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WSJ: Oil's Surge Reshapes The World  
User currently offlineJawed From United States of America, joined Sep 2006, 482 posts, RR: 0
Posted (6 years 11 months 3 weeks 1 day 16 hours ago) and read 1799 times:

eventually it will impact aviation in a major way.

fascinating article:

Oil Hits $100, Jolting Markets
Boom Cuts U.S. Clout, Revives Middle East;
Dark Days for Detroit

By NEIL KING JR. , CHIP CUMMINS and RUSSELL GOLD
January 3, 2008

The surging price of oil, from just over $10 a barrel a decade ago to $100 yesterday, is altering the wealth and influence of nations and industries around the world.

These power shifts will only widen if prices keep climbing, as many analysts predict. Costly oil already is forcing sweeping changes in the airline and auto sectors. It is intensifying the politics of climate change and adding urgency to the search both for fresh sources of crude and for oil alternatives once deemed fringe.

http://online.wsj.com/article/SB1199...2763671.html?mod=hps_us_whats_news

24 replies: All unread, jump to last
 
User currently offlineTranspac787 From United States of America, joined Jul 2007, 3217 posts, RR: 13
Reply 1, posted (6 years 11 months 3 weeks 1 day 16 hours ago) and read 1764 times:

This is probably more appropriate in nonav....

That having been said though, I was REALLY hoping we wouldn't see triple-figure oil, as most everyone also was I'm sure. Does anyone know why the rapid increase in the past few days?? Last time I checked the price was below 90 dollars for a short while.


User currently offlineSilentbob From United States of America, joined Aug 2006, 2176 posts, RR: 1
Reply 2, posted (6 years 11 months 3 weeks 1 day 16 hours ago) and read 1736 times:



Quoting Transpac787 (Reply 1):
Does anyone know why the rapid increase in the past few days??

It's cold in NY, that always results in oil price increases as most homes in the northeast use oil for home heat.


User currently offlineJetjack74 From United States of America, joined Jul 2003, 7433 posts, RR: 50
Reply 3, posted (6 years 11 months 3 weeks 1 day 12 hours ago) and read 1693 times:
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Quoting Silentbob (Reply 2):
It's cold in NY, that always results in oil price increases as most homes in the northeast use oil for home heat.

The usual reason. With all the storms in the Mid west and in the Northeast, the price was bound to surge. Maybe i'm abit late with this, but it's realy no surprise. A snowstorm in the east, a hurricane in the gulf. The powers that be can't wait to jack up the price.



Made from jets!
User currently offlineBeaucaire From Syria, joined Sep 2003, 5252 posts, RR: 25
Reply 4, posted (6 years 11 months 3 weeks 1 day 12 hours ago) and read 1690 times:

It's just a boost to invest in alternative forms of energy and reduce dependance on oil.
Now the pressure is such,that any new generation of cars ,aircraft or ships will have to be better and more efficient than the previous generation.
While the surge in cost of petrol is a handicap in shiort and mid-term,the long term effect will be a clear reduced dependance on fossil fuels.
It should nevertheless be indicated that at least 35$/barel are pure speculative increase without any substantiated resons ro justify a 100$/barel price.Oil speculators should be chased and fined .



Please respect animals - don't eat them...
User currently offlineDougloid From , joined Dec 1969, posts, RR:
Reply 5, posted (6 years 11 months 3 weeks 1 day 5 hours ago) and read 1653 times:



Quoting Beaucaire (Reply 4):
While the surge in cost of petrol is a handicap in shiort and mid-term,the long term effect will be a clear reduced dependance on fossil fuels.
It should nevertheless be indicated that at least 35$/barel are pure speculative increase without any substantiated resons ro justify a 100$/barel price.Oil speculators should be chased and fined .

I'd settle for a good horsewhipping myself. That spike that came from ONE trade on the Merc is going to be the excuse for every gas station in the world to raise prises fifteen or twenty per cent. Fuel's gone up 30 cents a gallon here in the last two weeks.

Oil's a commodity, folks. Historically it trades in a certain range. Sometimes it trends upward, and that draws in a lot of money from "investors" who want to get rich quick. They're not sellers or end users. Usually the price declines after a while-we saw that with corn in the mid nineties. A lot of people got burned and we've just recently worked our way through all the litigation from that period. My suspicion is that smart people are looking to sell short, and that there's a lot more built in speculation premium than we think right now.


User currently offlineRayChuang From United States of America, joined Jun 2000, 8034 posts, RR: 5
Reply 6, posted (6 years 11 months 3 weeks 1 day 5 hours ago) and read 1648 times:

We're already well past the point that alternate energy has become competitive with crude oil--at circa US$95+ per barrel for all grades of crude oil (including the benchmark West Texas and North Sea Brent types), growing oil-laden algae and extracting oil from coal, oil shale and oil tar sands actually make money. In fact, even deep-sea oil drillling is tremendously profitable at US$95+ per barrel--I wouldn't be surprised that China signs a big lease deal with the Philippines and Vietnam to drill for oil in the Spratley Islands, which are said to hold potentially hundreds of billion barrels of oil benath the ocean near these islands.

At these prices, even solar and wind power are suddenly competitive--manufacturing plants assembling solar arrays and big wind turbines are essentially running 24/7 trying to keep up with worldwide demand.


User currently offlineArrow From Canada, joined Jun 2002, 2676 posts, RR: 2
Reply 7, posted (6 years 11 months 3 weeks 1 day 3 hours ago) and read 1605 times:



Quoting Dougloid (Reply 5):
My suspicion is that smart people are looking to sell short, and that there's a lot more built in speculation premium than we think right now.

I agree with this, to a point. And a US recession would be a tipping point. Funny -- when energy prices are going down, people tend to think they'll never go up, and when the prices are going up, they think they'll never go down. Smart investors will do a little profit taking around now.

I also think the geopolitics is being overplayed, and therefore responsible for this latest spike.



Never let the facts get in the way of a good story.
User currently offlineRara From Germany, joined Jan 2007, 2168 posts, RR: 2
Reply 8, posted (6 years 11 months 3 weeks 1 day 3 hours ago) and read 1600 times:

I'm not sure anyone is selling oil short at the moment. I believe the threat of the oil price rising even higher is very real. Just today I read a projection of 150 USD by 2013 and 200 USD by 2018.


One thing delights me about the incredibly high oil price though..  Smile our economies seem to adapt surprisingly well. Think back to the Seventies when an oil price of 6 USD per barrel brought the world economy down in a big way. Today we have a prospering (albeit nervous) economy at an oil price of 100 and more. That's pretty impressive, and it's a good sign that the so direly needed de-carbonization of our industries is not at all impossible.



Samson was a biblical tough guy, but his dad Samsonite was even more of a hard case.
User currently onlineTugger From United States of America, joined Apr 2006, 5770 posts, RR: 10
Reply 9, posted (6 years 11 months 3 weeks 1 day 2 hours ago) and read 1580 times:



Quoting Rara (Reply 8):
One thing delights me about the incredibly high oil price though.. Smile our economies seem to adapt surprisingly well. Think back to the Seventies when an oil price of 6 USD per barrel brought the world economy down in a big way. Today we have a prospering (albeit nervous) economy at an oil price of 100 and more. That's pretty impressive, and it's a good sign that the so direly needed de-carbonization of our industries is not at all impossible.

Well the key thing to remember is that oil is not that large a part of the economy as far as the cost of it goes. The USA's current daily petroleum consumption is about 21million bbl's/day, which at todays prices is only $2billion a day, which when you think of it isn't that much for the USA. The important thing is that we can get what, and all that, we need of it.

People THINK oil is this huge economic thing (the Dollar v Euro sales issue coming to mind right now) but really its not. The big issue is what oil ENABLES the economies of the world to do: Transportation, Food, Basic and Raw Material Production, Technology, etc. and what would happen if oil stopped flowing in sufficient qty's.

Tug



I don’t know that I am unafraid to be myself, but it is hard to be somebody else. -W. Shatner
User currently offlineKlaus From Germany, joined Jul 2001, 21521 posts, RR: 53
Reply 10, posted (6 years 11 months 3 weeks 1 day ago) and read 1560 times:

There is a large strategic shift under way right now, and it is closely linked to oil.

The rapid growth of both China and India creates a growing demand. And since internal stability is linked to economic groth in both and at least China has substantial currency reserves, it has already begun to be a matter of competition for the available supply.

The oil price will of course continue to vary short to medium term, but the long-term trend will see increased competition and thus increasing prices.

China simply cannot afford to be squeezed out of the market any more - when in doubt that will be their priority, even if it puts them in direct opposition to the west and even to the USA.

Climate policies will be an increasing factor as well, so I would not expect the old recipies and experiences to apply for much longer.


User currently offlineDougloid From , joined Dec 1969, posts, RR:
Reply 11, posted (6 years 11 months 3 weeks 1 day ago) and read 1545 times:



Quoting Rara (Reply 8):
I'm not sure anyone is selling oil short at the moment. I believe the threat of the oil price rising even higher is very real. Just today I read a projection of 150 USD by 2013 and 200 USD by 2018.

It's got all the markings of a classic pump and dump.


User currently offlineFlighty From United States of America, joined Apr 2007, 8762 posts, RR: 3
Reply 12, posted (6 years 11 months 3 weeks 21 hours ago) and read 1508 times:



Quoting Rara (Reply 8):
One thing delights me about the incredibly high oil price though.. Smile our economies seem to adapt surprisingly well. Think back to the Seventies when an oil price of 6 USD per barrel brought the world economy down in a big way. Today we have a prospering (albeit nervous) economy at an oil price of 100 and more. That's pretty impressive, and it's a good sign that the so direly needed de-carbonization of our industries is not at all impossible.

Very well said. I am happy about $100 oil, and will be happier with $175 oil. Both as an oil investor and as a citizen.

Our transport (in the USA) is adapting amazingly well. Turns out many of our 14 MPG vehicles can be traded in for 35 MPG vehicles. Most of us simply drive to the mall, or Wal-Mart, or to work. Even a small car can accomplish what we need. Our families are fairly small. Minivans are the best thing for families.

So, we have a lot of flexibility to increase efficiency. One example is the increased re-urbanization inside the USA. Urban real estate prices are rising. Suburb prices are falling. This is related to oil. Driving 60 to 80 miles per day, as many Americans do, is getting more unattractive. Therefore, urban real estate is reinventing itself as lush, green, friendly and modern.

The development of a 30-story condo tower -- across the USA -- prevents a great deal of land use, heating and cooling costs, and lawn fertilizer. Not to mention, shorter driving distances. This saves an absolute ton of energy, which by the way, makes these people more wealthy. Wealthier people tend to be less stressed out about life. Saving energy is key to this relaxed new lifestyle.

Previously, our richest people bought the biggest houses and cars. That's changing fast. We are learning from places like Japan. Now, sometimes poor people have the biggest cars. And they complain about gas prices.

Quoting Klaus (Reply 10):
Climate policies will be an increasing factor as well, so I would not expect the old recipies and experiences to apply for much longer.

This is true. If oil has a worldwide $100 tax per bbl, its natural price may well be very low (and unprofitable to oil companies). Kyoto is basically such a system. Each unit of Co2 requires payments. Each bbl of oil will therefore be taxed, as it should be, to afford humankind the luxury of not blowing up the world. It's much like a tax on benzene gas, to avoid giving us all cancer.

Both concepts serve the same goal, promoting human and animal life in our financial system. This is the definition of wealth and finance that I perfer. Using that definition changes the energy markets quite a bit, as you say.


User currently offlineKlaus From Germany, joined Jul 2001, 21521 posts, RR: 53
Reply 13, posted (6 years 11 months 3 weeks 21 hours ago) and read 1497 times:



Quoting Flighty (Reply 12):
So, we have a lot of flexibility to increase efficiency. One example is the increased re-urbanization inside the USA. Urban real estate prices are rising. Suburb prices are falling. This is related to oil. Driving 60 to 80 miles per day, as many Americans do, is getting more unattractive. Therefore, urban real estate is reinventing itself as lush, green, friendly and modern.

Birdwatching posted a thread to exactly that topic:
Airliners.net Non Aviation: "The End Of Suburbia": Great Documentary (link)

I can really recommend the documentary. It is a perfect illustration of your point above.

Quoting Flighty (Reply 12):
Each bbl of oil will therefore be taxed, as it should be, to afford humankind the luxury of not blowing up the world. It's much like a tax on benzene gas, to avoid giving us all cancer.

Tell me about it - the majority of the price I'm paying for gas at the pump is tax. I'm not ecstatic paying it, but price pressure is a workable way to effect change.


User currently offlineGalapagapop From United States of America, joined Feb 2005, 910 posts, RR: 4
Reply 14, posted (6 years 11 months 3 weeks 18 hours ago) and read 1471 times:

Although many wish to speculate even higher prices of oil in the future, I'm more inclined to believe there will be steadying of prices, if not a dip in the coming years. What few realize is that oil has jumped to this level so quickly many institutions have been reluctant to actually believe in the new price point for oil. For example GE has had a huge oil shale operation in the Rockies on tap for almost 10 years now. Problem was it came with a huge price tag of about $20+ billion and would only be profitable years down the road and with oil at $50+. Problem is the spike is so sudden many don't wish to spend the money on infrastructure to only have a potential downturn in price due to the economy potentially rejecting the sudden spike in oil. This builds on what Rara said, in that the economy has been coping and well, despite the huge spike in oil prices. This will bode quite well for worldwide production in the coming years as Oil shale, the Alberta Sands, and other sources of oil that were left untapped due to cost concerns are now re-examined as viable in an $80+ oil environment. Of coarse all the investment by large companies in oil would be nullified if refining capacity doesn't start to grow as well. As over the past few years oil production of crude has been ready for a jump , but much of the bottleneck has been at the refining stage of the chain. What I see is this recent spike in oil to level off in the coming years and stay within a more stable range, if not a small decline in price as increased production meets depressed growth in demand and the growth of alternate fuel sources. Cheers!

User currently offlineL-188 From United States of America, joined Jul 1999, 29832 posts, RR: 58
Reply 15, posted (6 years 11 months 3 weeks 14 hours ago) and read 1447 times:



Quoting Galapagapop (Reply 14):
I'm more inclined to believe there will be steadying of prices, if not a dip in the coming years.

Agreed, at some point alternatives will become competivie and attractive, lessening the demmand. I forget which economist came up with that gem, but I am pretty sure he is a nobel lauriate.

Also you can't not factor in the fact that we are currently in an election year in the US. A lot of people are waiting to see who will get elected and determine economic policies.

Quoting Galapagapop (Reply 14):
Problem was it came with a huge price tag of about $20+ billion and would only be profitable years down the road and with oil at $50+. Problem is the spike is so sudden many don't wish to spend the money on infrastructure to only have a potential downturn in price due to the economy potentially rejecting the sudden spike in oil.

There are a lot of people in the industry who remember the 1990's when oil prices tanked. A lot of money had been spent in the 1980's to increase production and refining and it took a long time before it even began to look profitable.

In manyways that spike is mirroring the one we are currently seeing in Ethanol. There are a lot of projects that where launched in the past few years that right now are not profitable or on hold because with all the new facilties the market has tanked. E85 demmand hasn't risen as fast as expected. There was just a story about a new plant in Grafton ND that was shuttered last month because they can't be economicly operated at the current market rate.



OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
User currently offlineFlighty From United States of America, joined Apr 2007, 8762 posts, RR: 3
Reply 16, posted (6 years 11 months 3 weeks 14 hours ago) and read 1444 times:



Quoting L-188 (Reply 15):
There was just a story about a new plant in Grafton ND that was shuttered last month because they can't be economicly operated at the current market rate.

If they can't make money in a $100 oil environment, then they should not be building ethanol plants at all. It does nothing for the environment, anyway. It's a bunch of corn farmers looking for profits. Except it isn't profitable, and they want other citizens to pay them lump sums in cash, just because advertising suggests it may help our country somehow.

Turning corn to ethanol is actually a wealth-destroying activity, except farmers make out great, with the higher corn prices. That's all they care about. Fancy that.


User currently offlineL-188 From United States of America, joined Jul 1999, 29832 posts, RR: 58
Reply 17, posted (6 years 11 months 3 weeks 14 hours ago) and read 1439 times:



Quoting Flighty (Reply 16):
If they can't make money in a $100 oil environment, then they should not be building ethanol plants at all.

The problem is that E85 is still a rare fuel mix, I have yet to see a station sell it up here. Three years ago it was all everybody was talking about. The plants where planned and built on speculation and the demmand hasn't kept up.



OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
User currently offlineFlighty From United States of America, joined Apr 2007, 8762 posts, RR: 3
Reply 18, posted (6 years 11 months 3 weeks 14 hours ago) and read 1436 times:



Quoting L-188 (Reply 17):
The plants where planned and built on speculation and the demmand hasn't kept up.

The only way I would buy it is if it's around 30% cheaper than gasoline. It has a lot less energy, after all. So if gas is $3.00, E85 should be around $2.10. And how profitable is that... not very. So unless the states subsidize this stuff -- or omit highway fuel taxes on it -- nobody is going to want it. Not for a while anyway, if gas hits $4.00 or more.


User currently offlineQANTAS077 From Australia, joined Jan 2004, 5869 posts, RR: 39
Reply 19, posted (6 years 11 months 3 weeks 13 hours ago) and read 1432 times:



Quoting Silentbob (Reply 2):
that always results in oil price increases as most homes in the northeast use oil for home heat.

and it wasn't cold 10 years ago in winter? didn't see the price going up 10 fold back then.

Quoting Jetjack74 (Reply 3):
The powers that be can't wait to jack up the price.

blame the speculators! OPEC is at maximum output so there is no real need for oil pbl to be at $100...



a true friend is someone who sees the pain in your eyes, while everyone else believes the smile on your face.
User currently offlineGalapagapop From United States of America, joined Feb 2005, 910 posts, RR: 4
Reply 20, posted (6 years 11 months 3 weeks 3 hours ago) and read 1409 times:



Quoting QANTAS077 (Reply 19):
and it wasn't cold 10 years ago in winter? didn't see the price going up 10 fold back then.

But it did see increases. And with the current speculation on the market combined with a market extremely sensitive to demand spikes you get this. And this isn't the North East alone, basically across the US from the Midwest East are seeing extremely cold temperatures, even all the way down in Florida. Surely it gets cold in the winter, but not big spikes like this seen effecting almost have the country....


User currently offlineDougloid From , joined Dec 1969, posts, RR:
Reply 21, posted (6 years 11 months 3 weeks 2 hours ago) and read 1397 times:



Quoting Flighty (Reply 16):
Quoting L-188 (Reply 15):
There was just a story about a new plant in Grafton ND that was shuttered last month because they can't be economicly operated at the current market rate.

If they can't make money in a $100 oil environment, then they should not be building ethanol plants at all. It does nothing for the environment, anyway. It's a bunch of corn farmers looking for profits. Except it isn't profitable, and they want other citizens to pay them lump sums in cash, just because advertising suggests it may help our country somehow.

A lot of ethanol plants were built (with venture capital I might add) on some risky assumptions about where the price of corn would go and stay. I know a guy who's a grain trader and he tells me that many of the ethanol startups did not forward contract for more than 25 per cent of their requirements, and that's a bet that the price would decline before the term of the contract expires-taking a risk and selling short, in other words. It hasn't.

That's probably what put Alchem in Grafton in the shitter.

One reason why ethanol makes sense here is that the spent process material (DDGS) is just as good as feed for animals as corn, minus some of the carbohydrate value but plus protein value. The price of DDGS is around $150 a ton and at today's market price corn is around $168 a ton. So although the feedstock price is high, the spent process material can be resold into the feed market for nearly as much-and that makes ethanol a pretty good financial proposition.

Distillers Dried Grains:
FOB The Plant
(Eastern Corn-Belt) 155.00-165.00 up 10.00-5.00
(Chicago, IL Area) 153.00-155.00 up 5.00
(Lawrenceburg, IN) n/a n/a
(Nebraska) 165.00-170.00 up 17.00-15.00
(Minnesota) 130.00-155.00 up 5.00-dn 1.00
(Kansas) 155.00-190.00 up 5.00-10.00
(Iowa) 152.00-170.00 up 8.00-15.00
(Northern Missouri) 165.00-170.00 up 11.00-5.00

Corn is $4.67 a bushel this morning and there are about 36 bushels in a ton.

I do not know how much weight the material loses in the process of fermentation.


The last time I looked E85 was selling for about $2.30 a gallon here and that's when E10 was selling for $2.73 a gallon. most vehicles are not yet flex fuel capable. I'd probably use the stuff if I could because I like the idea of Americans getting the money instead of it going to that cesspool in the middle east.

In the end it's a matter of BTUs. Ethanol's got less than gasoline per pound.

Here's some interesting information on the subject of ethanol plants

http://www.greentechmedia.com/articl...anol-plant-gets-cancelled-388.html


User currently offlineArrow From Canada, joined Jun 2002, 2676 posts, RR: 2
Reply 22, posted (6 years 11 months 3 weeks 2 hours ago) and read 1393 times:



Quoting Galapagapop (Reply 20):
But it did see increases. And with the current speculation on the market combined with a market extremely sensitive to demand spikes you get this. And this isn't the North East alone, basically across the US from the Midwest East are seeing extremely cold temperatures, even all the way down in Florida. Surely it gets cold in the winter, but not big spikes like this seen effecting almost have the country....

I know heating oil is still used in the northeast, but it is being rapidly overtaken by natural gas. Natural gas is considerably cheaper right now than oil. If the pice differential remains, you'll see more and more conversions to natural gas, and virtually none of the new-build house will have an oil furnace. I don't think heating oil is as big a factor (in North American term) as it was, and it certainly isn't a big factor in the global context of crude oil prices. Look to China for that.



Never let the facts get in the way of a good story.
User currently offlineRayChuang From United States of America, joined Jun 2000, 8034 posts, RR: 5
Reply 23, posted (6 years 11 months 2 weeks 5 days 18 hours ago) and read 1349 times:

I do think that within 20 years we'll get getting diesel fuel, heating oil and kerosene mostly from processing oil-laden algae, mixed in with a small amount of petroleum-based fuel for low-temperature stability. Because oil-laden algae can be grown anywhere there is a source of water (including seawater!), that could have a drastic effect on OPEC, to say the least.

I feel like living in the 1840's, when we were transitioning from using whale oil to kerosene for oil lamps.


User currently offlineL-188 From United States of America, joined Jul 1999, 29832 posts, RR: 58
Reply 24, posted (6 years 11 months 2 weeks 3 days 15 hours ago) and read 1295 times:

Hey guys,

Guess what,


Apparently the reason why oil spiked at 100 a barrel is that a British commodity trader decided to pay that much so that he could claim to be the first one to actually spend 100 dollars a barrel.

That claim cost him $600 because he ended up selling at 99.40 a barrel.

And who says the market reflects anything but perception.

http://www.ktuu.com/Global/story.asp?S=7591107



OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
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