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Things That Make You Go Hmmm - Such As $4.00 Gas (Again)

Tyler Durden's picture




 

 

From Grant Williams' Things That Make You Go Hmmm

After the attack on ‘speculators’ failed to lower gas prices (here’s a piece of free advice by way of a simple mathematical equation for anybody in the current Administration who may be reading: ZIRP ? Low Gas Prices), it was the turn of the other staple solution to an intractable problem; the US Strategic Petroleum Reserve (SPR):

(Montreal Gazette): A group of Democratic lawmakers in the U.S. House of Representatives is again urging President Barack Obama to aggressively use the threat of releasing oil from emergency reserves to rain on speculators driving up oil prices.

 

The three lawmakers are gathering signatures from others in Congress for a letter to Obama to press him to wield the 696 million barrels of oil that the government stores in salt caverns as a weapon against “rapid price escalations resulting from speculation in the oil markets.”

Last June (the 24th to be precise), it was announced that 60 million barrels of oil would be released from world reserves, with about half of that amount being taken from the SPR. Oil was trading at $91 when the announcement was made but actually rose in price - hitting $97 - before dropping to $88 once the surplus oil was introduced on July 15.

60 million barrels = $3 lower price. Hardly bang for the buck - especially as oil was back above $100 before the end of the year.

As much as the SPR is seen by many to be the panacea for high prices, the lack of available additional supply from the world’s biggest producers is a far bigger concern; one which my friend Ronni Stoeferle from Vienna wrote a fantastic report on recently entitled “Nothing To Spare” (you can email Ronni HERE for a copy of the report which is an incredibly detailed piece of work). In it he took an in-depth look at some of the supply constraints facing the world and his conclusions are, to say the least, troubling:

The still low reserve capacity makes the oil price vulnerable to geopolitical tensions. With the exception of Saudi Arabia, no country holds any significant reserve capacities. But since Saudi Arabia has never exceeded the barrier of 10 mbd on a sustainable basis, we harbor doubts as to whether the country can actually produce 12.5 mbd. Risks are that it will take a supply side crunch to find out whether the alleged reserve capacity actually exists to the extent proclaimed. At any rate, the decision of IEA to tap the strategic reserves during the Libya crisis is a clear indicator of the strained supply situation.

Ronni goes on to examine the price forecasts of many major oil producers and their projections also point the way to higher prices:

A comparison of the oil price forecasts from various oil producers reveals that, in the period of 1999 to 2010 Mexico, Saudi Arabia, and Russia made the most accurate forecasts. All three of them also came closest to the actual price last year, which is why it makes sense to listen to their expectations. For 2012 they predict substantially higher oil prices. Saudi Arabia expects an average WTI price of USD 97, Mexico forecasts USD 116, and Russia USD 120/barrel. Iran has given the highest forecast at USD 137/barrel.

But these producers have their own problems - most notably the Gulf States who, in order to calm tempers amidst last year’s Arab Spring, handed out billions of dollars to placate their angry citizens which has driven up their breakeven cost to between $80 - $90 per barrel. In fact, the sheer magnitude of the Saudi  “stimulus package’ was simply staggering. Ronni again:

The Saudi Arabian “Day of Rage” in March was without any consequences due to the generous governmental handouts. The economic stimulus package worth  USD 130bn contained a wage increase of 15% for civil servants, an increase in the minimum wage, cheques for two months’ salary for civil servants, and an unemployment program.

 

Almost USD 70bn will be invested in the construction of 500,000 social flats, and all mosques across the country will be renovated. Overall, the package equals more than 20% of the Saudi Arabian GDP (by comparison, TARP in the US accounted for 5% of GDP).

Clearly, talk of speculators is (as it invariably is) a convenient attempt to find a scapegoat for a problem that doesn’t sit well with the public (incidentally, in an in-depth study that I won’t even bother conducting, it was proven that scapegoats are extra-convenient in election years), but the real problems are far more complex and far less solvable by policy - at least in the West.

Much more in the full report (pdf)

 

 

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Sun, 03/18/2012 - 20:12 | 2268099 bugs_
bugs_'s picture

buried in the pdf is a table showing california tax revenues 2012 vs 2011 - check it out!

Sun, 03/18/2012 - 20:21 | 2268118 Eireann go Brach
Eireann go Brach's picture

Can I use food stamps to buy gas? I bet Obama will come up with Bama Gas Bucks to buy some more votes soon!

Sun, 03/18/2012 - 20:28 | 2268130 GMadScientist
GMadScientist's picture

No, but you can sell your car to buy food.

 

Sun, 03/18/2012 - 21:37 | 2268284 Long-John-Silver
Long-John-Silver's picture

Who is going to buy a used car they can't afford to put gas in? Anyone that can afford the current gas prices will buy a new car. That new car is not going to be a tiny gas sipper. It's going to be a huge SUV.

Sun, 03/18/2012 - 22:57 | 2268457 GMadScientist
Mon, 03/19/2012 - 07:12 | 2268882 GetZeeGold
GetZeeGold's picture

 

 

You buncha freakin Philistine flat earthers probably think drilling more supply would bring the price down........HAH!!!!

 

Just go get some Obama gas.......it's freakin free don't you know!

 

/YesWeCan

 

Mon, 03/19/2012 - 11:24 | 2269721 Woodyg
Woodyg's picture

I'd like to see domestic oil production from federal lands be named a strategic resource and a law passed saying any oil produced from federal lands must be sold in the USA.

The USA is the 3rd largest oil producer by country on the planet.

Let's keep that black gold in the USA.

Sun, 03/18/2012 - 20:31 | 2268142 Id fight Gandhi
Id fight Gandhi's picture

Oh can't win an election with gas or $3. Gas prices have double since Obama took office.

Thank you central planning

Sun, 03/18/2012 - 20:57 | 2268199 Dingleberry
Dingleberry's picture

So has Fed money printing...excuse me...."quantitative easing"

Sun, 03/18/2012 - 22:07 | 2268351 Id fight Gandhi
Id fight Gandhi's picture

But the people notice gas prices, not stock prices.

Mon, 03/19/2012 - 07:18 | 2268891 GetZeeGold
GetZeeGold's picture

 

 

That's because all the QE cash has gone to supporting equities not gasoline prices......cause lower gas prices would help out the little people....and that just makes way too much sense to do that.

 

 

Sun, 03/18/2012 - 21:40 | 2268295 Long-John-Silver
Long-John-Silver's picture

If Obama wins a second term he will double gas again by March and if people still refuse to buy Chevy volts he will double it again by June.

Mon, 03/19/2012 - 00:22 | 2268610 Harbanger
Harbanger's picture

They cant even sell the European version of the Volt, and they’re already paying twice as much for Gas.  Govt. Motors was another one of Obama's many accomplishments.  And next years line of Chevy Volts are going to be made in China. for real.

Mon, 03/19/2012 - 05:08 | 2268810 fredquimby
fredquimby's picture

I sat in it yesterday at the Geneva Car show. And it is very boring. Why did they make it look like a Ford Mondeo from 2001? I then sat in the Tesla S and the Fisker and both have way more exciting interiors and exteriors than the Volt.

P.S I also cancelled my Fisker order last week. It has been on order since 2008 so it's not like I didn't give them a chance to deliver.....

 

 

Mon, 03/19/2012 - 07:15 | 2268893 GetZeeGold
GetZeeGold's picture

It has been on order since 2008 so it's not like I didn't give them a chance to deliver.....

 

It's almost insane to think anyone can get anything done in that amount of time....clearly you should give them 4 more years.

 

Mon, 03/19/2012 - 09:31 | 2269261 Long-John-Silver
Long-John-Silver's picture
Fisker electric Karma was pushed to market before it was ready

Consumer Reports wrote in a blog post:

We buy about 80 cars a year and this is the first time in memory that we have had a car that is undriveable before it has finished our check-in process.

 

Good thing you canceled that order.

Mon, 03/19/2012 - 08:24 | 2269001 Shizzmoney
Shizzmoney's picture

It went up at times during Bush, Reagan years as well.

Rise of oil has NOTHING to do with presidental policies, for the most part.  Or oil speculators (although their input into the final price has increased due to volume being spurred by volitility in the economy, Middle East, corporate shenanegians, etc).

Where can we trace that volitlity in USD and Oil?  Well, oil, as we know....is traded in the world's reserve currency......the US Dollar. 

Who controls the US Dollar?  The Federal Reserve.

Yet, we don't hear about their role in oil's price in MSM.  Hmmmmmmmmmmm

 

Sun, 03/18/2012 - 20:32 | 2268143 non_anon
non_anon's picture

when I was a kid my folks used green stamps, maybe they'll come back

http://en.wikipedia.org/wiki/S%26H_Green_Stamps

Sun, 03/18/2012 - 23:22 | 2268505 HungrySeagull
HungrySeagull's picture

Gawd.

And it will take a whole 10 minutes to count and verify them. hell, there were 6 lanes about 30 feet wide and every one was staffed with two managers, 6 baggers, 6 cashiers and 4 people to help load your car.

MAN those were the days.... work for all who wanted to even if it was folding boxes for the export dumpster.

And the store bought and stocked only what the local area in terms of city blocks would eat. For us German Americans... it was great. And so it was for the Irish, French and so on down the street.

Sun, 03/18/2012 - 23:58 | 2268571 non_anon
non_anon's picture

lmfao, I remember my grandma, at 6th street grocery store, cashing in those fucking green stamps, a little fucker back then!

Mon, 03/19/2012 - 07:35 | 2268910 GetZeeGold
GetZeeGold's picture

 

 

Bought my first ounce of silver back then........I uas just a tiny tyke with a pocket full of bullion.

 

Sun, 03/18/2012 - 20:48 | 2268175 AbruptlyKawaii
AbruptlyKawaii's picture

you can sell your "benefits" 2-1 for cash

Sun, 03/18/2012 - 23:22 | 2268512 HungrySeagull
HungrySeagull's picture

I am not surprised, there is a little underground trade in that. The problem is you needed one hungry Benefit card holder to swipe something for cash.

Sun, 03/18/2012 - 20:23 | 2268122 Future Tense
Future Tense's picture

I think $4 gas is one of many things that is going to bring markets lower.  It is the new Fed Funds rate.  This article provides a lot more reasons, through an easy to understand format, on why stocks are very overpriced right now:

http://www.ftense.com/2012/03/global-market-forecast-introduction.html

Sun, 03/18/2012 - 20:46 | 2268172 navy62802
navy62802's picture

Well, the last time we reached $4 / gallon for a sustained period, we ended up with a massive market melt down and a financial crisis. I can't help but think that the two things are related, as people begin spending more on gas (and other items affected by high oil prices) and less on paying off their debts, we may see it all play out again.

Sun, 03/18/2012 - 21:21 | 2268237 Id fight Gandhi
Id fight Gandhi's picture

The early summer/spring ain't going to help. People are out and about which they say... Is driving up sales at retail places like home depot.

Mon, 03/19/2012 - 01:14 | 2268682 downrodeo
downrodeo's picture

wha? reallly?

696 million barrels - (1/2)*60 million barrels = 666 million barrels

we only have 666 million barrels left in the SPR, seems like a good number.

 

Solution: maintain stock of said 666 blah blah bs until oil approaches asymptote, then lease it back to the public to settle the national debt. lulz

cheers zhers

 

 

Mon, 03/19/2012 - 09:58 | 2269167 Flakmeister
Flakmeister's picture

Instead of this drivel, I suggest you google

EIA Cushing Stocks

or

EIA SPR Stocks

It might open your eyes....

Sun, 03/18/2012 - 20:53 | 2268176 nmewn
nmewn's picture

Revenues down 22.5% is one helluva change.

Also, for a heart rending story of what totalitarianism is, begin on page 14...

Shin and his mother lived in the best prisoner accommodation the camp had to offer. They had their own room, where they slept on a concrete floor, and they shared a kitchen with four other families. Electricity ran for two hours a day. There were no beds, chairs or tables. No running water.

If Shin’s mother met her daily work quota, she could bring home food. At 4am, she would prepare breakfast and lunch for her son and for herself. Every meal was the same: corn porridge, pickled cabbage and cabbage soup. Shin was always hungry and he would eat his lunch as soon as his mother left for work. He also ate her lunch. When she came back from the fields at midday and found nothing to eat, she would beat him with a shovel.

Her name was Jang Hye Gyung. She never talked to him about her past, her family, or why she was in the camp, and he never asked. His existence as her son had been arranged by the guards. They chose her and the man who became Shin’s father as prizes for each other in a "reward" marriage."

?Lovely.

Sun, 03/18/2012 - 21:52 | 2268321 Long-John-Silver
Long-John-Silver's picture

Vehicle License fee revenue dropped from 102,386 to 2,573.

 

That's caused by Truck Drivers getting the hell out and refusing to take loads into California.

Sun, 03/18/2012 - 23:24 | 2268516 HungrySeagull
HungrySeagull's picture

And half of those truck drivers will fall into tier two or completely out of the CDL pool by mid 2014.

Mon, 03/19/2012 - 02:28 | 2268747 Seer
Seer's picture

POVs are to the trucking industry what junk mail is to the USPS.  A vast reduction in POV travel will force trucking costs, which translates to increased costs of goods sold, UP!  And This, my friends, is what I've been trying to warn about for a LONG time; this is a perfect example of "economies of scale" in reverse, how it works/plays out.

Mon, 03/19/2012 - 05:37 | 2268819 RafterManFMJ
RafterManFMJ's picture

 

 

...and those Mexican truckers, they don't pay either.

Mon, 03/19/2012 - 06:48 | 2268877 Seer
Seer's picture

I suspect that Canadian truckers surpass the numbers of Mexican truckers.  Regardless, it does bring up an interesting point: one way to avoid paying road taxes is to relocate your company next door and then use the same road systems for free (though I'm not sure the taxes paid by the Canadians would be less; for the Mexicans, I'd figure so).

Sun, 03/18/2012 - 22:19 | 2268373 tempo
tempo's picture

What pdf table? BTW who was the President who added to the SPR at $35/bbl?? Should that President be praised rather the Obama who wants to deplete the SPR for political reasons? BTW SPX and AAPl should go higher until the end of the quarter as more and more hedge funds must show they hold a AAPL position.

Sun, 03/18/2012 - 20:15 | 2268103 sitenine
sitenine's picture

A friend made another video for you guys.  Enjoy.

http://www.youtube.com/watch?v=RgE563VCDOg&feature=youtu.be

Sun, 03/18/2012 - 20:45 | 2268168 gwar5
gwar5's picture

Great video sitenine. Thanks.

 

Given the other EOs, the NDAA, 30K domestic drones, and the Utah spy center information getting out, I think it is all escalation in posturing and implied threats, like Putin usually does.

If TPTB were going to escalate, next up would be making a few select public examples out of target groups with arrests, like Putin just did. This is an old playbook. We'll see. I will be interesting times if the Liberator USA were to suddenly be killing their own people, like Assad and Ghadafi, and China then send us aid and air support to help us kick out the regime.

Sun, 03/18/2012 - 23:07 | 2268479 mbarido
mbarido's picture

OH, what a devious twist on international affairs.  Just imagine what TPOTUS would say with his teleprompter.  Would it sound like Ghadafi or Assad?  Would China even step in?

Sun, 03/18/2012 - 20:55 | 2268190 Dr. Engali
Dr. Engali's picture

That video lost all credibility by that Jefferson quote. He never ever said that. It's a phoney quote that's made it's way around the net. The executive order is serious shit. But if you don't do due diligent research on what you are posting people will not lend the subject matter any credibility.

Sun, 03/18/2012 - 20:58 | 2268202 sitenine
sitenine's picture

I didn't make the video, but I can pass on that advice.  I would like more information on why that quote is not attributable to Jefferson if you are able to pass it along, as I've heard it many times over - including some of Bill Still's stuff (who I respect very much for thorough research).

Sun, 03/18/2012 - 21:08 | 2268214 Dr. Engali
Dr. Engali's picture

Here's a link to snopes on that quote.

http://www.snopes.com/quotes/jefferson/banks.asp

I'm not trying to be crass. That Executive order needs to be taken seriously and the more awareness the better.

Sun, 03/18/2012 - 22:10 | 2268343 sitenine
sitenine's picture

In full agreement on the seriousness.

Thank you both for the links.

Mon, 03/19/2012 - 02:01 | 2268727 TWSceptic
TWSceptic's picture

Maybe you should do your own research better, that quote is only partly spurious, much of it however is actually Jefferons opinion on private banks.

Mon, 03/19/2012 - 07:09 | 2268868 Dr. Engali
Dr. Engali's picture

You're a moron noob .Just because he didn't care for banks doesn't make it okay to attribute a quote to him that he never said. I can assure you that I've probably forgotten more about Jefferson than you know. Just because you displayed your intelligence level with a comment like that doesn't make it okay to put the following words in your mouth....... "I'm stupid and I don't know what the hell I'm talking about." that may line up with the facts but you still never said it. .... At least I don't think you have. Have you?

Mon, 03/19/2012 - 02:41 | 2268750 Seer
Seer's picture

Tell your friend that the Thomas Jefferson quote is bogus.

It's one thing to bash bad things, but it's another to do it in ways that use falsehoods.

To me this smacks of party pussy-ism.  It's immaterial whether Obama did or didn't want to sign this thing (like anyone could know what's in his, or anyone else's, head?), the signing was mandated by TPTB.

Sun, 03/18/2012 - 20:16 | 2268105 gwar5
gwar5's picture

So what is the relative highest price for gasoline adjusted for inflation? Anyone know if are we there yet?

 

Methinks we are close. But the middle 1980's were pretty high too, like about $1.35 in the SF Bay Area, which might convert to about $3.75.

Sun, 03/18/2012 - 22:22 | 2268376 seek
seek's picture

We're past that point. This provides some background: http://zfacts.com/p/35.html

Short answer is that the peak gas price in today's dollars in history happened in 1980, at $3.55.

So current "normal" gas prices are very near the highest seen in a full-on crisis (Iran-Iraq war) 30 years ago. The structural difference between the pricing situation is huge, it's unlikely that the current situation will resolve the way the crisis 30 years ago did, because current pricing is reflecting a lot of inflation and only a little bit of the crisis/shortage mentality. If we get a hot war in Iran, we could easily go higher, if it settles down, I doubt we get below $3.

Sun, 03/18/2012 - 23:09 | 2268482 LaLiLuLeLo
LaLiLuLeLo's picture

The main difference is that every Tom, Dick & Harry has a credit card to pass the buck onto their future selves.

Mon, 03/19/2012 - 10:47 | 2269570 Amish Hacker
Amish Hacker's picture

Here's a historical price chart for gasoline:

http://gasbuddy.com/gb_retail_price_chart.aspx

I'm not sure how you would want to adjust for inflation. CPI? Gold price?

Anyway, the price went to $4.12 in 2008, then fell off a cliff, down to $1.61 at about the time of Obama's inauguration, then back up from there.

 

Sun, 03/18/2012 - 20:19 | 2268110 bob_dabolina
bob_dabolina's picture

If you take the oil out, you're gona' have to put it back in except you'll be buying it back at higher prices. 

Sun, 03/18/2012 - 20:28 | 2268133 kito
kito's picture

Yes, logic that comes from congressmen who think borrowing more money is good because interest rates are so low....after all, what can go wrong......lasik surgery couldn't fix their short sightedness.......

Sun, 03/18/2012 - 20:29 | 2268136 GMadScientist
GMadScientist's picture

I wonder who donates the most to campaigns that would benefit tremendously from this exercise (just like they did through two terms of Bush and his daddy's buddies).

Mon, 03/19/2012 - 02:49 | 2268757 Seer
Seer's picture

Clearly, unions! </sarc>

Now then, quit bothering me, I've got to get back to pushing the buttons controlling the drones...

Sun, 03/18/2012 - 20:21 | 2268117 FXPortent
FXPortent's picture

Insanity rules the day, yet again!!

Sun, 03/18/2012 - 20:24 | 2268120 CrashisOptimistic
CrashisOptimistic's picture

Has anyone noticed that all explanations for oil supply problems never ever address . . . oil supply problems?

It's always "lack of investment" or "high breakeven point because of government spending" or even the always popular "speculators have reason to restrict supply to make a profit on their trades, so they (pick one) fill up tankers and don't allow them to port, they start a war to shut the Straits of Hormuz, they . . . whatever.

I'm taking an amused perspective on this, and I predict that on the day it is clear there are outright gasoline shortages in the US, it will be blamed on government intervention or big oil shutting refineries or the bogeyman-du-jour.  That bogeyman will never be geology.  Not ever.

For some very odd reason, it seems to be unacceptable for people to embrace the concept of . . . if there's not enough coming out of the ground for needs of 7 Billion people then maybe no more can come out.  Period.  Maxed out.  This is an unacceptable concept.  And yet people have accepted nature before.  People dying of heat in a desert never imagine that they can do something to turn down the sun.  It's very odd.

 

 

Sun, 03/18/2012 - 20:37 | 2268150 Caviar Emptor
Caviar Emptor's picture

For 40 years we've had "no oil problem". And higher prices would force more production to come online. But US imports ahve only gone up. And US production peaked in 1970. I think we all gotta stop our day jobs starting Monday and help drill for oil. 

Sun, 03/18/2012 - 21:58 | 2268335 t0mmyBerg
t0mmyBerg's picture

i will tell you what.  This LTRO/Feds gonna buy more MBS/Treasury liquidity meme better peak relatively soon or I am going to be looking for a job in the NoDak oil patch.  I know I am an idiot to be short in the face of the trillions in money printing and larry fink screaming to go all in stocks (surely he had just come from a meeting with someone where he learned where the money flows would go).  Somehow I just cannot believe that all the price signal distortion and capital misallocation will lead to such an awesome outcome that all markets surpass their 2007 highs.  Nevertheless, in an analog to "I'm afraid it's medical experiments for the lot of you" I am slowly resigning myself to "I'm afraid it's oil derricks for the lot of you".

Mon, 03/19/2012 - 08:26 | 2269009 Shizzmoney
Shizzmoney's picture

Ironic, because 40 years ago is also when the USD went off the gold standard. 

Like Chazz Palmateri's character Sonny said in "A Bronx Tale":

"The Working Man is the biggest sucker."

Sun, 03/18/2012 - 20:43 | 2268164 Dr. Engali
Dr. Engali's picture

I am not totally opposed to that idea. I have to admit that I don't know enough in that area to formulate an honest opinion. But from what I have read it seems all the easy oil has been reached, but there is a lot more difficult oil to find. It's just not cost effectient right now. Like I said though it's a topic I have to do more research on.

Mon, 03/19/2012 - 04:07 | 2268796 Seer
Seer's picture

"That bogeyman will never be geology."

Or, too much consumption...

Kind of like Easter Islanders probably never suspected that their consumption of forests would ever stall their statue-building (and thus their very [in Dick Cheney's voice] "Easter Island way of life").

Sun, 03/18/2012 - 20:27 | 2268129 trustee
trustee's picture

I think we have reached the point where supply and demand have zip to do with oil price.

Sun, 03/18/2012 - 20:29 | 2268134 CrashisOptimistic
CrashisOptimistic's picture

Of course you do.

Sun, 03/18/2012 - 20:52 | 2268151 deflator
deflator's picture

 Price has nothing to do with supply and demand if market participants are wrong about future supplies which I think they are. I think most market participants believe that myriad of hopium exists in the form of unconventional oil and natural gas. Once the veil of hopium is lifted and market participants realize that the next 10 years is not an extrapolation of the past 150 TSHTF.

 I think oil prices are well below what they would be if market participants were realistic about present and future supply and demand.

 I think prices are being kept artificially low because fiat currencies fail in the absence of confidence of future growth. If energy, the master commodity declines, then fiat currencies will no longer have the false notion of infinite growth to rely on.

 I believe that a great veil of false beliefs exists world wide when it comes to energy. This false belief is due to the past 150 years of persistent economic growth entirely attributable to the past 150 years of persistent growth in energy and technology that consumes it. The past 150 years of persistent economic growth is not attributable to our greater understanding of economics.

Sun, 03/18/2012 - 21:15 | 2268228 DoubleTap
DoubleTap's picture

I agree trustee. A few years ago I came across this site when I was trying to learn about oil pricing. http://www.radford.edu/~wkovarik/oil/6oilbiblio.html

I don't believe in peak oil. Peak Oil is nothing more than bullshit fearmongering propaganda. I wish this site would be updated past 2006. Since then Brazil has had major discoveries and become an oil exporter. The Bakken oil fields keep growing in size. It seems every year there is a new discovery in the Gulf of Mexico that is the largest ever found. The finds in Uganda. And the untapped resources in ANWR. At least the Canadians are smart enough to be drilling right on the other side of the Alaskan/Canadian border in Mackenzie Bay & Yukon Territory.

From the link above: • 1879 -- US Geological Survey formed in part because of fear of oil shortages.

It's a great read, check it out. We aren't running out of oil any time soon. Global warming is bullshit too.

Sun, 03/18/2012 - 21:33 | 2268261 deflator
deflator's picture

 From the link above: • 1879 -- US Geological Survey formed in part because of fear of oil shortages.

 Ohhhh...  you believe in government and it's statistics when it comes to oil...

Sun, 03/18/2012 - 21:46 | 2268302 CrashisOptimistic
CrashisOptimistic's picture

"I don't believe in peak oil."

It's not a religion.  It's geology.  No multi million dollar churches.  Just pages of seismic imagery.

And you do realize that at the end of the boy who cried wolf story . . . the wolf did show up and kill everyone.

Mon, 03/19/2012 - 05:56 | 2268830 Seer
Seer's picture

I'll never know how anyone can think any differently.  Sure, conspiracies can exist, but even manipulations cannot alter the FACT that consumption of a fixed quantity DOES actually DEPLETE that thing.  I know, hard to believe...  ANYONE can test this out by filling up a glass of water, you only get that one glass, and then drink it at whatever rate and then see if in fact there is LESS water in it than you started out with (and if it's a hot day and there really isn't any other water, it's quite probable that you'll experience your very own peak water in only one day!).

Sun, 03/18/2012 - 22:07 | 2268322 CrashisOptimistic
CrashisOptimistic's picture

>>

Since then Brazil has had major discoveries and become an oil exporter. The Bakken oil fields keep growing in size. It seems every year there is a new discovery in the Gulf of Mexico that is the largest ever found. The finds in Uganda. And the untapped resources in ANWR. 

>>

One other thing, there guy.  Without addressing each of these at all . . . in the interests of objectivity, why didn't you list the wells/fields that declined in production or outright shut down because empty the past year, or five years?  Do you think such things do not exist?

You do realize the oil industry has a sub category of companies who specialize in C&A, cap and abandon?  And that's not just in the US.  When a well is dry you cap and abandon it.  You pour a couple of miles of concrete in and smooth it over and leave the site.  Such companies are paid very well to do that.  It's the mortuary of the oil business.  Zero glamour, but a lot of money.

Regardless of numbers, why did you not mention any dying or dead wells in your list?  Wouldn't that be fair?  Aren't you thinking of only one side of the equation?  

Sun, 03/18/2012 - 23:50 | 2268553 CompassionateFascist
CompassionateFascist's picture

The problem isn't Peak Oil. It's Peak Humans. Soon the Peak Human Problem is going to resolve itself. Then there will be plenty of oil to around.

Mon, 03/19/2012 - 09:39 | 2269274 AnAnonymous
AnAnonymous's picture

Well, well, well.

Typical US citizenism.

Currently, 3 billion people are out of oil consumption.

For this solution to work, for oil to be plentiful, the population to be eliminated has to be the population that consumes oil.

So well, does not look as if this peak human probem is going to resolve itself.

Sun, 03/18/2012 - 23:04 | 2268470 fnordfnordfnord
fnordfnordfnord's picture

Ahem. Here are links to parts 1&2 of an 8 video series, you can find the rest. You need to watch all eight. It's just facts, no propaganda. But it explains in no uncertain terms how these things work. It's like an innoculation against being ignorant.

http://www.youtube.com/watch?v=F-QA2rkpBSY

http://www.youtube.com/watch?v=Pb3JI8F9LQQ

Mon, 03/19/2012 - 06:07 | 2268835 Seer
Seer's picture

It's like an innoculation against being ignorant.

Yup.  As a matter of fact, I toss this at anyone who thinks of affecting ANY change.  Unless you know the fundamentals there's ZERO chance that what you do can possibly turn out right.

Here's a better place to watch this, only one link required:

http://video.google.com/videoplay?docid=4364780292633368976

Mon, 03/19/2012 - 06:24 | 2268854 blueridgeviews
blueridgeviews's picture

The first time that I've read about peak oil was back in the 1920's when there were oil rigs all over Pennsylvania and they were having a hard time finding new locations to drill.

The term has been thrown around a lot ever since. I beliieve there is a lot more oil on the planet than anyone knows.

Mon, 03/19/2012 - 09:41 | 2269284 AnAnonymous
AnAnonymous's picture

It is true that US citizens entered the age of oil knowing oil was a finite resource.

Kicking the can as usual... Usual US citizen procedure.

Consume now and see what happens later.

Mon, 03/19/2012 - 10:12 | 2269416 Flakmeister
Flakmeister's picture

Hey Doubletap...

You are not allowed to make shit up on the fly... Bad form..

Brazilian Oil Production and Imports

And as for Global Warming, please explain this result:

http://www.skepticalscience.com/pics/FR11_All.gif

taken from this elegant simple paper

http://iopscience.iop.org/1748-9326/6/4/044022

Sun, 03/18/2012 - 20:29 | 2268132 Dr. Engali
Dr. Engali's picture

"The Saudi Arabian “Day of Rage” in March was without any consequences due to the generous governmental handouts. The economic stimulus package worth  USD 130bn contained a wage increase of 15% for civil servants, an increase in the minimum wage, cheques for two months’ salary for civil servants, and an unemployment program."

Just goes to show you that it's not just in the U.S. where the sheeple can be bought off with a few trinkets.

Sun, 03/18/2012 - 20:30 | 2268137 GMadScientist
GMadScientist's picture

Worked great with the Native Ameri-...oh, wait.

Sun, 03/18/2012 - 20:30 | 2268138 Caviar Emptor
Caviar Emptor's picture

We got no worries. Prices are up even though demand is down. No worries at all

Sun, 03/18/2012 - 20:40 | 2268156 Teamtc321
Teamtc321's picture

You can find the camera guys story herehttp://www.dailypaul.com/221418/im-the-camera-man more athttp://www.WarnWire.com GOP once again just like Georgia trys to disenfranchise voters and rigg and hijack the delegate process by not allowing a vote! Ron Paul Supporter Arrested St Charles Missouri Caucus March 17 2012 Delegates Rigged Fraud Missouri Caucus Rigged Fraud, NO Camera's Allowed Ron Paul Mitt Romney Voters Election St Charles Remove the Chair, We make the rules!

Sun, 03/18/2012 - 20:42 | 2268158 monopoly
monopoly's picture

But, but, I thought the higher prices were due to growth in the US economy. That it was getting better with more jobs, higher pay, and construction up. That is what they told me on NBC. Oh my!

Sun, 03/18/2012 - 21:16 | 2268229 Zero Govt
Zero Govt's picture

no the problem is Wank Paulson (again) flogging fraudulent paper contracts as buy orders ...especially just before the price setting mechanism so the oil monopolists, sorry majors, can fleece the motorist out of another 3 Cents ($3 Billion nationally) the following month

dunno but we keep getting problems with Wank at the centre! 

Sun, 03/18/2012 - 20:45 | 2268170 kito
kito's picture

More good news if you own anything of value........

http://beforeitsnews.com/story/1906/406/Obama_Executive_Order:_Peacetime...

Sun, 03/18/2012 - 20:57 | 2268198 Bay Area Guy
Bay Area Guy's picture

I truly wish someone would tell these idiots in Washington that there's absolutely nothing wrong with speculation.  We ALL speculate for Christ sake.  When someone buys a stock, you're speculating that the price is going to go up and you're going to make money.  When you sell that same stock, you're either speculating that the price of the stock is going to drop, or that you can find something else to make a greater amount of profit on.  For everyone speculating that oil is going to rise and buying futures based on that speculation, there has got to be someone on the opposite side speculating that oil is either going to drop or that something else is going to go up faster in order for there to be two parties in the transaction.  Speculation is not only good, but in a fair and open market (something we can only dream of in this and most other countries), it's actually a prerequisite.

What these idiots SHOULD be saying is that there's a lot wrong with manipulation of the oil market.  Of course, if they admit to manipulation in the oil market, they're left with egg on their collective faces when someone asks them about manipulation of every fucking market around.

Sun, 03/18/2012 - 21:59 | 2268339 CrashisOptimistic
CrashisOptimistic's picture

Noble speculators are the only thing between us and $175 oil, which would be the price today without their superhuman efforts.

Sun, 03/18/2012 - 22:31 | 2268400 aerojet
aerojet's picture

Speculating is one thing.  Taking commodities into a huge bubble using free money printed up by the Fed at the expense of every single decent American is quit another. 

I laugh when people post about oil not pricing in future shortages.  When the hell are you going wake up and realize that these markets are a joke?  They're trading with computers based on sub-second changes.  There is no consideration for the future unless you are talking a maximum of five minutes from now.  These markets are hopelessly broken.

Mon, 03/19/2012 - 00:23 | 2268614 CrashisOptimistic
CrashisOptimistic's picture

You're correct, but you being correct is not relevant.

A refinery buys oil from a tanker and is under no obligation to look at, and generally does not look at, NYMEX pricing to decide what he'll pay.  

He pays as little as he can without the tanker owner shrugging and sending the ship to the next refinery.  They don't make these decisions based on what computers do in NYC.  They decide at the port where the tanker leaves when they get an order from a refinery willing to pay the price they want for their oil, and . . . they don't have any obligation to look at NYMEX either.

We have a cart and horse issue here.  NYMEX is looking at what refineries are paying, not vice versa.

 

Mon, 03/19/2012 - 06:15 | 2268844 Seer
Seer's picture

From wikipedia:

In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum.

Markets are all about speculation.  Anyone who promises safety is THE problem: such a condition could only be attained through manipulation/subversion of regular market forces.

As noted in another response,  the vast quantities of "free" money is effectively rigging/manipulating markets.

Sun, 03/18/2012 - 21:00 | 2268204 gimli
gimli's picture

I just looked up "Bad News" in the dictionary ....... cause I forgot what it was ----- just as I figured...... wasn't anything there.

Mon, 03/19/2012 - 06:21 | 2268851 Seer
Seer's picture

Need to track down one of those dictionaries that was published pre-totalitarian days...

Sun, 03/18/2012 - 21:05 | 2268211 rsnoble
rsnoble's picture

Drover our 4 wheelers all over tarnation last night.  Didn't even burn a 1/4tank.  Spent some time at the nudist coloney and listened to the Pagans play bongo drums and chant. I'm neither, but still a good time.  Some gal was there in a coyote sorta dress with a coyote tail hanging off her ass I asked her if I could pull her tail she said sure. Of course screw the tail I had a handful of ass. Get this....the bitch growled at me??  She said it was a friendly growl though lmao.

Sun, 03/18/2012 - 22:18 | 2268371 rsnoble
rsnoble's picture

Awe........does'em poor babies want to sit around and cry about high gas prices all sunday night? This shit's going where it's going....my as well have a good time before the bottom drops out.

Sun, 03/18/2012 - 21:13 | 2268223 Printfaster
Printfaster's picture

Gold and oil prices are going to get slammed going into the elections.

Bank on it.  Below three bucks by September.  Gold to 800.  Read it and weep.

Sun, 03/18/2012 - 21:54 | 2268325 Long-John-Silver
Long-John-Silver's picture

Are you Mathman with a new handle?

Sun, 03/18/2012 - 22:23 | 2268382 akak
akak's picture

Only $5 per hour to troll from my basement!

Sun, 03/18/2012 - 22:02 | 2268342 CrashisOptimistic
CrashisOptimistic's picture

Oil south of $75 is inevitable.  It happens when $150 oil smashes world GDP to -3% and consequent consumption.

Down goes the price until the world dares attempt growth again (1.7%), at which point $175 oil arrives to smash it all again.

 

Mon, 03/19/2012 - 06:34 | 2268865 Seer
Seer's picture

Yes, it's about "affordability."  If no one can afford it then it won't command a high price; though, however, economies of scale might suggest that it would be hard to pump a single barrel of oil for such a small amount: some rich fuckers will be able afford limited quantities, but it won't come cheap (unless you're the US military).

Sun, 03/18/2012 - 22:02 | 2268345 Hangfire
Hangfire's picture

You mean, read it and stack!

Sun, 03/18/2012 - 22:25 | 2268387 jomama
jomama's picture

lol, don't i wish.

Sun, 03/18/2012 - 22:29 | 2268396 FrankThinkTank
FrankThinkTank's picture

/sarc?

Is the US fiat going to increase in value by elections? Is the FED going to rescind reserves to primary dealers? That would certainly drop the equities markets

Please do tell 

Sun, 03/18/2012 - 21:14 | 2268224 Fail2Deliver
Fail2Deliver's picture

I want to party with you, Cowboy...lol

Sun, 03/18/2012 - 21:17 | 2268232 Teamtc321
Teamtc321's picture

Congressman Submits Impeachment Resolution Due to Obama's Failure to Get Congressional Authorization for Military Action in Libya.

http://voices.yahoo.com/congressman-submits-impeachment-resolution-due-to-11077044.html?cat=62

 

 

Mon, 03/19/2012 - 06:42 | 2268871 Seer
Seer's picture

Bless Walter Jones.  He had a real come-to-Jesus moment when he realized that his helping to lead the charge of war against Iraq was wrong: he's since been an active supported of ending the war.  Anyone who remembers will recall that Walter was the one who started the stupid campaign to pressure the French to jump on the war bandwagon, it was he who made the bold contribution to America's fighting forces by... suggesting that the congressional cafeteria call "French Fries" "Freedom Fries."

I now have more respect for Walter after admitting his mistake, AND, for actually learning from it!

Sun, 03/18/2012 - 21:24 | 2268246 q99x2
q99x2's picture

A pencil and blank piece of paper yields the highest ROI.

Sun, 03/18/2012 - 21:36 | 2268276 Monedas
Monedas's picture

O'bama....O'Nero....O'Hoover....O'Carter   4 Losers !    Monedas  2012   $4 gas = 4 year presidency !

Sun, 03/18/2012 - 21:43 | 2268301 digalert
digalert's picture

I know how to lower the price,

Drill Baby Drill

Meanwhile in other news: Chevron and Transocean executives detained in Brazil. Passports seized pending criminal charges...

http://www.reuters.com/article/2012/03/18/brazil-chevron-spill-idUSL2E8E...

Sun, 03/18/2012 - 21:57 | 2268333 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Going Back to the First Look at Saudi Arabian Oil Production:

http://www.theoildrum.com/node/9034

Sun, 03/18/2012 - 21:58 | 2268337 dbomb12
dbomb12's picture

Instead of the SPR why noy just get it from the BAKKEN oil reserves, oh thats right we cant buy our own oil because of federal regulations

Sun, 03/18/2012 - 22:03 | 2268347 CrashisOptimistic
CrashisOptimistic's picture

There are no restrictions on Bakken drilling.  It's taking place frantically every single day.

Sun, 03/18/2012 - 22:56 | 2268452 dbomb12
dbomb12's picture

http://www.energyindepth.org/tag/bakken-shale/

Some members of Congress have discussed attempting to attach new regulations on hydraulic fracturing to legislation aimed at addressing that tragedy, according to Pomeroy.

Lynn Helms, director of the N.D. Department of Mineral Resources, during a presentation in Minot in May, spoke about if the Environmental Protection Agency decides to regulate hydraulic fracturing.

We really have got to stop that from happening,” he said. He said his department put together a document which tells how North Dakota regulates it and has gone to EPA headquarters and Gov. John Hoeven.

If this happens, I can tell you that our Bakken and Three Forks drilling will have to stop for two to three years,” he said. He said when it happened to Alabama for coalbed methane, “they completely had to shut the door” for two years.

“By the time they got the rules written, the play had moved on and it has never been what it was before,” he said. “So that’s a huge cloud sitting over our industry a major impact. It would just reduce our activity to almost zero for two to three years.”

In his letter to Pelosi, Pomeroy said, “I believe that this would be a mistake and would find little support in the Senate. The EPA is currently undergoing a congressionally mandated study into hydraulic fracturing that is expected to be completed in 2012.”

Pomeroy called it “irresponsible” for Congress to enact new regulations

Mon, 03/19/2012 - 00:29 | 2268622 CrashisOptimistic
CrashisOptimistic's picture

 

 

"There are no restrictions on Bakken drilling.  It's taking place frantically every single day."  

So you agree with me.  Those regulations were discussed and are not in place and may never be.  


Mon, 03/19/2012 - 07:00 | 2268883 Seer
Seer's picture

"we cant buy our own oil because of federal regulations"

Who is "we?"

No, US citizens can't buy they're own "oil" because they're fucking broke.  Further, oil is pooled into the global market.

If you persist that it's about "federal regulations" then back up that assertion and provide the relevant govt documents.

Sun, 03/18/2012 - 22:23 | 2268381 jomama
jomama's picture

PMs ramping up on a Sunday night?

that's not normal.

Sun, 03/18/2012 - 22:31 | 2268399 americanspirit
americanspirit's picture

While everyone is focused on how many US warships are busy making themselves targets in the Persian Gulf has anyone noticed that the French carrier Charles de Gaulle and its 'strike force' is busy steaming in circles too? 

Would anybody really care if the Iranians sank Le Grande Nez?  I think we have the scenario. OMG - those camel jockeys sank our ally's precious carrier. Tally ho!

Sun, 03/18/2012 - 22:37 | 2268418 Hangfire
Hangfire's picture

Yea there's a difference thought, the de Gaulle is steaming in circles because their rudder is stuck, the US fleet is voluntarily holding their pattern.  

Mon, 03/19/2012 - 07:03 | 2268885 Seer
Seer's picture

Ask Walter Jones what happens when you make stupid French-bashing jokes (or, in Walter's case, stupid propaganda campaigns).

Sun, 03/18/2012 - 23:01 | 2268466 akak
akak's picture

Nah, the frogs would just haul that old railcar out of storage in Compiegne. float it over to Bushehr, and surrender to the Iranians over cheese and wine.

Mon, 03/19/2012 - 07:14 | 2268892 Seer
Seer's picture

"This is an oil-based economy. It always has been and always will be," Kinzie said. "Fortunately, the economy (in Cushing) is really good right now. We've been blessed."

I wish that it were legal to shoot people with no brains.  "It always has been" blah blah blah... yeah, in your myopic, self-centered life, you piece of shit.

And from this (http://www.okmag.com/May-2011/Trouble-In-Pipeline-USA/):

“Historically, Cushing has been the center point for oil in America,” says Mike Cantrell, president of the Oklahoma-based Domestic Energy Producers Alliance (DEPA).

Fucking Orwell lives!  Someone named after a dying Mexican oil field (OK, it's a close spelling!) and who is for DOMESTIC energy production is campaining to help IMPORT MORE OIL?

People would often compare quitting smoking to kicking an heroin addiction.  I think that kicking the oil addiction will be like kicking an heroin addiction.

Sun, 03/18/2012 - 22:52 | 2268445 yogibear
yogibear's picture

See loads of cars and SUVs now with $4.39/gallon gas. No effect. Gasoline will have to go a great deal higher to make an impact!

Maybe $6.00 or $7.00 gas may put a dent in consumption by Americans. There are huge SUVs racing to the lights and still plenty of traffic.

Bottom lie no impact, Americans are used to $4.39/gallon gasoline.

Sun, 03/18/2012 - 23:03 | 2268468 UP Forester
UP Forester's picture

Yeah, loads of 'em.

 

Parked in the yard with "For Sale" signs on 'em.  Right next to the ReMax sign that's been up 3 years.

Sun, 03/18/2012 - 23:31 | 2268526 GMadScientist
GMadScientist's picture

They haven't got their credit card bill yet. Give em time.

Mon, 03/19/2012 - 00:10 | 2268594 CrashisOptimistic
CrashisOptimistic's picture

You are partially right.  

Americans who aren't making their mortgage payments and have no housing costs are not upset by $4.39/gallon gasoline.

Sun, 03/18/2012 - 23:06 | 2268476 palmereldritch
palmereldritch's picture

Depetion of the SPR is an intentional act obfuscated by 'goodwill' politics that will ensure resource scarcity when they are needed most, at a time of crisis not to be unexpected nor avoided.

Sun, 03/18/2012 - 23:23 | 2268515 847328_3527
847328_3527's picture

Nixon's price controls and 10% tariff on imports was a total disaster for those who remember. Why not let free markets work.

Mon, 03/19/2012 - 00:27 | 2268619 yogibear
yogibear's picture

Today I was in a traffic jam with gasoline stations nearby posting $4.39/gallon around a popular mall due to nice weather. The resturants were packed and parking lots full. That's why I stated there seems to be no effect and gasoline could climb much much higher before there is an impact. People are still at the malls, resturants are still buzzing and a local convention center, casino are going like gangbusters.

Refiners/suppliers keep raising the prices people will keep cruising/boating and going out to eat to the Applebees, Olive Gardens, Weber Grill, etc!!!

Mon, 03/19/2012 - 01:30 | 2268705 UP Forester
UP Forester's picture

NSF has been replaced by Credit Cards.  Problem is, CCs come due at some point, and you can only get so many.

Mon, 03/19/2012 - 03:00 | 2268769 oldman
oldman's picture

Yogibear,

I have'nt heard a thing about the recovery you speak of

the tylers say just the opposite

what is this all about?

have you told the tylers yet?

HEY, TYLER!!!!!!!!!!!!!!!!!                                           om

Mon, 03/19/2012 - 07:47 | 2268919 Seer
Seer's picture

Does the word "enclave" mean anything to you?

Mon, 03/19/2012 - 00:35 | 2268630 zebra
zebra's picture

oh come on, as if you haven't been to SFbay in CA..

oh wait a minute, we don't have $4 per gallon, it is $5 per gallon, self-service cash price...

 

Mon, 03/19/2012 - 01:32 | 2268706 UP Forester
UP Forester's picture

Move north.  At least in Oregon, you've got someone to pump it for you.

Mon, 03/19/2012 - 00:36 | 2268634 nah
nah's picture

high gas prices, war, and education are the largest problems of this world

Mon, 03/19/2012 - 02:51 | 2268759 oldman
oldman's picture

2012

and we are still talking about gas prices?

and still driving SUVs?

nothing new in the good old us of a?

no wonder you're stuck with fox, cnn, and obama                   om

Mon, 03/19/2012 - 06:19 | 2268847 Sathington Willougby
Sathington Willougby's picture

 

If you need oil, which you don't - the economy of bureaucrats doesn't do anything, then why can't you just print it?

Mon, 03/19/2012 - 09:31 | 2269263 Flakmeister
Flakmeister's picture

A quote from a recent R. Heinberg piece:

During the past few months, op-eds and talking heads have announced the death of “the peak oil theory” even as actual world crude production rates remain stagnant and oil prices soar. The fallacy in this thinking arises from a confusion of reserves with production rates. With oil prices so high, staggering quantities of low-grade hydrocarbons become theoretically profitable to produce. It is assumed, therefore, that the scarcity problem has been solved. If we extract enough of these low-grade resources, that will bring oil prices down! But of course, if the oil price goes down then these unconventional sources become uneconomic once again and effectively cease to be countable as reserves.

 

The absurdity of the “new golden age of oil” line of thinking will take a while to reveal itself; how it will do so is fairly easy to define from trends in the “fracking” shale gas industry, where temporary abundance (due to high rates of drilling a few years ago when gas prices were high) has driven gas prices back down to the point where producers are losing money, cutting drilling rates and selling off leases. All that’s left to this sad story is the coming denouement, wherein shale gas producers go bankrupt, production rates fall and the nation finds itself back in the midst of a natural gas supply crisis that pundits claimed had been deferred for a century.

 

The oil problem can be summed up simply: Fossil fuel supply boosters know how to add, but they’ve forgotten how to subtract. Seeing new production coming on line from North Dakota, for example, they extrapolate this growth trend far into the future and forecast oil independence for the nation. But most U.S. oilfields are seeing declining rates of production, and individual wells in North Dakota have especially rapid decline rates (up to 90 percent in the first year). Do the subtraction properly, and it’s plain that net supplies will continue growing only if drilling rates climb exponentially. That, again, spells higher production costs and higher oil prices. If the economy cannot support higher prices, and hence high drilling rates, then net total rates of production will drop. The one future that is impossible to achieve in any realistic scenario—low prices and high production rates—is precisely what is being promised by politicians and oil industry PR hacks.

Mon, 03/19/2012 - 09:42 | 2269291 Rentier
Rentier's picture

Zzzz...call me when the lowest price in the US is just over $5 a gallon then we'll start to see some interesting stuff happen.

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