Oil Surge Begins

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Mon, 12/05/2011 - 10:03 | 1946261 Joaquin Menendez
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This is why the United States will attack Iran.  Oh wait, I forgot, it's all about nuclear energy.

Mon, 12/05/2011 - 10:49 | 1946458 Temporalist
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Bernanke's got this covered...just give him 15 minutes.

Mon, 12/05/2011 - 11:22 | 1946565 GMadScientist
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Forget about nukes pointed at Israel (if only) and consider the ramifications of an Iran that is less dependent on exports or even drilling services to get the black stuff out of the ground because they have nuclear power generation to keep all those green bandanas tweeting.

How does attacking Iran lower the cost of oil again?

Mon, 12/05/2011 - 10:03 | 1946263 AladdinSaneGirl
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Great, will someone please tell Xcite Energy????

Mon, 12/05/2011 - 10:09 | 1946284 CPL
CPL's picture

Why would you buy an estimation company in the oil business?


It's a third tier business, it doesn't make oil, just tells you how much its worth.


WTI is your friend with Oil always.  hope you aren't underwater too much on it, your stop should have saved you in a drop. 


Or did you not put in a stop?  If not, I'm so sorry.

Mon, 12/05/2011 - 10:21 | 1946342 Oh regional Indian
Oh regional Indian's picture

Does oil have the potential to break control and go to real value? 

All this reeks of war. Tangentially or directly. And it's been 33 years since the first great oil shock...perhaps it's time. Now, we are more dependent than ever on the supply chain choke chain.



Mon, 12/05/2011 - 10:30 | 1946364 CPL
CPL's picture

The cold chain is the direct hit after the fact.  It sort of supplies us with our daily bread, literally.


How's things in your neck of the woods? 

Mon, 12/05/2011 - 10:37 | 1946403 Oh regional Indian
Oh regional Indian's picture

Not good at all. India has the highest or close to the top three gas prices in the world. Relentless rises. Strong diesel/transporter lobby keeps it artificially low and less taxed. So petrol, which is how most of India gets by, is crazy expensive (almost $1.75 /Liter). 

And they've really broken down the traditional hub and spoke produce distribution system into a pure logistics play.

Now my veg guy has fruits from New Zealand, US (Cali/FL/OR/WA), South Africa, Oz..... then India.

Typical, destroy existing infra, then unleash a price rise squeeze and then push through some draconian regulation (tolling of all roads, per mile tax, excuse for rampant inflation...whatever).

The grip is tightening everywhere.


Mon, 12/05/2011 - 11:18 | 1946547 falak pema
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Ori, according to the press, the BIG retail chains are taking over in India : Carrefour and Wal-MArt. Which makes imports and sales of veggies, you name it, easy, as the Oligarch supply chain can work full blast. I see this as a move by Western Oligarchs saying to Indian Oligarchs : you scratch my back, we scratch yours, and we all make money and we all protect certain national oligarchies on both sides. Only the poor consumer gets shafted, as always.

Mon, 12/05/2011 - 11:30 | 1946595 Oh regional Indian
Oh regional Indian's picture

you got it Falak. Nail on the head.

There is a lot of Kabuki going on right now, but it will pass and the systems/M&A stuff is just waiting. They have all come with Cash and Carry and other means already.

NAsty stuff.


Mon, 12/05/2011 - 10:31 | 1946368 GeneMarchbanks
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'Does oil have the potential to break control and go to real value? '

With global ZIRP and 'unconventional' monetary policy how does one find the real value of anything? Isn't this why many are holders of PMs?

War or inflation finally spilling over. My guess? Both.

Mon, 12/05/2011 - 10:39 | 1946409 Oh regional Indian
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Sure feels that way eh? See my response to CPL below. 

i can literally SEE the noose tightening.


Mon, 12/05/2011 - 10:32 | 1946370 LawsofPhysics
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That is what the collapse in the spread implies.  Coupled with the beating war drums and a rather muted response from China and Russia (who are fine with letting the western world destroy itself), the implication is yes.  Time for all the talking heads on CNBC to start saying otherwise in 3...2...1...

Mon, 12/05/2011 - 10:38 | 1946405 Snidley Whipsnae
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How can there be an imported oil shortage in the US while the supply of dollars is unlimited?

Are those pesky Persians whining about accepting rapidly devaluing dollars for their oil?

Doesn't Iran know the US is in favor of a 'strong dollar policy'? ...any day Ben will be jacking interest rates back up to the historic norm.



Mon, 12/05/2011 - 10:04 | 1946265 Sofa King
Sofa King's picture

Well, demand sure as hell isn't the problem:



Mon, 12/05/2011 - 10:21 | 1946301 -273
-273's picture

I'm pretty sure there are countries besides America who use oil, and have an increasing demand it ;)

Global oil demand is still around 87 million barrels per day (mb/d)

Mon, 12/05/2011 - 10:34 | 1946366 SRSrocco
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-273...VERY TRUE.  Most of the gain in refining has taken place in the Gulf States.  Older plants such as the one that just closed down in Philly...are landlocked and can't expand.  Large refineries can produce oil products cheaper than smaller ones.

That being said, the rest of the world is picking up oil demand.  This is from westexas on THEOILDRUM:

Saudi Arabia and Russia combined accounted for about one-third of Global Net Exports of oil (GNE) in 2005. Here are the numbers for recent Saudi and Russian net oil exports (BP, total petroleum liquids):

Saudi Arabia & Russia respectively, mbpd:

2005: 9.1 & 6.8
2006: 8.8 & 6.9
2007: 8.3 & 7.1
2008: 8.5 & 6.9
2009: 7.3 & 7.1
2010: 7.2 & 7.1


Here we can see that the top two oil exporters have declined from 15.9 mbd global net exports in 2005 to only 14.3 mbd in 2010.  All the oil exporters are increasing their own domestic consumption on top of declining production.  This is a double-whammy.

Unfortunately GROWTH IS OVER.  Any politician who says we need to grow our economy out of this mess... is totally oblivious. 

Mon, 12/05/2011 - 10:42 | 1946427 -273
-273's picture

Yea exactly, if they sat down and watched that recent Chris Martenson presentation posted here at one of their summits they might actually finally realise that NOTHING conventional (or at all) will work to restart growth and plan accordingly. Surprised they are so ignorant actually, it's not hard to grasp the state of things once you look at the supply/demand data, and realise oil discoveries peaked over 40 years ago. Even the official I.E.A reports are finally painting a relatively clear picture of how tight supply is/will get.

Production of conventional crude oil – the largest single component of oil supply – remains at current
levels before declining slightly to around 68 mb/d by 2035. To compensate for declining
crude oil production at existing fields, 47 mb/d of gross capacity additions are required,
twice the current total oil production of all OPEC countries in the Middle East.

Mon, 12/05/2011 - 10:59 | 1946502 Snidley Whipsnae
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"if they sat down and watched that recent Chris Martenson presentation posted here at one of their summits they might actually finally realise that NOTHING conventional (or at all) will work to restart growth and plan accordingly"


Chris Martenson and Kyle Bass both have it right. We're looking at growth of 1.5% gdp (maybe) as far as we can see ahead when 2.5% gdp growth is needed to stabilize the workforce at whatever level it happens to be. Muddle through is a best case scenario unless the Martians help us out with some new free energy source. 

There is no doubt in my mind that we will see wide spread social unrest. Governments have made a lot of promises that they will be unable to deliver on. Perhaps the FEMA camps are their 'plan accordingly' solution?

Pay particular attention to minutes 41 - 44...



Mon, 12/05/2011 - 12:08 | 1946759 SRSrocco
SRSrocco's picture

-273... I like Chris, but those figures are pretty optomistic even in my book of facts.  Conventional Crude actually falls to approx 40-42 million barrels a day by 2035 (graph here: http://www.cleanbreak.ca/wordpress/wp-content/uploads/oilforecast.png)

Then we have the work by Jeffrey Brown and the Land Export model showing a decline of AVAILABLE NET EXPORTS by 2020:

(0.1% annual decline rate) = http://i1095.photobucket.com/albums/i475/westexas/Slide10-1.jpg

(1.0% annual decline rate) = http://i1095.photobucket.com/albums/i475/westexas/Slide11.jpg

If you take a look at those two graphs you will see that we are really SCREWED by 2020 and not 2035.  If the 33 exporting oil countries suffer a 1.0% annual decline rate, Available Net Exports (minus China-India) will only be a pathetic 16 million barrels a day in 2020, compared to 35 million barrels a day in 2010.

SEE... I make Chris Martenson look like a PIKER...

Mon, 12/05/2011 - 12:50 | 1946938 CrashisOptimistic
Mon, 12/05/2011 - 15:00 | 1947513 -273
-273's picture

I agree it will be worse, according to my own research of depletion rates, new finds and growing internal demand of oil producers. both IEA and EIA have been consistently downgrading their expectations with each passing report, was just pointing out that even THEY are now admitting we need to find 2 new middle easts to offset depletion, in a relatively short space of time, which is obviously not going to happen, whatever the timescale.

Those are some scary charts man. Of course what is important is the amount of oil available to export, not just produce and those charts dont look good for those who need to import, which is most people.

Mon, 12/05/2011 - 10:05 | 1946267 AngryGerman
AngryGerman's picture

"If Iranian exports were suspended that would be very significant as the market is tight already" - Does anyone besides me hear the Chinese laughing? 

Mon, 12/05/2011 - 10:05 | 1946268 falak pema
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Every time the price of oil goes up Exxon's profits double.

Mon, 12/05/2011 - 10:09 | 1946286 Sudden Debt
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it won't go up by that much. Maybe to 250$ a barrel. We can handle this.


Mon, 12/05/2011 - 10:14 | 1946311 Chump
Chump's picture

Soooo...bullish, yes?

Mon, 12/05/2011 - 10:34 | 1946371 e2thex
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Exxon is a sovereign nation. 

Oil kills economies.

Water scarcity kills Civilizations.  That is the Black Swan that everyone is looking for.

Mon, 12/05/2011 - 10:06 | 1946274 Sudden Debt
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Mon, 12/05/2011 - 10:39 | 1946407 LawsofPhysics
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Working on it.  Refining the nuclear fuel for these babies is not trivial and requires a significant capital and energy cost up front.  We'll worry about dealing with the waste later.

In the mean time you might want to start feeding all your biodegradable waste to a methane digester.  Very easy to modify a 90's style fuel injector to run on methane or hydrogen gas.  Both gases are major products of anaerobic fermentation of your typical waste products.  The best part is your can simply cut out the catalytic convertor in your exhaust system and sell it for a few grand.

Mon, 12/05/2011 - 11:24 | 1946573 GMadScientist
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Or buy a bicycle.

Mon, 12/05/2011 - 12:19 | 1946834 KK Tipton
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Build one yourself. No welding:

N55 Trike and trailer

N55 SPACEFRAME VEHICLES - YouTube - http://bit.ly/ujmYIX

N55 SPACEFRAME VEHICLES - YouTube - http://bit.ly/s6AhEe

Mon, 12/05/2011 - 10:07 | 1946278 Mike2756
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Time for another margin hike.

Mon, 12/05/2011 - 10:09 | 1946288 j0nx
j0nx's picture

Good. The higher the better because all of the bullshit, lies and fraud will be over that much sooner the higher gas goes. I almost spit my coffee on the floor at the grocery store this weekend when I saw how much groceries have risen in the past 2-3 weeks since I went. I honestly don't know why Americans aren't flooding onto the Capitol steps to demand an end to this bullshit. Paychecks stagnant, epic UE regardless of Goebbels-ized stats, and necessities rising 5% a month are starting to really grate my fucking nerves here and I am doing much better than many others out there. Yet not a peep from the lamestream media...

Mon, 12/05/2011 - 10:15 | 1946322 Chump
Chump's picture

You won't hear peeps from anyone, just gunshots.  People may be suffering in silence but they won't starve quietly.

Mon, 12/05/2011 - 10:51 | 1946467 Ruffcut
Ruffcut's picture

Most people are narcissitic self entitled. They still think that the gubbermint is looking out for them and will resolve it.

90% of the sheeple I talk to, are clueless. Info has to be spoonfed to them via the MSM. My inlaws come over and I don't talk to thme anymore. I give up on all the morons. Pity that my doom of truth spoil their day. Fuck em.

Mon, 12/05/2011 - 11:01 | 1946506 Flakmeister
Flakmeister's picture

Actaully there was a study out recently that found when confronted with complicated issues, most people take the "Ignorance is Bliss" approach and rationalize that the governement will take care of it...

 I'll root around for the link...

Mon, 12/05/2011 - 16:09 | 1947897 Chump
Chump's picture

I have a slightly similar experience.  I have several family members I'm close with who are well aware of the current problems even if they don't grasp the nuances.  But at the end of a good conversation, when we've finally detailed the fundamentals of why things are spinning out of control, and pondered the result of no more SNAP and bouncing gubbermint checks, they simply blank out.

"But things won't get that bad."

"But we'll get through this.  We got through the Great Depression."

Some have made just-in-case preps: couple cans of food, extra box of shells or two.  But none are prepared to go for even two weeks of real disruptions.  I've included these few in my own preps as far as antibiotics and some food, but I have to think about my own family first and foremost.  Believe me, there are others that are going to hear, "You always brushed me off when I warned you.  I can't risk my family's survival for yours."

Mon, 12/05/2011 - 10:30 | 1946363 flattrader
flattrader's picture

>>>I almost spit my coffee on the floor at the grocery store this weekend when I saw how much groceries have risen in the past 2-3 weeks since I went<<<

I thought it was just me.  I had the same WTF? moment myself.  I assumed it was because I hadn't been paying attention...and I always pay attention.

Mon, 12/05/2011 - 10:41 | 1946423 LawsofPhysics
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Same here.  Significant increases over the last month or two.

Mon, 12/05/2011 - 12:14 | 1946806 jomama
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i just spent a hundred bucks on one bag of groceries yesterday.  it was a heavy bag, but god damn.

Mon, 12/05/2011 - 10:32 | 1946374 Spastica Rex
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The price of iPads hasn't gone up. Or houses.

Mon, 12/05/2011 - 10:47 | 1946450 kito
kito's picture

what does that have to do with the price of tea in china?

Mon, 12/05/2011 - 10:53 | 1946474 Temporalist
Temporalist's picture

This is what:

"Witness last week's visit to Queens, New York, by New York Fed President William Dudley, who got a street-corner education in the cost of living.

Keep in mind the Fed doesn't think food and gas prices matter to its policy calculations because they aren't part of "core" inflation.

So Mr. Dudley tried to explain that other prices are falling. "Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said.

Reuters reports that this "prompted guffaws and widespread murmuring from the audience," with someone quipping, "I can't eat an iPad." Another attendee asked, "When was the last time, sir, that you went grocery shopping?""



Mon, 12/05/2011 - 10:10 | 1946292 the not so migh...
the not so mighty maximiza's picture

Because unemployment went down with their creative math they can ramp this oil sucka higher

Mon, 12/05/2011 - 10:11 | 1946297 Flakmeister
Flakmeister's picture

At what point do you start fading the oil price surge? $150??

Mon, 12/05/2011 - 10:11 | 1946298 firstdivision
firstdivision's picture

Anyone else notice that the price of gas seems low in their area, especially relative to oil?  I know we're having a warmer than normal winter where I am at, so consumption for heating is down, but pump prices have dropped even further today here.

Mon, 12/05/2011 - 10:14 | 1946316 fuu
fuu's picture

It was $3.13 a gallon last Wednesday where I live. It is 3.33 this morning. Nothing like a 6% jump in less than a week.

Mon, 12/05/2011 - 10:18 | 1946334 firstdivision
firstdivision's picture

At least your area is reflecting reality with raising the price today.  My area fell, and I am at a loss.  They will probably go up 10% here tomorrow. 

Mon, 12/05/2011 - 10:42 | 1946412 fuu
fuu's picture

I was wondering what was going on to be at 3.13 last week. I actually bothered to fill up both tanks.

Mon, 12/05/2011 - 10:14 | 1946318 fonzanoon
fonzanoon's picture

A lot of people seem to have noticed in my area. Is it the warm weather?

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