$119

[StrongTurd]

I see over at Bloomberg that we've just crossed $119 per barrel and climbing fast towards 120.

I read an interesting article last night about the Saudis having decided to ration their future production in order to leave something for their offspring. That's a smart move. It will effectively mean that Saudi Arabia will remain on the Peak Oil plateau for much longer than most other producers that are pumping oil like there's no tomorrow. Worryingly however, this strategy makes us even more dependant on other producers that have already peaked. Effectively the SA decision will make the downward slope on the other side of the Hubbert curve even steeper than it would have been without their moderating effect. Bad news for everyone else.

I wonder when we'll start seeing substantial amounts of demand destruction due to $119 per barrel. China consumed another record amount of oil during March so the price has not hurt them yet. It is bound to happen sooner rather than later, though. Still, I reckon that we'll soon look back at $119 as the good ol' days.

 

[supersunbird]

I read the Americans used 1% less oil last month

 

[semiautomatix]

Algae biofuels FTW. Time to sell the 2.0T and buy a Yaris, me thinks.

 

[Syndyre]

I see over at Bloomberg that we've just crossed $119 per barrel and climbing fast towards 120.

I read an interesting article last night about the Saudis having decided to ration their future production in order to leave something for their offspring. That's a smart move. It will effectively mean that Saudi Arabia will remain on the Peak Oil plateau for much longer than most other producers that are pumping oil like there's no tomorrow. Worryingly however, this strategy makes us even more dependant on other producers that have already peaked. Effectively the SA decision will make the downward slope on the other side of the Hubbert curve even steeper than it would have been without their moderating effect. Bad news for everyone else.

I wonder when we'll start seeing substantial amounts of demand destruction due to $119 per barrel. China consumed another record amount of oil during March so the price has not hurt them yet. It is bound to happen sooner rather than later, though. Still, I reckon that we'll soon look back at $119 as the good ol' days.

True but all of this assumes that no new sources of oil will be found. Prices like that are a massive incentive to oil companies to bring previously uneconomic oil fields into production and explore for new ones. There seem to be indications they may have found massive reserves in Brazil.

 

[Farquaon]

It is bad that the price of oil is so high, but it is a blessing, as R&D into biofuels have picked up and the sense to have a fuel (oil)-less car is growing in demand.

 

[StrongTurd]

Yikes! Oil at $117 a barrel. It has to go down from here, right?

Wrong. In the short term -- say, the next two years or so -- we're looking at bad news about global oil supply that could take the price of a barrel of crude to $180.

Needless to say, today's $3.50-a-gallon gasoline would look cheap if oil prices hit $180 a barrel. At that price for a barrel of oil, gasoline would cost somewhere north of $5.50 a gallon.

The good news is that's about the price, experts now say, that would send global consumption tumbling and oil prices into retreat, as drivers scrambled to find ways to conserve.

Source

 

[StrongTurd]

I read the Americans used 1% less oil last month

Yeah, I think I saw that figure too. However, the Chinese more than compensated for that by using oil at record volumes.

 

[Tassidar]

It is bad that the price of oil is so high, but it is a blessing, as R&D into biofuels have picked up and the sense to have a fuel (oil)-less car is growing in demand.

I doubt that biofuels will ever be able to satisfy demand. Apart from that, there is a lot of debate whether biofuels are more environmentally friendly (I'm sure I can provide links, but tis late at night, and I have a couple of beers in me).

Incidentally, what is a fuelless car? All cars need some source of fuel, and fuels have to come from somewhere.

Lastly, on a cost-energy point of view, the Prius is more expensive in terms of energy than the Hummer (over it's entire life cycle). There was a study done, but am too pissed to find it at the moment.

 

[StrongTurd]

Algae biofuels FTW. Time to sell the 2.0T and buy a Yaris, me thinks.

As far as biofuels go, I have to agree with you that algae is by far the best of the lot. Using corn or sugar (food) is just plain stupid. However, there are a few serious problems. Firstly, there are currently no commercial algae bioreactors anywhere in the world that I'm aware of. The technology is far from mature, even if it does hold a lot of promise. Secondly, I saw a figure that, if you were to replace the USA's diesel consumption with algae biofuel, you'd need around 70000 square kilometers. That's the size of Ireland. And that is JUST to offset diesel consumption, which is far lower than petrol consumption.

In order to ramp up algae biofuel production to levels that have a meaningful impact to offset crude oil production will take at least a decade and vast amounts of money, IMHO. Can the world's economy wait for another decade? I don't think so. Still, the sooner they get cracking on algae biofuels the better.

 

[StrongTurd]

True but all of this assumes that no new sources of oil will be found. Prices like that are a massive incentive to oil companies to bring previously uneconomic oil fields into production and explore for new ones. There seem to be indications they may have found massive reserves in Brazil.

The very fact that oil companies are now willing to go after very expensive oil like tar sands and extremely deep water drilling should be indication enough that we've run out of cheap, easy to reach oil. The low hanging fruit have all been plucked, so to say. Sure, there are vast reserves of oil out there but by far the largest majority of it is either low grade and/or very expensive to extract.

It would appear that the Brazilians jumped the gun about the size of their recent find, I dunno, maybe they're just trying to boost their share prices. Still, it takes many years to develop new oil fields and I would be very surprised if we saw a single drop of oil from this field within the next 10 years.:

Brazil's Carioca prospect may have 98 percent less crude than a figure cited by the country's oil agency, Credit Suisse Group said, challenging claims that the field is the biggest-ever discovery outside the Middle East.

Haroldo Lima, director of Brazil's National Oil Agency, sent shares of Petroleo Brasileiro SA and other Carioca stakeholders higher when he said April 14 that the offshore field may hold 33 billion barrels of oil. That figure is ``way off the mark,'' Mark Flannery, a Credit Suisse analyst in New York, said today on a conference call with clients.

An estimate of about 600 million barrels ``sounds reasonable,'' Flannery said, adding that the firm isn't yet giving an official assessment of its own. The estimate cited by Lima was probably intended for the entire subsea geological formation known as Sugar Loaf, which encompasses multiple fields, Credit Suisse said.

``A lot of exploration and delineation is going to need to take place,'' Emerson Leite, a Credit Suisse analyst who's been following Petroleo Brasileiro for a decade, said on the conference call. ``We are very early in the process here.''

Source

 

[Syndyre]

The very fact that oil companies are now willing to go after very expensive oil like tar sands and extremely deep water drilling should be indication enough that we've run out of cheap, easy to reach oil. The low hanging fruit have all been plucked, so to say. Sure, there are vast reserves of oil out there but by far the largest majority of it is either low grade and/or very expensive to extract.

It would appear that the Brazilians jumped the gun about the size of their recent find, I dunno, maybe they're just trying to boost their share prices. Still, it takes many years to develop new oil fields and I would be very surprised if we saw a single drop of oil from this field within the next 10 years.:



Source

Expensive is relative though, IIRC tar sands oil is profitable above $40/barrel, which we'll likely be at for the foreseeable future. There's no denying the era of cheap oil is over though but at least the high prices make alternatives more viable, I think it was the Saudi oil minister who said "The stone age didn't end because we ran out of stone".

 

[StrongTurd]

It is bad that the price of oil is so high, but it is a blessing, as R&D into biofuels have picked up and the sense to have a fuel (oil)-less car is growing in demand.

Unfortunately the stark reality is that market forces can only react IF the technology exists that it can exploit. Alas, it does not. Oil is just such an incredibly energy-dense, cheap and convenient source of energy that we simply do not have a suitable replacement. I wish I could share your optimism but IMHO we're going to need another Manhattan project in order to get out of this mess. I'm talking here about pumping at least a couple of trillion dollars into fission, fusion, hydrogen fuel cells and battery research before we can even begin to discuss alternatives to an oil-driven economy.

Oil has gone from something like $10 in 1999 to ~$120 a mere 8 years later. Yet, show me where I can buy a practical, economical plug-in hybrid vehice, not to mention a full electric vehicle with decent range and environmentally friendly and long-lasting batteries. Or direct me to a place where I can buy a hydrogen fuel cell car. Or how about an air car? That's right, you can't buy any of those. If ever there was an incentive for economic forces to come up with a viable alternative to fossil fuel powered vehicles, then that time is now. Unfortunately the technology just does not exist.

Biofuels are far from ready to save us too. It is NOT a good idea to use food to power your SUV with. Did you notice what happened to food prices recently?

 

[Phenom]

biofuels have scene huge improvements on price and emissions, and yes, they certainly are environmentally friendly.
Hybird sales also doubling, sometimes tripling year-on-year, so yes, we are certainly getting somewhere.

The next prius (2009/2010) should be offering over more than double the efficiency, thats over 100 mpg, and also better battery power storage, whats more it's said to be more affordable.

Algae biofuels are also catching on very quickly, and many say that they could make that half the price of oil, within a few years, even much cheaper than that in the longer run.
Battery tech is also about to take a huge leap with nanocells, hydrogen and others have also scene good improvements in the last few years, and much more investment will be spent in their next R&D, corn and other biofuels are also seeing improvement, in efficiency like with the development of the cleaner and cheaper, cellulosic ethanol and GM are enabling us to grow larger crops, and new species of bacteria, are also developed to turn these into fuel more efficiently. http://money.cnn.com/galleries/2008/fortune/0804/gallery.great_green_ideas.fortune/8.html

by 2012, more than half of GM's cars will be hybird(hydrogen&biofules/battery or alternative fuels only) or battery only.

i think that in the next 5 to 10 years, most of the cars manufactured will be hybird or battery only

 

[BCO]

I doubt that biofuels will ever be able to satisfy demand. Apart from that, there is a lot of debate whether biofuels are more environmentally friendly (I'm sure I can provide links, but tis late at night, and I have a couple of beers in me).

Incidentally, what is a fuelless car? All cars need some source of fuel, and fuels have to come from somewhere.

Lastly, on a cost-energy point of view, the Prius is more expensive in terms of energy than the Hummer (over it's entire life cycle). There was a study done, but am too pissed to find it at the moment.

Nope. This little bit of misinformation keeps rearing its head on the web. The energy required to manufacture a vehicle (even a hybrid) is far far less than the energy used in running a vehicle over its lifespan. You can read an article I wrote about this exact topic here.

 

[Syndyre]

Unfortunately the stark reality is that market forces can only react IF the technology exists that it can exploit. Alas, it does not. Oil is just such an incredibly energy-dense, cheap and convenient source of energy that we simply do not have a suitable replacement. I wish I could share your optimism but IMHO we're going to need another Manhattan project in order to get out of this mess. I'm talking here about pumping at least a couple of trillion dollars into fission, fusion, hydrogen fuel cells and battery research before we can even begin to discuss alternatives to an oil-driven economy.

Oil has gone from something like $10 in 1999 to ~$120 a mere 8 years later. Yet, show me where I can buy a practical, economical plug-in hybrid vehice, not to mention a full electric vehicle with decent range and environmentally friendly and long-lasting batteries. Or direct me to a place where I can buy a hydrogen fuel cell car. Or how about an air car? That's right, you can't buy any of those. If ever there was an incentive for economic forces to come up with a viable alternative to fossil fuel powered vehicles, then that time is now. Unfortunately the technology just does not exist.

Biofuels are far from ready to save us too. It is NOT a good idea to use food to power your SUV with. Did you notice what happened to food prices recently?

The high prices will likely act as an inducement for further research, though obviously there's a time lag involved. If battery technology was improved then that would probably be the best option, although the big oil companies will probably push for something like hydrogen as it'd fit in well with their existing business mode, distribution network etc.

 

[StrongTurd]

Expensive is relative though, IIRC tar sands oil is profitable above $40/barrel, which we'll likely be at for the foreseeable future. There's no denying the era of cheap oil is over though but at least the high prices make alternatives more viable, I think it was the Saudi oil minister who said "The stone age didn't end because we ran out of stone".

Unfortunately, even the most optimistic of forecasts puts production from Canadian tar sands at less than 4 million bpd in 2020.

http://www.theoildrum.com/uploads/28/COU200610_Fig4.png

4 Million barrels is only 4.5 percent of our current daily world oil requirement. It will be a drop in the bucket compared to the ~120 million barrels that we'll require by 2020. The tar sands are definitely not going to save us not to mention the enormous envioronmental damage that tar sand production is already inflicting on the Alberta province.

 

[Phenom]

well we've still got an extra to supply the world for an extra 10 years on this alone:

Las Vegas-based Arctic Oil & Gas has announced that new geological data on the Arctic Ocean suggests the presence of 400 billion barrels of oil.

http://www.treehugger.com/files/2008/04/arctic-400-billion-barrels-oil.php

 

[Syndyre]

Unfortunately, even the most optimistic of forecasts puts production from Canadian tar sands at less than 4 million bpd in 2020.

http://www.theoildrum.com/uploads/28/COU200610_Fig4.png

4 Million barrels is only 4.5 percent of our current daily world oil requirement. It will be a drop in the bucket compared to the ~120 million barrels that we'll require by 2020. The tar sands are definitely not going to save us not to mention the enormous envioronmental damage that tar sand production is already inflicting on the Alberta province.

On their own no but its (hopefully) just one example of what's available. What's interesting, or maybe the word should be scary, is how inelastic the demand seems to be, the price has risen exponentially and still demand keeps rising. It just shows how at the moment there aren't very many viable alternatives.

 

[StrongTurd]

biofuels have scene huge improvements on price and emissions, and yes, they certainly are environmentally friendly.
Hybird sales also doubling, sometimes tripling year-on-year, so yes, we are certainly getting somewhere.

The next prius (2009/2010) should be offering over more than double the efficiency, thats over 100 mpg, and also better battery power storage, whats more it's said to be more affordable.

Algae biofuels are also catching on very quickly, and many say that they could make that half the price of oil, within a few years, even much cheaper than that in the longer run.
Battery tech is also about to take a huge leap with nanocells, hydrogen and others have also scene good improvements in the last few years, and much more investment will be spent in their next R&D, corn and other biofuels are also seeing improvement, in efficiency like with the development of the cleaner and cheaper, cellulosic ethanol and GM are enabling us to grow larger crops, and new species of bacteria, are also developed to turn these into fuel more efficiently. http://money.cnn.com/galleries/2008/fortune/0804/gallery.great_green_ideas.fortune/8.html

by 2012, more than half of GM's cars will be hybird(hydrogen&biofules/battery or alternative fuels only) or battery only.

i think that in the next 5 to 10 years, most of the cars manufactured will be hybird or battery only

I can literally quote HUNDREDS of sources indicating that biofuels is a dead end. I'm unfortunately not in the mood so the following few will have to suffice for now:

Biofuels starving our people says UN
EU hints at biofuel climbdown
EU set to scrap biofuels target amid fears of food crisis
Brazil Lula Defends Biofuels From Growing Criticism
Biofuels Threaten Food Access In Latin America – UN
The Great Biofuel Famine
France says food should take priority over biofuel
The other global crisis: rush to biofuels is driving up price of food
Food or Fuel - A Hobson's Choice
Al-Naimi slams biofuels, favours solar energy
Germany cancels plans to add ethanol to petrol
Demands for crackdown on biofuels scam

Trust me when I say that I can go on and on...

 

[StrongTurd]

well we've still got an extra to supply the world for an extra 10 years on this alone:

The problem is evident: The exploration companies have not even started drilling test holes in this area. That figure is a thumbsuck at best. It could only be verified after years of exploration. Even if the Arctic does turn out to contain lots of oil, it is bound to be extremely expensive due to the location. In fact, it is probably going to be more expensive than any other current production field in the world to commercialise this area. And even then, it takes ten years to bring a new oil field into production. The Arctic is likewise not going to save us.