What does $500 brl OIL mean??

[contrary]

what about oil a $5 ???

The long term price of oil in todays prices has been $10-$30 except for 2 periods (now and the 70's). Maybe it is peak oil or maybe it's actually just the effect of the Iraq problem. Maybe China, Venezuela have a bit to do with it too. Anyway, the next prez of the US may get the yanks out of Iraq and that may do wonders.

I don't know what production will do but I actually think the oil price is peaking. I would be very surprised if it didn't revert to the mean. I reckon this will happen in the next 2 years and it will be below $50 in that time. Maybe it will reach $200, but the price is already resulting in long term demand destruction

This is a good summary.
http://www.wtrg.com/prices.htm

"(after the 1970's oil price peak) Surging prices caused several reactions among consumers: better insulation in new homes, increased insulation in many older homes, more energy efficiency in industrial processes, and automobiles with higher efficiency. These factors along with a global recession caused a reduction in demand which led to falling crude prices. Unfortunately for OPEC only the global recession was temporary. Nobody rushed to remove insulation from their homes or to replace energy efficient plants and equipment -- much of the reaction to the oil price increase of the end of the decade was permanent and would never respond to lower prices with increased consumption of oil."

 

[boomtown]

Increased efficiency in the West is incapable of offsetting increased demand arising from industrialisation in the East.

 

[landlubber]

I personally doubt that we'll see $500 pb oil. Let's consider consumer transport ...a subject close to all of our hip-pockets !! As oil gets more expensive many, many alternatives "open up". Today's Age ( sorry I can't find a link) says Nissan will have a "plug-in" electric car in showrooms by 2010 in the US and 2012 globally. Lithium ion batteries ( like the ones in your cell-phone and your laptop ) are giving full-plug-in electrics the range and performance that most consumers need...and zero pollution while driving. I think once consumers get used to "re-filling" their cars at home at night for about $2 the demand will be huge. And "full" electric cars, when mass producion kicks in, will be much. much cheaper than hybrids as there is simply no petrol/diesel engine...just batteries and an electric motor and controller. (There's a guy on you-tube who actually converted his car to batteries for $800. That's using only lead-acid batteries, not lithium ion. And the car has a very limited range. Most "workable" conversions are in the region of $8K to $12K.)

Another benefit of plug-ins is they will be mainly re-charged at night when the electric grid is way under utilised. That's neat! ( How we actually generate the elec. is another topic.)

Hopefully we'll be lucky enough to witness the "electric revolution". It will be bigger than the previous one from horsepower ( real horses) and steam to oil/petrol/diesel.

Life in the burbs will go on.

LL

 

[Peter 14.7]

Hi All

A good debate. My apologies for not replying to my comment 4 pages back.

May I put an observation that from what I read we generally agree that:

• peak oil has been reached, or at least
• cheap to extract, peak oil has been reached
• new technologies and or economies will complete with oil (solar, nuclear, etc)
• these new technologies will make oil redundant in the long term

But what about in the next five years?

Aside from improved efficiency in engines via Hybrids, DSG, etc..the only option is electric plug ins. They seem to be 2 to 3 years away however will have limited travel and don’t fix greenhouse concerns.

There is lots of exploration now, which if found today, would again be 2 to 3 years away for adding supply, if not 10 years plus.

I read once here 2 years back that if they stopped fighting now in Iraq it would take 5 years to get the infrastructure back on line to access that reserve.

The Saudi say they have 25 years plus supply but appear to be acting like someone “bluffing at the poker table” and should have a vested interest in keeping oil at a high but reasonable level (which it has gone past) so alternative technologies and fuels like bio fuels don’t get a look in. They don’t appear to have the supply they claim.

So it seems demand for oil for the next 2 to 3 years has no capand supply is fixed/declining.

So there is nothing to stop oil hitting $200 US Barrel by X Mas. Let’s say that translates to $2.50 a litre what does it mean???

Are you going to drive less? Get a smaller car or Hybrid? Use trains? Walk? Or simply pay it because (as posted here) we use fuel regardless?

It appears to me for the near future of 2 to 3 years we are all going to wear the inflation lack of supply and growing demand. In the long term alternatives will come through but till 2010 we have an entrenched inflation driver.

Regards, Peter 14.7

 

[landlubber]

Oil and the future of the USA ...

Interesting Article on oil and the USA ...see the link

http://business.theage.com.au/the-us-century-oblivion-becomes-the-oblivious-20080522-2hbb.html

some hi-lights for the speed readers...
- Bush will probably see oil go from US$20 (as at Sept 11 ,2001) to $200 ....
- the US Defence "machine" ALONE uses as much oil EVERY day as Sweden ...
- within 2 years forecasts are the US oil bill will be 1 trillion per year ..all going to foreigners who are inturn "buying up America" with those dollars....because the USD is so "weak" that's the only place they can efficiently spend them !

LL

 

[landlubber]

There is another alternative..

..the only option is electric plug ins.

There is another alternative that we could ALL DO NOW !! ...and it's CNG ( Compressed Natural Gas). The gas of which we have "squillions" on the North West Shelf and sell for a "few cents per litre" ...the VERY same stuff that is probably now running your HWS and your central heating. Yep ..ALREADY piped right to your home folks (if you're on the gas mains of course).

You simply convert your car to CNG (not unlike converting it to LPG). Then you can go to a CNG re-fuelling station, trouble is, there's not many of 'em currently. But the sensible thing would be to install a home compressor ( readily available overseas) , cost a few thousand , and re-fuel at home.

And the next good thing is CNG is best in large capacity engines ...yep again ...like the one's that Holden and Ford make right here in Oz.

None of this is pioneer stuff . It's all established technology ..even in places like New Zealand. Just google on " CNG cars " and read , read , read.

Ford is about to release a CNG vehicle. Great stuff. We could drastically reduce our oil imports, reduce transport costs for a huge % of the population. CNG is also less polluting than petrol or diesel. This is the sort of initiative that Rudd and his mates should be promoting big-time ...instead of their "10 minute summit bull----".

LL

 

[WinstonWolfe]

There is another alternative that we could ALL DO NOW !! ...and it's CNG ( Compressed Natural Gas).
LL

Good points LL....Agree that CNG is highly underrated by Australian stakeholders. Though thickheads like Rudd and Swan (may as well throw most poli's in) are preoccupied pandering to the welfare class and deluded Gen xYZs to do anything practical.

We should have a policy in Australia of weaning off ULP PLP, and replacement with diesel engines or those optimized for NG.

 

[Sunfish]

There is another alternative that we could ALL DO NOW !! ...and it's CNG ( Compressed Natural Gas). The gas of which we have "squillions" on the North West Shelf and sell for a "few cents per litre"

Trouble is LL that the NW shelf is a long way from Syd and freight costs (I read once) are a factor of X10, CNG vs oil. Those big cylindrical tanks are expensive and are made of high nickel steel.

Also, we have written long term contracts with China at these "give away" prices so, should we convert a significant amount of our transport to it, it we would be paying much more'n the Chinese. In fact I believe that the price would rise to parity. (Isn't the road tax holiday ending?)

Disclaimer: This is not an argumentative post, merely an attempt to add to the pool of knowledge

 

[landlubber]

...We should have a policy in Australia of weaning off ULP PLP, and replacement with diesel engines ..

Winston ..you are SO right !! I see the CNG opportunity as a "window" that is slowly closing. It goes like this. Right now Ford ( for example) makes a 4 litre ( in line 6) engine here...but it's already "marked" for replacement with an imported V-6. To operate on CNG it's optimal to have a high compression engine ...MUCH easier to do if it's built here ! More difficult when you have to change some high volume overseas production line to make them.

Also..as fuel gets more & more expensive the market can only buy what's available in order to cut their transport costs. So...The market is moving to small capacity ( sub 2 litre ) petrol engine and diesels ... virtually ALL imported.

So ...as we lose our locally built "large sixes" we lose ( somewhat, but not entirely) the "absolutely ideal" situation and power plants for CNG.

The truth is many Aussie's have long distances to travel and we don't have super-highways. Our big Aussie's cars are "just right". We could have the right cars with the right fuel at the right price if we were just "half smart" about it.

I'm crying here !!
LL

 

[landlubber]

Trouble is LL that the NW shelf is a long way from Syd ...

The CNG doesn't have to come from the NW shelf. If you're in Sydney or Melbourne etc AND you use gas for your HWS or stove or heating ...then you're already ON the gas main.

It's the SAME "hydrocarbon stuff" . Wherever Sydney is sourcing it's gas from now is just fine !! You probably ALREADY have a pipe right to your house !! Is that a WOW or what !! Further, you'd refuel at night when all that expensive, already installed, gas distribution pipework is mostly doing ...wait for it ...nothing.....

(I merely use the NW shelf because most people recognise it's a huge store of NG. But it's NOT the only one. Then there's coal seam gas etc etc)

PRICING ...listen up folks. We have our current pricing because we have to have "import parity" ...in other words we have to live in the real world and pay real world prices. This ASSUMES we are importers. BUT WE OWN THE NG. We can price it as we see fit. It's like petrol in Saudi ( I believe ) is sold to the locals very cheap ...they own it ..they price it locally as they see fit.

Pricing is UP To US ...and our pollies ( uh oh there's the problem )
LL

 

[Sunfish]

BUT WE OWN THE NG. We can price it as we see fit.

Are you sure? I thought Woodside owned it and as owners they have the right to sell to the highest bidder.

You can't have communist laws for hydrocarbon trading and lovely free enterprise for property. That just wouldn't be fair would it? Besides, I own some WPL shares.

 

[landlubber]

Sorry to repeat myself but you're getting side tracked....... the gas doesn't have to come from the NW shelf.

The main point is we don't have to import it. We don't have to "play" the import parity game. Whoever ALREADY owns the gas you ALREADY get in Sydney is just fine. They ALREADY (quite happily..I guess) deliver it right to your house for ( I believe, but I have not checked personally) about 40 cents per litre.

LL

 

[Sunfish]

Sorry to repeat myself but you're getting side tracked.......

But it was you who mentioned NW shelf and CNG. It is that, not Sydney domestic gas, which is being sold o/s., a point YOU made.

What you get in Sydney is likely to be CBM. Can you run a car on that? I don't know. It would need to be liquified but at what pressure does it do that? It is expensive to extract because new wells have to be constantly drilled using expensive horizontal techniques and then the coal must be "fractured". There certainly is an awful lot of it in Sydney and Newcastle but the company extracting it (Sydney Gas) has been a disaster on the stock market so there must be problems. It is a great concept though because that methane is lost during coal mining.

Besides, I suspect that the word "plenty" is relevant to domestic demand, not automotive use and your 40c/l is exclusive of taxes.

Not wishing to be argumentative, just stating how I see things.

 

[Bill.L]

Hi all,

LL, With your CNG, I would have to ask the question of the big gas suppliers, why aren't they doing this??

It would mean increased volume of sales, both of the gas and the equipment to install into households.

My belief is that they along with many others still believe that the current price of oil is overinflated, and will drop back to below the point where this CNG technology would be competitive. I wonder how high the oil price has to go and for how long before these things start to appear as commonplace.

bye

 

[HiredGoon]

I rent a house, ride a bike and invested a lot of my savings into energy shares - so I am betting on what I am about to say.

When people look at the housing bubble popping, they think the problem is with the restricted credit. But the problem was the loose credit that caused the problem, and built an unsustainable structure that would collapse upon returning to "normal" times.

It's exactly the same with energy. The problem is that we had a few generations of extremely cheap energy, and the problem isn't that it's running out - but that we built a society that would collapse upon returning to normal times...

-Huge amount of very cheap energy meant people thought it was normal to live more than a days walk from where they worked. That you could drive 1 tonne of metal 2km to the shops to buy a newspaper.

-That food, energy and credit costs would go down (like they had for a generation) and thus you could dedicate more and more of your income to housing. That future wealth will always be higher, so you can borrow years and years of future income (at current economic good time levels) betting that this will occur.

-It makes sense that by far the majority of our counties wealth should be tied up in low-density suburbs that require immense amounts of energy to run.

Draw a ring around Australia's capital cities. Outside is agricultural land, mineral and water resources. Inside is mostly suburbs.

It is absurd that so much of our wealth is invested in the rings and so little outside of it (though this is changing with the resources boom) I expect suburbs to drastically reduce in value and in relative terms, real things like fertile ag land and energy resources etc to drastically increase.

100 years ago 95% of people were involved with agriculture and suburbs didn't exist. Now almost all of our wealth is in suburbs...

This is where I've allocated my wealth. 0% suburbs, 60% energy, 40% mining, agriculture and other non-discretionary or consumer consumption based infrastructure/industry (plus a bit of precious metals and cash in online savers)

Take a house on a block 1 hours drive from the CBD. It might be worth 6-8+ wage years and 50+ acres of ag land. I believe that will be an all time high (certainly during my lifetime)

 

[House_Keeper]

One inevitable consequence of higher oil prices will be more expensive airplane travel. You can switch cars to electric but not planes.

If oil prices keep going up, then international holidays are likely to become a luxury fewer people can afford.

Only new technology can stop that, but that would be many years away.

Better go now while it's still cheap!

Cheers,

 

[natmarie73]

Hi all,

LL, With your CNG, I would have to ask the question of the big gas suppliers, why aren't they doing this??

It would mean increased volume of sales, both of the gas and the equipment to install into households.

My belief is that they along with many others still believe that the current price of oil is overinflated, and will drop back to below the point where this CNG technology would be competitive. I wonder how high the oil price has to go and for how long before these things start to appear as commonplace.

bye

I was chatting to someone who works at Woodside recently and mentioned CNG as I had heard about it recently on the 7.30 report. He didn't know what it was.

Origin Energy have a bit more to do with CNG and there seems to be some good news re government funding for refuelling stations http://www.originenergy.com.au/news/news_detail.php?pageid=82&newsid=55. I would think that the big oil companies would jump on board or lose market share when CNG use becomes more widespread.

Transcript of report - I found it interesting that the technology is already here, but not widely promoted or supported via infrastructure. As usual, Australia is 20 years behind the rest of the planet.

http://www.abc.net.au/7.30/content/2006/s1726428.htm

 

[WinstonWolfe]

The other reason why NG vehicles may not be taken seriously are the ongoing developments in battery storage.

Battery technology is improving and a battery with an energy density of 0.150 kwh/kg is due out next year (around 4 times lead acid storage).

This will allow a ~1200kg vehicle and payload to travel around 130km on a charge.

Nevertheless, that's still a requirement of 160kg of battery storage (based on a 160km requiring 30kwh).

As Ausrtalia also has coal in buckets, and underutilized power stations at night, it makes a lot of sense for us to go electric. And as the world's car manufacturers are gearing up for electric, maybe NG vehicle production would be quickly leap frogged.

 

[Sunfish]

As Australia also has coal in buckets, and underutilized power stations at night, it makes a lot of sense for us to go electric.

If that's the way we go WW then look to buy the miners of niche metals and rare-earths. I can't present figures but if a tiny percentage of vehicles changed to lithium based batteries the demand for it would skyrocket. Even relatively common metals such as Au and Ag could be in demand.

There is no excess capacity in any of the rare-earth or metal markets now. Pick your resource and invest in it. If you get lucky you're a millionaire.

 

[landlubber]

... Can you run a car on that? I don't know. It would need to be liquified but at what pressure does it do that?

The good 'ol internal combustion engine will run on almost anything that can be ignited either by a spark or the heat of compression... that includes ( as far as I am aware all of the gaseous hydro-carbons methane, propane etc etc). But some work better than others. No ....it doesn't get liquified ( that's LNG (Liquified Natural Gas) ....it just gets compressed (CNG ) just like an air compressor does to air..only higher pressures, but still quite workable.

... Besides, I suspect that the word "plenty" is relevant to domestic demand, not automotive use and your 40c/l is exclusive of taxes..

Nope .. do some googling... the world is awash with NG (and coal) ..enough for hundreds of years. Yes .. the 40c is before Cliche Kev get's his cut, but RIGHt NOW he doesn't get a cut !!

...Not wishing to be argumentative...

Obviously .

LL