Discussion in 'Peak Oil' started by ghrit, Jan 6, 2011.
Current thinking as of Jan 3.
The Oil Drum | Will 2011 be a rerun of 2008? (Longer version)
Just this afternoon I had this conversation with a good friend who spent 15 years in the oil business raising money for exploration, and we came to the same conclusion. (And, neither of us frequent TOD anymore - not since the IEA peak report anyway, when TOD basically said "our work here is done")
We both believe the economy is too fragile to support $150 oil, and that $125 give or take is a more likely price peak for this next cycle.
I hadn't spoken with him since before Thanksgiving, and was interested to find out that he's looking for an old Dodge diesel truck. He had just been to look at one at a used car dealership and the salesman said "I don't know why everyone wants these old 12 valve trucks with a stick shift. Every time we get one in we get all sorts of calls!" It was ridiculously overpriced, and they laughed off his offer.
2011 will be an interesting year. Let's hope it's not America's last...
I came to the conclusion about five or six years ago that peak oil would be an undulating move from recession to recovery and back and forth until the plateau leveled off and began permanent decline. $147 a barrell killed the economy last time. I think $110 to $120 will do it this time.
It will happen. I am currently active in the Petrochem industry and this year has already started like '08. In fact two of the major players are heavily invested in massive expansion projects here in Texas, and I've heard speculation on the re-opening of several "deactivated" platforms if the moratorium can be lifted.
Oh, and I'm looking at an old, well used, and loved diesel truck myself.
I understand the diesel, as I had a 24 valve Dodge, but why the heavy interest in a 12 valve? Mechanical fuel pump over the electronic VP-44 in the 24 valves? That pump was a pita but that 2001 still got 19.5 mpg loaded or empty.
Unemployment rising, cold weather lingering firmly, looks like a long, cold, disparaging winter.
Oil. The blood of Tyrants.
Enjoy Today's Prices, They Will Not Last
As our fragile economy staggers toward re-establishing itself, oil prices will surge and act much as a governor on an engine--our economic recovery will continue to be restrained by higher energy (oil/gas) prices.
Many students of economics conclude that soaring energy prices were a major factor that helped push our economy to the brink just before things fell off the cliff in 2008.
If energy prices shoot up too fast, that factor alone could strangle our long awaited economic recovery.
A first gen (80-93) 12 valve Dodge is ALL mechanical - engine and even the auto tranny. The second gen trucks have mechanical engines but the auto tranny is electronic.
A friend has a 92 (1st gen) 1-ton 4x4 with a flatbed that's pretty well loaded - he gets 18 in town, 22 on the road with the 5-spd manual in overdrive. Another advantage of the 12 valve mechanical cummins is no glow plugs, no grid heaters, nothing. That's what's in my school bus (the bug out bus, complete with woodstove!) and those suckers all start instantly, even below zero. Furthermore, there's no electric fuel pump at all - just the mechaniocal lift pump on the side of the block - a $100 part at NAPA!
That early motor is cheap and easy to turn up, too, in ways that actually increase everyday fuel economy if you can keep your foot off the fun pedal. Rather than just turning the fuel screw or putting in marine injectors (inelegant in my book) the best way is carefully modified injectors and a fuel plate for the pump. That, along with slightly advanced timing, will get you another 150 HP and perhaps three hundred additional pounds of torque on demand, with no smoke, as well as 10% better than stock economy in everyday driving.
That 2 valve per cylinder B series Cummins may be the best all-around diesel engine design ever. Everyone's familiar with the 5.9 liter 6Bt that came in Dodge trucks. The 4 cylinder version (the 3.9 liter 4Bt) came in a lot of delivery trucks. People are transplanting that into pickups and getting 25-28 mpg with small block performance. The smaller B3.3t 4 cylinder delivers 35-40 MPG in mid size vehicles like Explorers and S-10 pickups. Using exactly the same design, the scaled up "C" series 8.3 liter delivers 12-13 MPG in big motorhomes and over 400 HP in marine trim. I just wish the dang things had sleeves so you could do an inframe rebuild.
And, I just talked to ANOTHER friend who's looking for one. Apparently, if you want to meet some local survivalists, you just place an ad pretending to have one for sale on Craigslist!
FSN Update on Energy with Bill Powers | FINANCIAL SENSE
Good commentary on current energy situation. I listen to it weekly for practical and investment advice.
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Oil's surge in 2010 paves the way for $4 gasoline - Yahoo! Finance
Oil's surge in 2010 paves the way for $4 gasoline
Price of oil rises 30 percent in 2010; gasoline prices could hit $4 a gallon in 2011
NEW YORK (AP) -- The price of oil is poised for another run at $100 a barrel after a global economic rebound sent it surging 34 percent since May. That could push gasoline prices to $4 a gallon by summer in some parts of the country, experts say.
Flying, shipping a package and ordering a pizza all likely would get more expensive in the new year if that happens and companies pass along higher energy costs. Some economists say rising energy prices will slow economic growth.
The U.S. is the world's largest oil consumer, but prices since spring have been on a roll primarily because of rising demand in developing countries, especially China. China's oil consumption is expected to rise 5 percent next year; that compares with less than 1 percent growth forecast for the U.S.
Benchmark oil for February delivery rose $1.54 on Friday to end the year at $91.38 per barrel on the New York Mercantile Exchange. It reached $92.06 earlier in the day, the highest since Oct. 6, 2008. Nationwide gasoline pump prices now average $3.072 per gallon.
Gasoline expert Fred Rozell predicts that 15 states -- including Alaska, Hawaii, Connecticut and Rhode Island -- will see gasoline prices top $4 a gallon by Memorial Day. "A dollar more per gallon isn't that much -- probably about $750 more per year for each motorist, but there's a psychological aspect to gas prices," he said. "People are going to be up in arms about this."
What is it that Rozell misses? We'll damn well notice the increase in (for one thing) bread price.
And everyone in America has $750 to spare this year...
Families can just go without Christmas.
Hell, let 'em eat cake!
(+1, ghrit. The guy's an effin jerk.)
+2, he's a wall street stock guru, come live in the real world. Got this from Yahoo finance news.
More comparisons to 2008. Peak everything.
World Food Prices Jump to Record on Sugar, Oilseeds
World food prices rose to a record in December on higher sugar, grain and oilseed costs, the United Nations said, exceeding levels reached in 2008 that sparked deadly riots from Haiti to Egypt.
An index of 55 food commodities tracked by the Food and Agriculture Organization gained for a sixth month to 214.7 points, above the previous all-time high of 213.5 in June 2008, the Rome-based UN agency said in a monthly report. The gauges for sugar and meat prices advanced to records.
Sugar climbed for a third year in a row in 2010, and corn jumped the most in four years in Chicago. Food prices may rise more unless the world grain crop increases “significantly” in 2011, the FAO said Nov. 17. At least 13 people died last year in Mozambique in protests against plans to lift bread prices.
“There is still, unfortunately, the potential for grain prices to strengthen on the back of a lot of uncertainty,” Abdolreza Abbassian, senior economist at the FAO, said by phone from Rome today. “If anything goes wrong with the South American crop, there is plenty of room for them to increase.”
White, or refined, sugar traded at $752.70 a metric ton at 11:53 a.m. on NYSE Liffe in London, compared with $383.70 at the end of June 2008. Corn, which added 52 percent last year on the Chicago Board of Trade, was at $6.01 a bushel, down from $7.57 in June 2008. Soybeans were at $13.6325 a bushel, against $15.74 at the close of June 2008.
Demand From China
The cost of food climbed 25 percent from a year earlier in December, based on the FAO figures, after Chinese demand strengthened and Russia’s worst drought in a half-century devastated grain crops. The agency’s food-price indicator rose from 206 points in November.
Last month’s year-on-year rise compares with the 43 percent jump in food costs in June 2008. Record fuel prices, weather- related crop problems, increasing demand from the growing Indian and Chinese middle classes, and the push to grow corn for ethanol fuel all contributed to the crisis that year.
“In 2008 we had rapid increases in petroleum prices, fertilizer prices and other inputs,” Abbassian said. “So far, those increases have been rather constrained. It doesn’t really reduce the fear about what could be in store in the coming weeks or months.”
New York-traded crude was last at $88.44 a barrel, compared with $140 at the end of June 2008. Bulk urea pellets, used in fertilizer as a source of nitrogen, were at $320 a ton in the last week of December, against $460 in June 2008.
9.1 Billion People
Global food production will have to rise 70 percent by 2050 as the world population expands to 9.1 billion people from about 6.8 billion people in 2010, the FAO has said.
In response to the 2008 crisis, countries from India and Egypt to Vietnam and Indonesia banned exports of rice, a staple for half the world. Skyrocketing food prices sparked protests and riots in almost three dozen poor nations including Haiti, Somalia, Burkina Faso and Cameroon.
Sugar and oilseeds have a disproportionate effect on the FAO’s food index because it’s based on trade values for commodities, Abbassian said. The price of staples including rice is lower than in 2008, he said. Rough rice last traded at $13.90 per 100 pounds in Chicago, compared with $20.21 at the end of June 2008.
“If you want to see the index as a barometer of food crisis, I’m not so sure this is the right thing to do,” Abbassian said. “In the previous episode, really the main driver in food commodities was cereals. This time around, look at sugar and oilseeds.”
Compared with 2007-2008, many poor countries had “good or above-average” cereal harvests last year, the economist said. Production problems took place in grain-exporting countries, and “supply at hand should be adequate,” he said.
The FAO’s gauge for sugar prices reached 398.4 points last month, increasing from 373.4 in November. The meat-price index rose to 142.2 points from 141.5.
The agency’s cereal-price index jumped to 237.6 points in December, the highest level since August 2008, from 223.3 the previous month. The indicator for cooking oils advanced to 263 points, the highest since July 2008, from 243.3. The index for dairy prices rose to 208.4 points from 207.8.
Global grain output will have to rise at least 2 percent this year to meet demand in 2011-2012 and avoid further depletion of stocks, the UN agency has said.
The basis for the FAO index is 2002-04. The gauge includes commodity quotations that the agency considers representative for international food prices.
“The real uncertainty and problem is the 2011-2012 market,” Abbassian said. “We are at a very high level. If it’s further up than this, then you really begin to be concerned.”
Commodity Inflation/Dollar Devaluing
We appear to be in a worldwide market moment where many key commodities are surging. Simultaneously, the dollar is being de-valued by our continued mismanagement of our economy.
Actually, our economy may not be "mismanaged" but rather it all could be a purposeful nose dive into the ground by this extreme fringe left Progressive administration.
I mention the above because, at this time, soaring prices are not a sole factor. We also have a rapid;y depreciating dollar. So, even if prices were completely stable, we would still see substantial price increases caused by monetary weakness.
This could get profoundly ugly very fast!
Boy...if we ever needed a reason to yuck it up over what passes for knowledge on the topic of oil, gas and resources in the blogosphere, combined with zero macro economic analysis capability, this certainly helps. As we all know TOD imploded in 2013, coincidentally right about when some of their editors and contributors became the punchline to jokes during plenary sessions at national conventions. I would put that timeline at August of 2013, and this is boots on the ground information among the industry scientists, white collar professionals, experts in the fields of petroleum engineering, petroleum geology and seismic exploration folks...pretty much anyone who makes the industry work..no REFM here for sure.
That was Jan 3, 2011, if you read it for detail. Sheesh, your one trick pony foundered on that one.
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