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Is there an oil price shock coming?

late

late

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We had 2 nasty oil price shocks in the 70s. If it came in a bottle, the label would say Instant Recession".

Ships will have to start using low sulfur fuel in 2020. Philip K. Verleger, Jr. argues that this will kick off a dramatic rise in oil fuel prices, even gasoline, and set off a recession.

He makes a persuasive case.




https://www.pkverlegerllc.com/assets/documents/180704200CrudePaper.pdf
 
keep your eyes on DRYS ....................... that will tell you something ..........
 
I suppose it could happen. But what ever happened to peak oil? Seems it hasn't come to pass has it?
 
Well... one interesting thing I've heard is that Venezuela has promised it's people to ramp up it's oil production drastically in order to save it's sinking socialist ship...

That might decrease the price of oil.
 
EnigmaO01 said:
But what ever happened to peak oil? Seems it hasn't come to pass has it?
Click to expand...

We're in it.

The questions you should be asking is when, and how do we keep the economy from being wrecked by high oil prices when demand consistently outstrips supply.
 
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EnigmaO01 said:
I thought I knew what it was -- running out of oil.
Click to expand...




We're in it.

The question you should be asking is how do we keep the economy from being wrecked by high oil prices when demand consistently outstrips supply.
 
after reading Mr. Verleger's presentation I must admit he makes a good case of how we may all end up getting completely ****ed .......
 
late said:
We're in it.

The questions you should be asking is when, and how do we keep the economy from being wrecked by high oil prices when demand consistently outstrips supply.
Click to expand...

as far as the 'light sweet crude' aka low-sulfur production, yes; those days are pretty much gone.

there is IMO still a good supply of crude but the costs of production/extraction have gone up to the point that it inhibits profitability; then add in the costs to refine the required product

we may, or may not be on the declining portion of the Hubbert curve as far as untapped crude supply is concerned but I have no doubt we are on the declining portion of a bell curve as far as interest from potential producers; this of course is based on the ill potential for profitability

when you have such a vital product that is required YET there is little interests by potential producers because of profit concerns, then IMO there is real potential for disaster

disasters typically happen very quickly ............
 
EnigmaO01 said:
I suppose it could happen. But what ever happened to peak oil? Seems it hasn't come to pass has it?
Click to expand...

Peak oil was about conventional oil. So not oil sands or oil shale (Not shale oil)


The increase in production in North America has been primarily driven by unconventional oil. I do not know about Russia or the ME regarding production increases and their sources. But as I understand it (from a few years ago) Saudi Arabia was increasing water injection and started to produce less sweet and heavier crude than in the past. Indicating they have less good quality oil in the ground
 
late said:
We're in it.

The questions you should be asking is when, and how do we keep the economy from being wrecked by high oil prices when demand consistently outstrips supply.
Click to expand...

Demand doesn't outstrip supply. If it did we would see long lines at the pumps a la Carter. + higher prices.

Several things contribute. Better extraction methods, more efficient use of resources. More use of alternative energy sources. The market works that way.
 
late said:
We had 2 nasty oil price shocks in the 70s. If it came in a bottle, the label would say Instant Recession".

Ships will have to start using low sulfur fuel in 2020. Philip K. Verleger, Jr. argues that this will kick off a dramatic rise in oil fuel prices, even gasoline, and set off a recession.

He makes a persuasive case.




https://www.pkverlegerllc.com/assets/documents/180704200CrudePaper.pdf
Click to expand...

Here in Sweden we learned from the oil crisis and reduced oil from 75 per cent of Swedish energy supplies to 20 per cent.

https://sweden.se/society/energy-use-in-sweden/

There a big part was replacing oil fired burners with district heating powered mostly by biofuels and waste heat.

District heating

You also have Norway there over half of new car sales was electic or hybrid in 2017 and Norway also plan that all new cars should be zero emission by 2025.

https://www.reuters.com/article/us-...ar-sales-now-electric-or-hybrid-idUSKBN1ES0WC
 
Lord Tammerlain said:
Peak oil was about conventional oil. So not oil sands or oil shale (Not shale oil)


The increase in production in North America has been primarily driven by unconventional oil. I do not know about Russia or the ME regarding production increases and their sources. But as I understand it (from a few years ago) Saudi Arabia was increasing water injection and started to produce less sweet and heavier crude than in the past. Indicating they have less good quality oil in the ground
Click to expand...

Interesting. I did hear the Saudi's are the only ones that know how much oil they have left and will keep it that way.
 
Let's hope the Abiotic Oil folks were right, and this whole oil running out stuff is moot.
 
Renae said:
Let's hope the Abiotic Oil folks were right, and this whole oil running out stuff is moot.
Click to expand...

Abiotic oil folks might be right, but I expect if they are the replenishment rates would be too low to really help.

Ie if we use 90 million barrels a day, and only 5 million are created through abiotic generation, it does not help very much
 
Lord Tammerlain said:
Abiotic oil folks might be right, but I expect if they are the replenishment rates would be too low to really help.

Ie if we use 90 million barrels a day, and only 5 million are created through abiotic generation, it does not help very much
Click to expand...

Yeah, but on the flip side that means there is more oil out there to find now than we know about. I mean, the russians did find that big field ina place where oil shouldn't form, period....
 
This is actually a two-fold problem. There is the resource problem of how much light sweet crude there is as opposed to the heavier stuff some of which is a consequence of extraction techniques. So there is that. Are there as yet undiscovered large reservoirs of light sweet crude that we can yet identify and get to? I don't have an answer to that. The desire to drill is not predicated on trying to resolve this issue. It is based on generating profits for the oil industry.

The other issue is refineries. The refining industry shows very little interest in updating and upgrading even when there is a payoff though one that takes some time to materialize. Go to them with a story that now they must update and upgrade at even higher cost with an even longer payback period and they are likely to barf all over that....probably already are barfing all over it. Yes US refineries did go through a major period of upgraded but again that was an effort made for the same reasons the industry drills. We wanted to dominate refining here in the US and hence put in the resources to become a dominant refiner in large part intended to handle at least at some level the heavier crude resulting from particular extraction techniques. Again, show them a profit goal and a payback time period for making back their investment they are used to dealing with and you can get them to pay attention. Show them a need to improve based on the existence of an onrushing standards implementation date and .........not so much.

Here is where Trump's helter-skelter interventionism and ala' carte trade and tariff efforts (can't call them a policy, they don't rise to that level) really begins to fall apart. We are making enemies of our allies and rattling the cages of our trade partners in an environment where they are now and will be more prepared for removing the fossil fuel addicts needle.

Lets dispense with the notion that Trump does not like to "intervene" internationally. He loves it as a means to flex our muscles while using them like they are his muscles all the while railing against interventionism and globalism for the domestic audience because it elicits cheers from his rally audiences. But the problem is that ultimately we are going to ask trading partners to accept a delay, a postponement in the 2020 date of implementation because we will especially under Trump do what we like to do.....delay doing anything responsive to an issue until it is right on our necks. However, trading partners will have little incentive to aid us in this regard and are more likely to just say, "OK, we are ready and you are not, you can just pay fees, fines or other economic penalties for your lack of preparedness".

That will be a defining moment for us and for the globe that went from coming at us to rushing at us in the era of Donald Trump. I can easily envision, economic warfare that makes these tariff fights look like kids at play up to including shooting conflicts. We have to get this dingdong out of the Oval Office to have any shot at getting past this and the other issues now rushing at us as Donald is busy tweeting about Omarosa, feathering his personal wealth nest regardless of how corruptly he might be doing it and devouring big macs and rounds of golf and thats about it from this guy. Can anybody in their wildest imagination think about a Trump administration or anybody in it attempting to do anything relevant to the 2020 implementation date?
 
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