Oil price to double, Gas to break $2/L, Peak oil still a hoax?

[Super_Geo]

Peak oil has been brought up a couple of times now on Beyond in the past 4 years or so, and there has always been people on here fiercely calling it out as a bullshit theory (look how much the oil sands are going to produce, etc etc).

Well... now with oil over $110/BBl, gas looking to sit in the $1.1x-$1.4x range for this summer and constant rumblings about even higher prices around the corner, I'd like to see what people's thoughts on it are now.

Oil, Gasoline prices to double: CIBC Report

Peak Oil: Timing (Wikipedia)

Saudi Arabia's King Abdulla told his subjects in 1998, "The oil boom is over and will not return... All of us must get used to a different lifestyle." Since then he has implemented a series of corruption reforms and government programs intended to lower Saudi Arabia's dependence on oil revenues. The royal family was put on notice to end its history of excess and new industries were created to diversify the national economy.[78]

The Association for the Study of Peak Oil and Gas (ASPO) predicted in their January 2008 newsletter that the peak in all oil (including non-conventional sources), would occur in 2010. This is earlier than the July 2007 newsletter prediction of 2011.[79]

And if you're going to listen to anyone in the Oil/Gas industry, it might as well be Boone Pickens... he recently gave one hell of a talk at the Pengrowth Energy Conference. Here he is again talking about where oil prices are going:

Pickens Reverses Position to Bet on Higher Oil Prices (Update4)

By Daniel Whitten

April 17 (Bloomberg) -- Boone Pickens, a billionaire energy investor, said he reversed course and is betting the price of crude oil will rise.

Pickens, 79, the founder and chairman of Dallas-based BP Capital LLC, said today in a speech at Georgetown University that the price of crude will only continue to climb and demand will eventually be dampened.

``The position is long, not short,'' Pickens told reporters after his speech. ``I covered the short position, it was a mistake on my part. We missed.''

Crude oil futures in New York touched $115.54 a barrel today, the highest intraday price since trading began in 1983.

Investors looking for higher returns have flocked to commodities. Oil in New York surged 82 percent over the past year as the Standard & Poor's 500 Index dropped 7.4 percent and the Dow Jones Industrial Average declined 1.2 percent.

Pickens said he thought oil was approaching $125 a barrel. Oil will eventually reach $150 per barrel, he said, while cautioning ``I won't be investing in $150 oil.''

Pickens said his BP Capital Energy Equity Fund fell 21 percent in the first quarter of this year. Since 2001, the fund has grown 800 percent, he said.

World oil supplies won't exceed 85 million barrels a day because of high depletion rates of existing wells, he said in his speech. This supports his belief in a climbing price.

Global Supplies

``There is only 85 million barrels of oil globally in the market coming a day and I don't think you can increase that 85 million,'' Pickens said.

World oil demand during the four years ending 2008 is rising at an average annualized pace of about 1.4 percent, according to International Energy Agency forecasts.

Over the same period, non-OPEC oil supply is seen climbing at a slower pace of 0.9 percent. The Organization of Petroleum Exporting Countries has this year been reluctant to commit to pumping more, saying supply and demand are in balance.

Pickens endorsed Republican presidential candidate John McCain, while criticizing his energy policies. Recent McCain proposals to stop putting oil into the federal Strategic Petroleum Reserve and to suspend a gasoline tax for the summer wouldn't be good for the country, Pickens said.

``I'm hoping he will become better informed and come up with better ideas about energy than he has up to now,'' he said.

He plans to invest $10 billion in 4,000 megawatts of wind projects within the next several years.

``We are going to put a lot of money into wind next month,'' Pickens said, adding he expects at least a 25 percent return on his investment.

[sputnik]

Peak oil ultimately requires a serious drop in demand.

When I see massive amounts of middle-upper class people giving up their cars and people unable to afford to fly... then I will start to think we might have hit a peak.

Until then oil can continue to climb as high as it wants.

[benyl]

Originally posted by sputnik
Peak oil ultimately requires a serious drop in demand.

When I see massive amounts of middle-upper class people giving up their cars and people unable to afford to fly... then I will start to think we might have hit a peak.

Until then oil can continue to climb as high as it wants.

Peak oil has nothing to do with the price, it has to do with the amount of oil pulled out of the ground.

The peak is where we can no longer pull out more oil as it has run out. No new reserves found, etc...

[Super_Geo]

Originally posted by benyl


Peak oil has nothing to do with the price, it has to do with the amount of oil pulled out of the ground.

The peak is where we can no longer pull out more oil as it has run out. No new reserves found, etc...

Well, not 'run out,' but it has to do with production rates. We won't run out of oil for decades to come, but the the global production rate has flatlined for the past couple of years while demand is still rising.

The scary part is the decline of the peak oil curve... when global production falls each year (85 billion this year, 84.5 billion next year, 83 billion the year after, etc etc)... new projects take years or decades to fully come online. In that time, the rest of the world's fields are slowing down.

What do you do when there's not enough oil to fill everyone's needs (which grows yearly)?

[b_t]

What will happen when supply starts to shrink is a pretty scary thought.

[dezinr]

Saskatchewan has a larger reserve of oil than Alberta and they have yet to tap into. They have also found areas of oils sands in norther Saskatchewan so I think there will still be oil for some time to come. So it is hard to say if oil has peaked...maybe in terms of Alberta's supply?

[mazdavirgin]

Originally posted by dezinr
Saskatchewan has a larger reserve of oil than Alberta and they have yet to tap into.

There is a reason that oil is still in the ground... The problem is those reserves are not economical and a lack of water. Lastly, I would like to see the stats where you found that Sask has larger reserves than Alberta. I find that hard to believe especially considering I have never heard of the tar sands being larger in Sask or the oil fields...

[SilverRex]

didnt bush come out to say to OPEC that they will one day regret having oil at such heights? like the 80s, high price of oil will destroy the Us economy (if it hadnt already done so) and hence the demand will shrink considerablly, causing oil price to fall like a brick.

Yes long term wise I only see oil continuely to move higher. when oil hit its recording around 80-85 dollars and fell towards 50.00 I knew as soon as it hit 50 it would completely resume its upward run towards 100.00 too bad I can see this but I do not invest in oil stocks or alike. what an opporunity.

anyhow I see oil to collasp at least one more time in this decade. just because like house prices in the US, sharp rise = sharp decline. Oil is a matter of time, same with Alberta economy, it will come a day when we will forget how hot it was and aruging when the downturn will be over. I see post Olympic as the starting point

[benyl]

Originally posted by dezinr
Saskatchewan has a larger reserve of oil than Alberta and they have yet to tap into. They have also found areas of oils sands in norther Saskatchewan so I think there will still be oil for some time to come. So it is hard to say if oil has peaked...maybe in terms of Alberta's supply?

Peak oil is different for every region. Texas reached peak oil in the 80s or 90s. That is why you don't really hear about a Texas oil boom anymore as it is pumping less now that it has in the past.

There is plenty of oil in many places in the world. It is a question of how much money it costs to extract that oil. Alberta has more oil in the Tar sands that Saudi Arabia has in the ground. The problem is that it costs $2/barrel to pump in SA and $10+ to extract it in Alberta. Not to mention the environmental damage of in-situ / mining of the oil.

Venezuela apparently has an even larger reserve in their oil sands, but again, it costs too much to extract.

[Super_Geo]

Originally posted by benyl
Peak oil is different for every region. Texas reached peak oil in the 80s or 90s. That is why you don't really hear about a Texas oil boom anymore as it is pumping less now that it has in the past.

In the 1950s, Hubble (the founder of peak oil theory) predicted that Texas production would peak around 1970. At the time in the '50s, Texas was pumping out more and more oil... the industry laughed in Hubble's face.

Oil production in Texas peaked around 1970.

Originally posted by benyl
There is plenty of oil in many places in the world. It is a question of how much money it costs to extract that oil. Alberta has more oil in the Tar sands that Saudi Arabia has in the ground. The problem is that it costs $2/barrel to pump in SA and $10+ to extract it in Alberta. Not to mention the environmental damage of in-situ / mining of the oil.

benyl you're right and you hit on a point that most people just don't consider. It's not just the cost to produce, but the total energy equation. There's a difference between Saudi production (ie: poke a straw into the ground and catch the oil with a bucket) and the oil sands and other unconventional oil plays.

Thinking beyond the dollars/cents mentality: You have to take the total energy value of the oil and subtract the amount of energy it took to get it out of the ground and processed. There are large reseves out there... but the problem is that it takes a lot of energy to get the oil out. So if it takes 100MJ of energy to get 80MJ of oil out of the ground... then what does that oil count for?

Thinking beyond the net energy mentality: You have to take into account the amount of natural resources that is consumed by processing the oil sands... most importantly, water. There is going to be a big issue with Alberta's water sovereignty (and supply) because of the US oil company's 'righs' to use our water for the oil sands. Thanks to our government's willingness to whore out our country's resources to the US, if we run into a water shortage (and experts believe we will very soon) we cannot stop the US from taking our water due to NAFTA.

[benyl]

Another factor in the oil sands right now is the use of Nat Gas.

There is a lot of energy being used to get that oil. It is surprising that Nat Gas prices are so low given the amount of use up North.

[Canmorite]

I read recently that there are HUGE reserves, just no way of tapping them, yet. They are too far below the ocean floor for current technology.

Eventually, we will run out. Just when is very hard to predict with ever changing technology.

Until then, I'm still long Oil

[Toma]

Oil will never run out.

getting it out of the ground fast enough is one problem
corruption and manipulation and Bush is the other

Most analysts looking at available supply and market demand STILL think it should only be about $60 a barrel.... no one is running out.

[Khyron]

Peak oil is BS. The cost will go up, source alternatives become financially or politically viable. Gets bad enough, they'll start drilling Colorado or the nature preserves in Alaska or slap some nuclear plants in Sask and start sifting.

The cost will make alternatives viable long before we actually "run out".

Speculators are what's currently got the price so high so quickly. It's estimated that over 25/barrel is strictly speculators. Also the lack of refinary capacity. Gas supplies are extremely high right now. I've read that the US is considering restricting investment on commodities like oil - no idea how that would play on a world market.

[dezinr]

Originally posted by mazdavirgin


There is a reason that oil is still in the ground... The problem is those reserves are not economical and a lack of water. Lastly, I would like to see the stats where you found that Sask has larger reserves than Alberta. I find that hard to believe especially considering I have never heard of the tar sands being larger in Sask or the oil fields...

Mazdavirgin,

Some of the above came from discussions with people I have met in the oil sector. I should have clarified and said that I have heard the following...therefore I will correct my statement by saying this is not documented fact but perhaps more speculationfrom people in the industry. From what I have heard part of the reason oil exploration did not happen as much in Sask is that the governement was going to tax or insist on royalties from the oil companies whereas Alberta at the time was not.

Here are some links to information I found a while back regarding this topic.

http://www.financialsense.com/editor...2006/0411.html

http://www.capp.ca/default.asp?V_DOC_ID=677
( Saskatchewan also does not have nearly the amount of exploration as Alberta does at the present moment)

http://finance.sympatico.msn.ca/Inve...mentid=6750399

"Ramshackle wheat and alfalfa farms there happen to lie atop the juiciest zone of the underground Bakken Formation, which stretches across 200,000 square miles of Montana and Saskatchewan as well. The heart of the Bakken, which contains three layers of shale that formed when the area was covered with relatively deep ocean, is about 2 miles down.

The rock was initially discovered as an oil source in the mid-1950s, but with extremely low porosity and permeability, it was impossible to exploit fully with conventional drilling techniques when oil was going for less than $50 a barrel.

In recent years however, horizontal drilling and "fractionation" extraction techniques -- invented in U.S. labs and developed in fields from Russia to Argentina -- have opened the formation, and its output is expected to expand exponentially so long as oil prices remain above $60 a barrel. Experts figure it will yield 270 million to 500 billion barrels of oil over its lifetime, which could make the roughly 60 billion barrels of oil of the famed North Slope of Alaska look like a child's mud puddle."

[Supa Dexta]

I seen on cnn yesterday truckers have been dropping down into mexico for 2$ gallon diesel.. But the border is putting a stop to it.. WTF! mexico gets 2$ gallon fuel and we can't..

[Super_Geo]

Originally posted by Khyron
Peak oil is BS. The cost will go up, source alternatives become financially or politically viable. Gets bad enough, they'll start drilling Colorado or the nature preserves in Alaska or slap some nuclear plants in Sask and start sifting.

The cost will make alternatives viable long before we actually "run out".

Peak oil has nothing to do with running out... it's all about production rates. You think the oil shales in Colorodo will come online fast enough to offset the declining conventional oil production in the rest of the world?

Originally posted by Khyron
Speculators are what's currently got the price so high so quickly. It's estimated that over 25/barrel is strictly speculators. Also the lack of refinary capacity. Gas supplies are extremely high right now. I've read that the US is considering restricting investment on commodities like oil - no idea how that would play on a world market.

And what are the speculators speculating on? The fact that our production rates have plateaued and industry experts don't expect us to be able to ramp it up any further?

From the Boone Pickens:

World oil supplies won't exceed 85 million barrels a day because of high depletion rates of existing wells, he said in his speech. This supports his belief in a climbing price.

So, again, who gives a shit about the oil shaels or other unconventional plays that will take years to decades to reach full production when the rest of the world's fields are producing less and less each year?

My friend is a drilling engineer for Imperial... the staunchiest old school oil company out there, the Darth Vader of oil companies. In their drilling school in Houston a VP made a speech and basically said 'Yup Imperial acknowledges that peak oil is coming, or has already hit.'

[The Cosworth]

time to start building nuclear like a mofo.

if it is good enough for the universe it is good enough for earthlings

[Antonito]

Originally posted by Supa Dexta
I seen on cnn yesterday truckers have been dropping down into mexico for 2$ gallon diesel.. But the border is putting a stop to it.. WTF! mexico gets 2$ gallon fuel and we can't..

Yeah but to get that price you have to live in Mexico...I'll pass on that

[8Ball]

Peak Oil is near