he's a trader" argument. Either he talks his book, or he's taking the other side. Lose, lose as far as public perception. Which is a bigger conflict of interest, say one thing - do one thing, or say one thing - do another?
I happen to know his book (and have 8 figures with him). He's not just talking it, he's putting his money where his mouth is. I'll take Andy's word on oil over anyone else on the planet. It's not that he's never wrong. It's that when he is, he's generally the first to react, too. You say oil to $50, he says $150. Either way, he's going to beat you...
well its not pissing contest.. he might be best trader on whole planet..
i was talking about price of oil , supply/demand and macro economics
so ..
ASK THIS SUPER HOT TRADER WHAT IS OIL GONNA COST if USA/Europe authorities make small changes for futures trading in oil :
#1 ALL CONTRACTS ARE SETTLED PHYSICAL..
#2 NO OFF COUNTER TRADING, ALL OIL CONTRACTS ARE TO BE TRADED ON EXCHANGES
#3 LEVERAGE IS 10X MAX per contract, margin is posted on daily basis..
I CANT WAIT TO GET ANSWER
alx
Do you think for a moment that the 40 million barrels of oil on the "open" market trade on the basis of what NYMEX and ICE have to say?
Or you still enthralled by "American Exceptionalism"???
It's probably on the American five-year-plan, to take over Saudi Arabia to 'safeguard' their oil, and at last find out how much is really there.
There is a long-running story that the Saudis used their piles of money to secretly buy one of the 200 or so nuclear weapons from their fellow Muslim country, Pakistan.
So maybe they have 'weapons of mass destruction' ...
The Saudis are slow to realise it, as they are partnering now with their US 'ally' on regime change in Libya and Syria, but Saudi Arabia is also on the eventual American regime change list, and some American analysts have even said this out loud ...
Saudi Arabia has a very disaffected Shia Muslim minority - living in the more oil rich regions - which could be rapidly armed by outside powers, and would be eager to help in revolution if armed and given a chance.
Right now, Saudi sells more oil to China than it does to the USA. The Americans might want to stop that.
"The Americans might want to stop that."
Maybe, but then again the Americans who are shareholders in the companies selling that oil might not want to stop it. You tell me who has more political clout.
That was indeed the five year plan, executed 30 years ago.
"and that about sums it up." it's where the oil goes not "how much spare capacity." and of course that't how Andrew made all that money. The other problem is that big government (aka The War Machine) is by far the biggest consumer. But of course that only explains the current price spike (change you can't believe in.) the real question is why in spite of this are prices now coming off there "endless bid."
to take over Saudi Arabia to 'safeguard' their oil,
Wrong perspective. It has been a joint subsidiary since we put the Saud family in that place.
If Oil goes to $200, the world is FUCKED.
Oil $200? We are one dollar at the pump away from chaos in this country. $150 oil will be more than enough to bring the pain. Heck, the pain is already here. We maintain $4+ gas and hit $5 and the American society is going to come apart at the seams,
You may be right. But oil has been in a bull market since 1997/98 and every time an upward move has made new highs. The last high was around $147. The next could be $20-50 north of that. It won't stay there for very long but the damage would be done.
I think it better to compare oil's value to that of gold/PMs. The USD is so distorted as to be just shy of meaningless: this is all about closing down the USD, killing this skeleton, removing it as the world's reserve currency- TPTB can no longer fool the masses that the USD is worth anything, and when the masses finally decide this is the case then that's when the USD collapses.
+ (many many numbers)
price is function of supply and deamand.. its 101 economics
everybody is blubbering endlessly how tight oil market is , how peak of oil is near, actually has been for last 30 years..
and nobody is talking about DEMAND.. aka actual amount of stuff is being purchased / consumed..
#1 did it bother anybody (excl me ) that WE HAD WARMEST WINTER ON RECORD?
and somehow gas prices are over 4$ pg
#2 did it bother anybody (excl me ) that Ceridianm index fell almsot 5% down y/y for 1st quarter.. how is it possible to "growning economy and labor market"
and demand for diesel fuel fell ..? somehow more people are working, but eat less, move stuff less?
ALL THIS IS BULLSHIT... WE HAVE G.G.G. DERESSION HERE , AND OIL MUST COST 50$
and it will
alx
see http://www.ceridianindex.com/reports/index.php
Alex, you are too focused on American demand. WORLD DEMAND has not slowed at all. The rest of the world could care less whether or not America is having a depression, wake the fuck up dude.
well,, exactly..
in USA oil must cost 50$ pb..
oil import is 10 year low, oil production is multi year high, USA started export oil products...
somehow natural gas prices are multi year low, but somehow oil that less and less imported and more and more produced is up up up ...
doesnt add up, does it?
AND PLEASE STOP THIS BULLSHIT ABOUT WORLD DEMAND? FROM WHERE ? Europe is in depression (car sales down 20 %y/y), Japan is dead,, China/India is only what 10% of world GDP.. dont wana talk about shitholes in S.America/Afrika
alx
Hell, China may be a shithole, but look where the oil is going. they are buying. You seem to be contradicting yourself Alex, if America is not a shithole, then quit your bitching.
So if you import ~9 million barrels of crude oil a day and export ~250,000 barrels a day of refined products then everything is ok since you are a "net exporter" of refined goods...wow..
Here is a reality check for you
http://www.theoildrum.com/node/9079
and
http://www.theoildrum.com/node/9085
There you go again Flak trying confuse these people with fact.
"You can lead a man to knowledge, but you can't make him think"
Ah, I said that....
You know and I know it's over. Period, end of story.
For you others who still believe we are 'Swimming in Oil" read and reflect.
Ghawar Is Dying
and For a very dark humorous look at what is going to happen as soon as the first rocket propelled grenade is lobbed into Saudi refinery complex...
"Sixty Days Next Year"
Here's a taste. Great Humor.
You'll have to excuse me, but I don't usually keep a diary. These events began before I understood what was happening, and where it was all headed. It was only later, after it was all going on, that I thought that maybe I should be keeping some sort of record--as if no one else was. We live in The Information Age, or did. Now it's just The Dim Ages. Welcome to my world.
June 14
It all started (for me) with just a small item on an Internet news page, "Trouble in the Kingdom". I thought they were talking about Disney World (the Magic Kingdom) so I clicked on it. Turns out they were talking about "the repercussions of curtailed social services in Saudi Arabia". (Insert a big yawning noise here.) So their kids don't get free day care? Big whoop. I scanned the article for any mention of M. Mouse and then went on with my life. My mistake. No biggie. Really.
June 15
Yesterday's headlines are still today's news? I guess those folks in the sand are really upset about something--it was in all the papers today. Sounds like the Saudi government is in for a tough time trying to rein in a runaway budget--and the locals don't like it one bit. Now their capital (Riyadh?) is a mess with people getting ugly in the streets. Yeah, yeah, yeah, no more subsidized housing. Deal with it, people. Get a job.
June 16
I saw the news today, oh boy. Three Saudi cities are up in flames, people with big guns are going nuts, and everyone that can find a plane is leaving that country in one big hurry. It's like Saigon in a sand box. (Not that I actually remember Saigon.) Local news guys are talking about what it means to us--and our oil. Maybe I'd better go fill up the car before everyone else does. I hate being stuck in long lines.
http://www.republibot.com/content/original-fiction-sixty-days-next-year-chip-haynes-2005
He maps out his experiences for 60 days following Saudi Arabia falling and what daily life is like...
As the House of Saud fares, so does the US dollar....
OK, I understand, and if you are willing to take a little time to read these links they might give you some insight into the "global bid up" of oil prices and the "global demand".
I am very skeptical about gov. data and enjoy the oil drum because like ZH they have a comment section in the bottom and this allows the "critics" of the article to throw darts at it, and like some of the people who comment on ZH I have a "grudging respect" for their insights, even though I may not be in complete agreement. So when you read the post and comments together it gives you a much deeper understanding of the issues.
I think that you may not appreciate the scale of the US reduction in oil usage, on a global basis, and you may want to look into that. You also have to offset that with declines in production of the fields in play, the cost of producing and developing "new reserves" and last but not least the cost and availability of refining the new reserves for example "tar sands", into its finished consumed product, gasoline.
There are several data bases that track global oil production.... and guess what they all don't agree on what the real production is... think of the IEA as the BLS....
http://www.theoildrum.com/node/8044
http://www.theoildrum.com/node/7965
Then you have the question of what are the "real trends" in global demand broken down by geo areas and how does price effect that demand.. this issue has some hair on it and the following links are not complete, I could not find the article that really laid. when I do I will post it.
http://www.theoildrum.com/node/7831
And then you have refining capacity, it's cost, availability etc.... that is playing a large part in the cost of gasoline.
(sorry this link will make your eyes glaze over if you are not a process engineer.....)
http://www.theoildrum.com/node/7641
This one, Conclusion: Resources are not Reserves, and Tight Oil isn't Shale Oil
http://www.theoildrum.com/node/9085
I keep reminding myself and the children in my life that, you're education is only complete when you die......
This should get you started.....
"The rest of the world could care less whether or not America is having a depression,"
Uh, not really so. As the biggest consumer economy the US represents the biggest market for most exporters.
But... as pertains to energy, well, yes, the rest of the world is fine that the US isn't consuming so much (though this still indicates reduced consumption of other goods).
Ceridian index fell almsot 5% down y/y for 1st quarter.. how is it possible to have "growning economy and labor market" and demand for diesel fuel fell ..? somehow more people are working, but eat less, move stuff less?
alx
see http://www.ceridianindex.com/reports/index.php
Hybrids and electric vehicles! </sarc>
Economic numbers are as sound as the USD. And ALL are given to us by those who wish to stay in control/power. Of COURSE it doesn't make sense! but neither does the fantasy that we can perpetually grow on a finite planet (yet the overwhelming percentage of folks believe it so- we LOVE lying to ourselves!).
But Obama said not to worry ---there was enough oil in the world market - including emergency stockpiles - to allow countries to cut Iranian imports.
http://www.reuters.com/article/2012/03/30/us-oil-obama-iran-idUSBRE82S1FD20120330So what if rising oil prices cause already record high world food prices to increase and a few billion people go hungry? The US can always rely on the Bush Jr. plan, and convert even more of its corn crop to ethanol.
http://www.reuters.com/article/2011/03/03/us-food-fao-index-idUSTRE72223C20110303
And some have dared to claim US leaders lack concern about energy costs for the little people.
There IS enough, enough if you cut back...
Best plan is to shy away from unstable stuff: banking industry; oil; Big Ag; Big Pharma etc. etc....
Politicians are paid by their handlers to lie to us. View it all as more theatre than anything else. Don't treat it as real: try to stay as disconnected and independent of it as you can.
Factoids:
1) Oil production is measured by three major agencies. EIA, IEA and JODI. The three generate numbers that do not agree with each other. They also use different definitions of "oil". And they generally just take various government numbers and sum them and there is no independent audit. The result is we have a very poor idea of what global oil production is. Quoting numbers about it being up, or down, or flat is widely done, but probably should not be.
2) Very heavy oil, with sulphur, or even with vanadium in it that is nearly impossible to refine, gets quoted as barrel for barrel along with pure light sweet oil. This is an additional problem with measures.
3) Oil's first recent spike in 2008 was before Quantitative Ease was even in the lexicon, let alone before it ever occurred. The theory that oil's price is printing derived is thereby undercut. It's a dangerous idea to lean on.
4) Nothing matters but transportation. Hand waving about electric this or that from solar or wind is meaningless. All those devices eventually break and without transport there are no spare parts to fix the break. Therefore, only oil matters. Not energy. Oil.
Word...
Peak Oil bitchez
All this continuous fear mongering about an oil shortage tells me what we really should be worried about is an oil glut brought to us courtesy of a hard landing in China, the collapse of the Euro economies, and US consumers finally maxed out on their credit cards.
Well maybe even the hard landing in China is caused by the oil glut, no?
Meaningless is even bothering to measure that which you will NOT be able to afford.
We're doing nothing more than spending money (and our personal energies) to engage in discussions that are used to prime the engines of the controllers, thereby allowing Them to continue to control as our own control/power fades.
As for myself, I prefer to actually DO something that I have control over. All this banter reminds me of those who think that one can control one's financial position by getting MORE "wealth," always failing that the real measure of control lie in controlling what one SPENDS/USES. Playing in Their pool you are certain that YOU are not afforded a life-preserver, nor are you afforded ANY stability, for these things are NOT for YOU but are for TPTB. Heads you lose. Tails you lose. THEY will only have MORE control of oil.
ya know, we are in the 21st century, yet still using 19th century auto-industry technology - last i looked. why haven't we designed a new tire? with all the leaps and bounds into metallurgy, married with chemistry,and new science, i find it hard to believe we can't substitute a two-century old tire into a state-of-the-art fiber-based kevlar/ myammar [etc.] product. et.el. http://en.wikipedia.org/wiki/Ballistic_vest
Ps. Please note that the world's entire "Tire Production Annually" consumes 1.7 Mbbl __ that's alot of OIL, and growing? http://en.wikipedia.org/wiki/Tire What does this have to do with oil production and current capacity constraints? You decide,... but, this number is significant, for it represents "TWO DAYS" of the entire worlds oil supply providing a 19th century 'TIRE' technology !?!
"with all the leaps and bounds into metallurgy"
RARE earth metals, know why they're called such?
actually spider webs and banana fibre are quite inexpensive,... not to mention hemp plant hybrids eg. coconut fiber, etc,.etc - all have been uses in ultra-lightweight aeronautics [ergonomics] experiments on the "salt-flats" with great success. jmo
Ps. Nanocellulous ___ ref: http://alttransport.com/2011/03/bananas-and-pineapples-can-make-your-car...
one coconut - two apples - three pear trees,...
Oops___ EDIT: 168 Mbbl
dam decimal point!
"So what does he have to say about the biggest wildcard currently in the energy market, namely whether or not Saudi Arabia, can push its production from its recent record high of just under 10,000 tb/d to the 12,500 tb/d that would be needed to replace all lost Iranian output (a question we asked rhetorically two weeks ago). The answer? Don't make him laugh."
Obama has said that war with Iran wouldn't lead to disruption in oil supply, and I agree with Andrew Hall that such a statement is nuts. I think the Saudis do have a switch that would allow them to pump 0.7 mbpd more crude, but the 2 mbpd would take much longer.
Still, Iran is producing over 3 mbpd, so the Saudis wouldn't be able to make up for the short fall. And Syria, Yemen, and Libya are still seeing capacity hobbled.
A war with Iran pushes gasoline to $6 to $8 a gallon overnight and insures that Obama is a one term president. If you are a Republican, nothing could make you happier than Obama being goaded into war with Iran to get the Jewish vote.
Of course, you have to believe he is dumb enough to take the bait, and I don't think he is. My guess is once he gets enough in Jewish campaign donations talks with the Iranians begin in earnest, a cooling of the sanctions ensues, and oil prices fall. Obama will then get credit for lowering the price of gasoline and be rewarded with his being re-elected.
But people like myself are pissed off now becuase gasoline would be much cheaper now if not for Obama's rhetoric and enhanced sanctions against Iran. Creating a crisis and then prentending it to solve it is sheer bullshit in my eyes.
As for Saudi oil, it is not the production number as much as the export number. The really funny part to me is that the Saudis are going to convert much of their power generating capacity from oil to nuclear, which allows them to export more oil and that is somehw okay. Our friends, Saudi Arabia, were the ones whose citizens paid for and were the majority of the 9-11 terrrorists, but it is okay for them to have nukes?
Iran has sponsored terrorist attacks against Isreal while Saudi Arabia has sponsored attacks against the U.S. and Israel. Someone will have to explain to me while Iran having nukes is such a major crisis while Saudi Arabia having them is A-OK.
check this out: http://www.theblaze.com/stories/former-wh-reporter-helen-thomas-sits-for... http://www.theblaze.com/stories/palestinians-honor-disgraced-journalist-...
Ps. Remember those black-sites [bush/cheney war-on-terror],... well guess what? If you guessed they were mostly holding all of the high-grade terrorist [?] in Sryia, and Egypt - you'd be correct. {jordan played a small part} Now think what will come out once the secrets are revealed by the new Government of Egypt, and the super-pissed-off Assad gov't of Syria. Wait for it? ref: [teaser?] http://www.aclu.org/accountability/olc.html http://en.wikipedia.org/wiki/Returnees_from_Albania
jmo
A "ramp it up and then ramp it down" gas strategy surprises you? From a political perspective, pretty ingenious, especially considering that the attention span of the average voter is very short. If Gas is $3 a gallon in October 2012, what percentage of voters will remember what the gas price was in August 2012? As was whispered to the Russians, will be a lot more flexibility in a second term. The NSA Utah data center is scheduled to be operational in September 2013, National Defense Authorization Act allowing detention of US citizens is signed, National Defense Resources Preparedness Executive Order 13603 authorizing takever of the economy is signed .... All teed up for an interesting 2013.
Wait a minute while I adjust my tin foil hat.
"Obama has said that war with Iran wouldn't lead to disruption in oil supply,"
Not to the US military machine. Always ask for qualification. Always challenge the premise... (we're assuming it applies to/for all of "us")