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Multiple Trends Turning Slowly Against Oil

Discussion in 'Energy, Environment, and Policy' started by gavine, Feb 9, 2016.

  1. gavine

    gavine Petrol Head turned EV Enthusiast

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  2. CHG-ON

    CHG-ON Still in love after all these miles

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    The reason for the crash in oil is simple: increasing production in the face of decreasing demand. What will happen in the not too distant future is that the Arabs will stop overproducing with the intent of killing off the US oil industry and limit production down to be commensurate with demand, or less so, and prices will begin to rise. It is a new dynamic for them, as the world is not as willing as it used to be to soak up everything they produce. The price will find a new equilibrium. My guess would be a US average price in the $2.50-3 range in today's dollars.

    I am glad to see this new reality catching on. I think the huge run up in prices over the last five years was a mistake for oil in the long term. Alternatives to oil have finally gotten a strong hold with enough grunt to become cost effective. The challenge will be to keep our eye on the long term and not assume that cheap oil is here to stay. History has repeatedly proven that to be wrong. Unfortunately, American consumers and electeds are notoriously very short sighted.

    The oil producers may well have sealed their demise through their greed. I certainly hope so.
     
  3. rays427

    rays427 Member

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    Consumption was up by .6 million barrels per day in 2015 and expected to increase by .2 million BPD in 2016. So consumption isn't dropping any time soon. Those greedy oil companies have just done to good a job of increasing production through new technology which has reduced prices to consumers and decimated their profits.
     
  4. vinnie97

    vinnie97 Member

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    Phew, nice to see the common sense viewpoint. The alternatives to oil are still not cost effective yet unless you're well-heeled and have a pile of money to throw at an EV (anything with an abysmal 100 miles of range is a nonstarter), which seems to be lost on many Model S owners. The Model 3 and Bolt may finally signal that sea change, and the Model S has helped to pave the way. However, I hate to say it, but a 58 mpg Prius IV may have to be in my cards with this oil glut and my health and income situation.
     
  5. Robert.Boston

    Robert.Boston Model S VIN P01536

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    Using the term "the Arabs" implies more cohesion there than exists. Iran and the Saudis are barely speaking; Iraq has a weak central government and no incentives to play ball with others. Libya has no central government and has three factions pumping as much oil as possible to fuel their ambitions. The supply side is oversaturated with no clear replacement for the quantity discipline that OPEC used to provide.
     
  6. Bangor Bob

    Bangor Bob Member

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    So, even in the face of cheap oil, the rate of demand growth is declining... Project that out as US fuel economy regs continue to tighten, China really gets rolling with their EV program, etc...
     
  7. TheTalkingMule

    TheTalkingMule Active Member

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    How much empty capacity does our strategic reserve have right now? Theoretically, how much crude oil could we pump into the ground in North America if we wanted to?
     
  8. Robert.Boston

    Robert.Boston Model S VIN P01536

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    Current inventory is 695 million barrels, very near the design capacity of 714 million barrels.
     
  9. mspohr

    mspohr Active Member

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    Interesting part at the end about the vulnerability of Saudi oil export terminals. If one of it's motivated rivals (Iran, Russia, client states, etc.) decided to take out an oil terminal, it could quickly turn the current 1 million barrels a day surplus into a 10 million barrels a day deficit. Iran and Russia (along with every other oil producer) would be happy and we would all pay much more for oil.
    Another interesting insight of the article:
    Renewable electricity merits and gets lots of headlines, but in 2014 it raised U.S. energy supplies only a third as much as the energy saved in the same year by greater efficiency. Over the past 40 years, Americans have saved 31 times as much energy as renewables added. Those cumulative savings are equivalent to 21 years’ current energy use. They’re simply invisible: you can’t see the energy you don’t use. But globally, it’s a bigger “supply” than oil, and inexorably, it’s going to get much, much bigger.
    The trend and economic forces are clear.
     
  10. RubberToe

    RubberToe Supporting the greater good

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    It's not a question of *if*, its only a question of when. Then, its a whole new ballgame.

    RT
     
  11. rolosrevenge

    rolosrevenge Dr. EVS

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    That would also result in a massive war in the Middle East. The Saudi's wouldn't just lie there and take it.
     
  12. mspohr

    mspohr Active Member

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    We're watching a series on Netflix called "Occupied" which takes place in the near future when turmoil in the Middle East has disrupted oil supply. Norway decides that the world is not doing enough to cut fossil fuel use and cuts their production. Russia invades with EU support to restore production. Interesting premise. Produced by Norwegian TV.
     
  13. TheTalkingMule

    TheTalkingMule Active Member

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    Therein lies the problem. We're very quickly edging towards a scenario where it's in a LOT of people's interest for something like this to happen. Hell, soon enough the Saudi royal family might be hoping for something like this to happen. Dangerous times.
     
  14. eye.surgeon

    eye.surgeon Member

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    #14 eye.surgeon, Feb 16, 2016
    Last edited: Feb 16, 2016
    This article is heavily influenced by hope more so than reality. The demand for oil is increasing. Current low prices are not the result of decreased demand, but rather increased supply.

    I do watch with pleasure however as the despots of the world lose their trouble-making slush funds @ $30/barrel.
     

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