Just thought some may not have seen this....
Just thought some may not have seen this....
Pretty worrying that the saudi's could be taking us for a ride.
Surely governments aren't stupid enough just to take their word on oil reserves.
Great site. In that spirit it was interesting to read the following article in today's West Australian. The shortsightedness of people absolutely astounds me.
Vehicle sales hit record as fuel price goes down
21st October 2006, 8:00 WST
West Australians have responded to the falling price of petrol by buying a record number of cars and 4WDs.
Despite new figures on the price of imported goods suggesting the Reserve Bank will lift interest rates at its meeting on Melbourne Cup day, it appears West Australians are continuing to spend up.
The State’s motorists bought 5588 passenger vehicles in September, breaking the record set in August. The 4WD and sports utility sector did best, with 1949 snapped up — 123 up on the figure for August, when petrol prices had people fleeing from big vehicles.
Combined with an increase in the “other vehicle” category, West Australians bought 9744 vehicles during the month and it appears certain the State will break the 10,000 vehicle a month level by Christmas.
Nationally, the fall in petrol prices led to a 3 per cent rise in overall car sales, led by a 10 per cent surge in the sports utility sector. It was the biggest rise in 4WDs in almost two years.
“Falling petrol prices had consumers returning to the showrooms,” Westpac senior economist Andrew Hanlan said. “Petrol prices by end of September were down 13 per cent from the record high of end of August.
“Moreover, labour market strength is supporting consumer spending power.”
Buyers may be getting in before the next interest rate rise, with the latest import price index falling slightly during the September quarter.
Prices fell 0.3 per cent, led by a 7 per cent fall in the price of imported food and drink and a 2.8 per cent drop in the price of household electrical items. Analysts had been expecting a bigger fall, particularly in the area of petroleum.
The import price index is important as it gives an insight into next week’s consumer price index, which will largely determine if the Reserve Bank goes ahead with a third interest rate rise for the year.
Yes they are that stupid, because that is precisely what they are doing.Originally Posted by billhill
Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.
It's not simply reserves in the ground that matter, but the ability to get the oil out of the ground. If the reserves aren't in production or production is at a limited rate (which it ALWAYS is with oil) then you can have a supply shortfall no matter what the reserves are.
I note Saudi Arabia's declining production in recent months in the face of very high prices. Somewhat telling I think.
Yeah i guess we didn't learn during the 1970's so why should it be any different to todayOriginally Posted by hardmoney
I wrote this (to some fellow investors) in August:
When the oil price peaked around 1980, it did so because OPEC cut supply. The price came back down again because there was a recession that reduced demand, followed by production increasing again.
Subsequently, Saudi Arabia maintained the price at around $US25/bbl by adjusting production as required.
The recent price increase is not IMHO due to wilful withholding of supply, or to terrorism, but because demand is close to maximum possible supply. There are all sorts of arguments as to why supply will be able to overtake demand again, but unless demand drops I believe it will not be able to do so over any extended period.
Nearly all the evidence is that we are at or close to "Peak Oil" worldwide.
The world's 2nd- and 3rd-largest oilfields have already peaked, and the largest, in Saudi Arabia, appears also to have peaked. No new oilfields of anything like that size have been discovered for ages. The graph for N American oil production is probably a good match to what will happen when world oil peaks:
All the Enhanced Oil Recovery techniques that may be brought to bear will not do more than slow the rate of decline.
As the document http://www.pppl.gov/publications/pic...aking_1205.pdf from which the above graphs are taken points out, "the 1973 and 1979 oil price spikes .. spurred a major increase in US exploration and production investments. The fact that the production up-ticks were moderate was due to the absence of attractive exploration and production opportunities, because of geological realities. Beyond oil price increases, the 1980s and 1990s were a golden age of oil field technology development, including practical 3-D seismic, economic horizontal drilling, and dramatically improved geological understanding. Nevertheless, as Figure II-3 shows, Lower 48 production still trended downward, showing no pronounced response to either price or technology [Fig.II-3 shows production barely able to respond to a large price spike]. In light of this experience, there is good reason to expect that an analogous situation will exist worldwide after world oil production peaks. Higher prices and improved technology are unlikely to yield dramatically higher conventional oil production." [their emphasis, not mine].
I have read a number of documents, some of which give opposing views, and have done some work on the historical statistics (see http://www.bp.com/multipleimagesecti...tentId=7021619 ), and my strong feeling is that any drop in oil price, eg. from a recession, will only be temporary, until the world comes up with either large energy saving measures or large supplies of alternative energy.
Originally Posted by hardmoneyLOVE. That is all I have to say.Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.
The Hubbert curve, whatever you want to call it, read up on it peeps:
Done plenty of work in this area with the ISTP, and the outcomes from this theory have been spot on to date.
Up the Rats!!!!
I think the most hilarious oil story, apart from the current Saudi one, involves Monty and Rommel in the North Africa campaign during WWII.
As they chased each other back and forth across Libya, water was obviously in great demand. However, both Monty and Rommel had accused the other of contaminating the water wells with oil. What neither of them had realised was that these water wells had turned into oil wells. Exactly what Rommel was fighting for.
I find it hilarious as Rommel was ordered to capture the oil fields in the middle east, when considering, oil was literally metres below the surface on the battle fields they were fighting on.
I mean seriously, shell goes off, oil flies everywhere. Nothing serious, nothing amiss? Nup. Tally ho soldier. "Keep that stiff upper lip now!"
These generals must have been reincarnated as blackhawk helicopter pilots.
Up the Rats!!!!
Don't Take Anyone's Advice, Except your OWN.