Posts with the tag 'oil price'
I strongly recommend reading this entire article, but this is the part which caught my eye:
…if you listened to their testimony, and more importantly pay attention to their actions, oil company executives simply do not believe that the price of oil is going to be $135 a barrel for the next few years. If they did, they would be punching more holes in the ground in places where it might be expensive to get the oil to market - but at $135 a barrel it would be profitable.
And then there is an odd circumstance in the oil picture that I think may suggest that we could see a break, and perhaps a violent one, in the near term for the price of oil.
Where Are All the Tankers?
For a few weeks now, observers have noticed that Iran is leasing tankers and storing oil in them. At about $140,000 a week or so, that is expensive storage. At first, conspiracy theorists were wondering if they were preparing for some kind of war or attack. But more conventionally, it may be they are having problems selling their oil. Their oil is not very high-quality, and there are only a few places that can take it and refine it. India, China, and the US are among the countries with refineries that can take Iranian oil. (And yes, George Friedman of Stratfor tells me some of it does end up in the US from time to time.)
India’s refiners are telling Iran they no longer want their oil, preferring the higher-quality oil that is readily available in the area. So Iran has to decide whether to send it to China or “repackage” it so that it can end up in the US, while they try to get refiners in India to change their minds. Thus, they are leasing tankers to store the oil they are pumping.
I called George about six this evening and asked him about the Iranian situation, as that is a lot of oil that could come on the market at some point, as well as a possible reason that oil supplies are down. George has analysts on top of this situation.
He told me, “John, it’s more interesting than that. It is not just Iran. Today we started checking on how many tankers Iran had, and soon discovered that there is a serious tanker shortage. Lease prices have soared in the past few weeks. It is clear there are a lot of speculators betting that oil is going to rise to $150 or so and are willing to pay very high prices for keeping the oil on the seas waiting for higher prices. It is a speculative boom.”
He then told me about flying into New York in the early ’80s. Outside the harbor were 30 or so tankers just sitting, waiting for prices to continue to increase as they had been doing for some time. When they did not, they all tried to get into the harbor at the same time, and of course they couldn’t. It was the top of the market. Prices dropped, and the owners of the oil had to go to the futures market to hedge what they could. I had heard that story, but George saw it with his own eyes.
Almost everyone (except the stock market) is convinced oil is going higher in the near term. As I noted above, this week’s rally was partially due to short covering by large institutions and companies which had sold production far into the future at much lower prices. They finally threw in the towel and took off their hedges.
I remember those tankers from 1980. I was only 15, but I thought it very odd that the price of oil was going through the roof while tankers were just sitting off America’s coasts, packed with oil. It was - in 2007 dollars - about $70 a barrel at that peak…and then it started to drop, and kept on dropping until it was about $20 a barrel. A similar event would mean $29 a barrel is in our future (and my view is that the reasonable price of a barrel of oil is about $35).
Could be an interesting few months in the commodities markets…
Tags: oil price
May 25th, 2008
And some liberals still screech at us for accusing them of being socialists. See the video here.
Interesting that a lady who thinks that the crack epidemic was courtesy of the CIA can get elected and re-elected…and Democrats will allow her on camera!
Tags: gas price, liberal lies, Maxine Waters, oil price
May 23rd, 2008
Illustrated thusly:
Oil prices rose sharply Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two Iranian boats. Retail gas prices as expected rose further into record territory, nearing $3.60 a gallon.
Word that a U.S. ship had fired on the boats in the Persian Gulf raised concerns that a conflict between U.S. and Iranian forces could cut oil supplies from the region. Light, sweet crude for June delivery jumped as high as $119.50 on the news before retreating to trade up $2.70 at $118.76 a barrel on the New York Mercantile Exchange.
Prices were already up before the report on news of a pipeline attack in Nigeria and a looming refinery strike in Scotland.
There is no shortage of oil, nor any real risk of a serious interruption of oil supplies…and yet the price of oil is skyrocketing for these very stupid reasons: a shot fired near Iran, a pipline attacked in Nigeria, a proposed strike in Scotland. None of these issues actually threatens oil supplies. What gives? Pure speculation - fools are outbidding each other at famine prices for a commodity the world is slopping over with, and as long as the price keeps rising, the fools will continue to make money. How long will it go on? Beats all heck out of me, but one should keep in mind that if you are putting out an oil future at $115.00 for June delivery, you are actually expecting the price to be higher than that in June, so you can make a profit Eventually, though, the wall will be reached - a point at which those who buy oil will give up and just cut production of petroleum-based products rather than have their profit margins destroyed, or being forced to raise their prices to a point where people stop buying their products. The collapse, when that comes, will be rather spectacular.
Taking one thing with another - increased demand, etc - the price of a barrel of oil is probably overstated by a factor of three or four right now. The market is distorted by the influx of speculative dollars as people try to cash in on oil prices which never go down…sorta like the speculative dollars which poured into the American real estate market because we all know that once real estate starts to rise, it can never go back down again, right? Stupid people - and they are going to get burned, and burned very badly.
Tags: financial speculation, oil price
April 25th, 2008
Never thought I’d see this:
Greenpeace founder Patrick Moore says there is no proof global warming is caused by humans, but it is likely enough that the world should turn to nuclear power - a concept tied closely to the underground nuclear testing his former environmental group formed to oppose.
The chemistry of the atmosphere is changing, and there is a high-enough risk that “true believers” like Al Gore are right that world economies need to wean themselves off fossil fuels to reduce greenhouse gases, he said.
“It’s like buying fire insurance,” Moore said. “We all own fire insurance even though there is a low risk we are going to get into an accident.”
The only viable solution is to build hundreds of nuclear power plants over the next century, Moore told the Boise Metro Chamber of Commerce on Wednesday. There isn’t enough potential for wind, solar, hydroelectric, and geothermal or other renewable energy sources, he said.
I still hold that global warming is probably not happening to the extent the alarmists claim, but I’ve been long in favor of a crash nuclear program to end reliance on imported oil and coal-fired power plants…and, heck, if the enviro-whackos really want to un-dam some of those rivers, then the electrical power can be replaced by nuclear power plants. We’ve even got the place to put them where NIMBY’s are unlikely to complain - the Nevada Test Site; its already radioactive, after all, and most monitoring of the plant can be done remotely (naturally, we Nevadan’s will demand a quid pro quo here…some sort of surcharge on the rest of the nation which would, oh, cover about double our State budget - about $2.5 billion per year - so that we can have a gold-plated health and education system, and no taxes…).
Environmental problems must be tackled with common sense and hard science - which means that 99% of environmentalists will have to be excluded from any part in the debate. Nuclear power is cheap, safe and renewable, and we’ve been the world’s biggest dunderheads for following the “no nukes” demands of the late 70’s all the way into the early 21st century. Time to put aside such childish things, and start acting like adults in matters environmental and energy.
Tags: energy policy, global warming, nuclear power, oil price
April 25th, 2008
As you continually outbid each other for oil futures contracts, I wonder if any of you have considered the fact that global oil demand is declining, not rising?
Now, I’d like to say that once the oil futures market crashes - which it will, because you twits are bidding famine prices during an oil glut - that I will be sympathetic to you, but I won’t.
Tags: market bubbles, oil price
March 11th, 2008
Good stuff over at his blog - takes a lot of the froth off the recent inflation report.
Tags: inflation, oil price
January 17th, 2008
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