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Thread: Supply & Demand

  1. #61
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    Re: Supply & Demand

    Quote Originally Posted by zimmer View Post
    They have infiltrated the Democrat party.

    .
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    Re: Supply & Demand

    I was flipping channels and I caught Hannity (ugh) interviewing the CEO of Shell. He claimed that using "proven oil reserves" was misleading because it was a narrow legal term that did not include possible or probable reserves. He went on to claim the U.S. had trillions of barrels of oil in possible or probable reserves - more than the Middle East. For some reason I immediately thought of this thread.

    I did a little research, and as I suspected, the CEO left a few details out. Two of the largest possible reserves in the U.S. are the Green River formation in Utah, Colorado, and Wyoming, and the Bakken Formation in North Dakota. The Bakken Formation has been estimated to around 400 billion barrels of oil in it. However, only 1% are technologically recoverable right now.

    The Green River Formation isn't actually crude oil, its oil shale - which requires more processing than crude, making it more expensive to produce. But the Green River formation is the largest oil shale reserve in the world, giving us a potentially huge source of energy if/when we can make it economically viable.

    In a perfect world, with unlimited resources, we would be working hard towards making the Bakken Formation oil technologically extractable and also investing in oil shale production while we also continue to develop cleaner alternative fuels. However, we have limited resources. And I suppose the fair question is, are these energy reserves worth the cost when they won't be useable (due to technology or economics) in the forseeable future when we could be using those resources to develop completely new and clean energy sources? And as large as these reserves are, they are not unlimited. Would they be nothing more than a band-aid that doesn't address the long term issue of us needing something other than fossil fuels? I don't know the answer to that, but I did find it interesting to know that we do have some rather substantial domestic sources of oil that potentially be tapped down the road.

    Bakken Formation - Wikipedia, the free encyclopedia
    Oil shale - Wikipedia, the free encyclopedia
    Green River Formation - Wikipedia, the free encyclopedia
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  3. #63
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    Re: Supply & Demand

    Quote Originally Posted by zimmer View Post

    Incredibly obvious, except for the younger generations that haven't spent much time in the work force, or have ever tried to get a business off the ground.
    Linear regression - Wikipedia, the free encyclopedia

    Please educate yourself.
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  4. #64
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    Re: Supply & Demand

    Quote Originally Posted by Gipper View Post
    Sorry, I've been busy with work as of late and haven't had a chance to come to DP to see things progress.
    You haven't missed much. The level of stupid here has increased significantly over the past week.

    Well, prices indeed can drop, but it's not based on supply and demand...technically. It actually does depend on S&D, but on a microeconomic level amongst the cartel nations (OPEC). The truth is that the OPEC cartel is an oligopoly, but not a harmonic one. These bastards stab each other in the back all the time. Because of some nations like Saudi Arabia with claim to a much larger supply feel a need to crowd out certain nations with a smaller pool that don't do their bidding, they will price-cut to a level that will force nations with smaller reserve to hold on to what they have while the energy "big boys" essentially slap them around and make them do their bidding. You know about manipulation. You're married, right?
    No, I'm not married. Furthermore, OPEC to me doesn't seem like the force it once was. Comparatively speaking, OPEC's share of total oil production isn't where it used to be. Furthermore, as you point out, OPEC is hardly an efficient or even functional monopoly. Kuwait was backstabbing Iraq during 1989 by refusing to abide to OPEC quotas (and partially got invaded for it). And right now, Saudi Arabia is pretty much at capacity. I do think your argument is a bit off in terms of raw supply and demand. Demand right now is rising at rates that supply cannot hope to math. On average, it takes about 15 years to bring oil to market. At a growth rate of 10%, we need to effectively quadruple our capacity to meet the demand at the 15th year. That's not going to happen. And I suspect that 10% will actually be higher as India and China increase their middle class populations. There's no way we can get the kind of capacity from anywhere much less domestically to provide an additional 270 million barrels per day in that 15th year. I made the crack about needing Jesus the Oilman for a reason. Ignoring all else, the differential between capacity and demand defies logic how increasing domestic drilling could reduce prices. At best outcomes it will slightly reduce the price increase. The fastest way to reduce oil prices to reduce demand. Ironically, to get relief at the pump, the US needs to reduce its demand.

    Lots of the price involved with fluctuations have nothing to do with profit and simple S&D, but quite a bit still does, and that's because of a corruption in the collusive factors of oil exporting nations.
    True, lots of price doesn't have to do with pure base supply and demand, but factors such as speculation are indirectly affected. We saw oil future rise on an attack on a Saudi facility. That's S&D related.
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  5. #65
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    Re: Supply & Demand

    Quote Originally Posted by obvious Child View Post
    Hey Zimmer, want to tell me how we're going to get 270 million barrels of oil on top of our declining supplies in 15 years?

    MATH RUN FOR YOUR LIFE.
    What was that about declining supplies? Every time they look at our reserves... it seems they grow. LOL...

    U.S. Crude Oil and Natural Gas Proved Reserves

    With Data for 2011 | Release Date: August 1, 2013 | Next Release Date: Early 2014 | full report

    In 2011, oil and gas exploration and production companies operating in the United States added almost 3.8 billion barrels of crude oil and lease condensate proved reserves, an increase of 15 percent, and the greatest volume increase since the U.S. Energy Information Administration (EIA) began publishing proved reserves estimates in 1977...U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Proved Reserves
    The Experts: How the U.S. Oil Boom Will Change the Markets and Geopolitics
    The Experts: How the U.S. Oil Boom Will Change the Markets and Geopolitics - WSJ.com
    Top Saudi investor says US energy boom could doom kingdom's economy

    Read more: Top Saudi investor says US energy boom could doom kingdom's economy | Fox News
    North American Oil to Dominate Supply Growth - WSJ.com
    LONDON—North American oil production will dominate world-wide supply growth over the next five years,


    Newly found sources of domestic oil and natural gas are having an even bigger impact on the economy than first projected, adding more than $1,200 last year to the discretionary income of the average U.S. family, a new study says.
    U.S. energy lifting economy more than expected
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  6. #66
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    Re: Supply & Demand

    Quote Originally Posted by obvious Child View Post
    Hypothetical:

    If there are a 1,000,000,000 units of product A, all effectively identical and someone adds 1,200,000 more to the market and demand is annually increasing at 3% (so 30,000,000) will that materially reduce prices?

    *Assume no barriers to purchase for all potential buyers.
    What do you mean by "materially"? If you don't have enough money to buy product A, but if the price drops a bit enabling you to buy product A...is that a "material" reduction in price? Not for one person, maybe, but it is for another. Need to define "materially."

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    Re: Supply & Demand

    Quote Originally Posted by zimmer View Post
    What was that about declining supplies? Every time they look at our reserves... it seems they grow. LOL...
    This is embarrassing. You spent how many hours to find a single thread you could necro that was before hydraulic fracturing came out as a force?

    You really are desperate. Yeah, sure I was wrong on that. Does it bother you that you had to spend hours to find a single post I was wrong on?

    Seriously, that was more than 3 years ago.
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  8. #68
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    Re: Supply & Demand

    Quote Originally Posted by obvious Child View Post
    I don't see how that matters. A mere 1.2% increase in goods that's easily outstripped by demand cannot possibly reduce prices where no barriers to purchase exists.
    Hmm, but is that greater demand caused by the drop in price which was caused by the higher supply of goods? In which case you might not have that demand at the higher price.

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    Re: Supply & Demand

    Quote Originally Posted by obvious Child View Post
    Hypothetical:

    If there are a 1,000,000,000 units of product A, all effectively identical and someone adds 1,200,000 more to the market and demand is annually increasing at 3% (so 30,000,000) will that materially reduce prices?

    *Assume no barriers to purchase for all potential buyers.
    Relative to the baseline of where it is, no. As demand is increasing faster than supply, price will continue to increase (your model does not include feedback from price into demand).

    Relative to the baseline of where it would otherwise be, yes.

    Here's a question, though. Where are those 1,200,000 units being built, and do are the jobs associated with that industry include blue-collar jobs that do not require a college degree but pay well over the average?

    Because if so, we should absolutely enable that industry here at home and enjoy both an employment boom and a relative decrease in oil prices (sorry, it was just really obvious).

    Also, I am not so positive that 3% increase in demand is going to be so dependable going forward.

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    Re: Supply & Demand

    Quote Originally Posted by zimmer View Post
    What was that about declining supplies? Every time they look at our reserves... it seems they grow. LOL...
    Moderator's Warning:
    Supply & DemandBecause there are some on target responses, I am going to allow this, but in the future, do NOT necro threads that are this old.
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