Oil Contrarian Believes Oil Prices Could Plummet to $28 Per Barrel As Early As Summer
Most energy analysts on Wall Street expect oil prices to remain high for the foreseeable future because of strong demand and limited supply.
Then there is Tim Evans, a contrarian who says today's crude oil prices above $50 a barrel reflect nothing more than a market bubble fed by speculation and unwarranted fear. Evans, a senior analyst at IFR Energy Services in New York, believes oil prices could plummet to $28 a barrel as early as this summer.
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- lnglive1011yyz
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RE: Finally Someone With Good News On Oil Prices
I want him on my team.
All we can do is hope for the best.
1011yyz
All we can do is hope for the best.
1011yyz
RE: Finally Someone With Good News On Oil Prices
In general I like contrarian thinking. It's one of the only ways to ensure that you are buying low and selling high. For example right now I've been buying airline stocks while they are so low. However, I'm waiting for my airline stocks to pay off and that won't happen with oil this high. So I hope he's right.
RE: Finally Someone With Good News On Oil Prices
There was also a short blurb on CNN today stating that OPEC had decided to increase daily production based on the currently high price. No solid numbers were given as to how much a day the increase would be, no further info was given.
Would not an increase cause the price to stabilize - if not fall a bit?
Regardless, I don't see a savings at the pump based on a small increase in production of crude. The way we tend to be gouged by the oil companies anyway, I wouldn't foresee a drop regardless.
Would not an increase cause the price to stabilize - if not fall a bit?
Regardless, I don't see a savings at the pump based on a small increase in production of crude. The way we tend to be gouged by the oil companies anyway, I wouldn't foresee a drop regardless.
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- prebennorholm
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RE: Finally Someone With Good News On Oil Prices
It is to a large degree a speculation bubble. Like any other bubble it will burst some day.
Enormous fortunes have been "earned" on speculation. And there will be a lot of crying when it bursts.
Like the IT bubble and real estate bubbles it will burst. But it is impossible to predict when it will happen.
Anyway the bubble was created in the beginning by real shortages. But it was not just crude oil production shortages.
Oil companies have shut down old refineries rather than rebuilding and modernizing them to comply to new safety and environmental standards.
New refineries have been built in third world countries, but operate with reduced throughput due to lack of experienced workforce.
Recently a few refineries blew up due to accidents - Venezuela and Texas.
Shortage in transportation: Due to a string of accidents and incidents - starting with Exxon Valdez - single hull tankers are prohibited in more and more waters, and there simply ain't enough double hulls out there yet.
So the speculators had an easy game. When the first minor speculation fortunes had been made, then the "lemming-effect" took control, and that's what wee feel at the gas station today.
Anyway I doubt that many speculators wanted the bubble to go as far as it has gone. Those who haven't stepped out yet, are positioned for a kingsize punishment.
But how can a price continue to bubble if there is no real shortage? The name of the game is "futures". Speculators buy oil at an agreed price, oil which is produced sometimes several months later. When it is finally pumped out of the ground, then every old rustpile of a tanker is used to store the oil until the price has gone up and the profit can be collected.
Enormous fortunes have been "earned" on speculation. And there will be a lot of crying when it bursts.
Like the IT bubble and real estate bubbles it will burst. But it is impossible to predict when it will happen.
Anyway the bubble was created in the beginning by real shortages. But it was not just crude oil production shortages.
Oil companies have shut down old refineries rather than rebuilding and modernizing them to comply to new safety and environmental standards.
New refineries have been built in third world countries, but operate with reduced throughput due to lack of experienced workforce.
Recently a few refineries blew up due to accidents - Venezuela and Texas.
Shortage in transportation: Due to a string of accidents and incidents - starting with Exxon Valdez - single hull tankers are prohibited in more and more waters, and there simply ain't enough double hulls out there yet.
So the speculators had an easy game. When the first minor speculation fortunes had been made, then the "lemming-effect" took control, and that's what wee feel at the gas station today.
Anyway I doubt that many speculators wanted the bubble to go as far as it has gone. Those who haven't stepped out yet, are positioned for a kingsize punishment.
But how can a price continue to bubble if there is no real shortage? The name of the game is "futures". Speculators buy oil at an agreed price, oil which is produced sometimes several months later. When it is finally pumped out of the ground, then every old rustpile of a tanker is used to store the oil until the price has gone up and the profit can be collected.
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- frugalqxnwa
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RE: Finally Someone With Good News On Oil Prices
I hope this Evans is right so airlines can start making money again and I won't burn a hole in my pocket every time I fill up at the gas station. $2.00 a gallon is hard on a college budget!
(Before I get flamed, I realized the gas prices in Europe are much higher, as in $3-4.00 a liter, but still our price is getting high for my budget.)
(Before I get flamed, I realized the gas prices in Europe are much higher, as in $3-4.00 a liter, but still our price is getting high for my budget.)
RE: Finally Someone With Good News On Oil Prices
Bullshit. Bush & Co. have put way too much work into getting these oil prices up. They aren't going to let up anytime soon.
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- flying_727
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RE: Finally Someone With Good News On Oil Prices
| Quoting DC10GUY (Reply 6): Bullshit. Bush & Co. have put way too much work into getting these oil prices up. They aren't going to let up anytime soon. |
I miss the old days of A.net (6 years ago when I joined) when we didn't have to read worthless replies like this, that have no relevant information or rational thought.
[Edited 2005-04-05 02:33:44]
RE: Finally Someone With Good News On Oil Prices
Funny, I don't remember them days ???
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- ClearedDirect
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RE: Finally Someone With Good News On Oil Prices
Flying_727
Agree wholeheartedly!
Heard the production increase was to be in the neighborhood of 500,000 barrels/day increase. Not sure what that will do but its what I heard on the news.
CD
Agree wholeheartedly!
Heard the production increase was to be in the neighborhood of 500,000 barrels/day increase. Not sure what that will do but its what I heard on the news.
CD
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- A340Spotter
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RE: Finally Someone With Good News On Oil Prices
All I know is that nearly every time OPEC has increased production, the price of oil has gone up instead of down...The worst was about 6-8 months ago when the Saudis said they would increase 1.5%. Price went down 1.50 or so on that news, but by day's end, oil ended up for the day...even OPEC scratches their heads about this trend of late.
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- thomasphoto60
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RE: Finally Someone With Good News On Oil Prices
| Quoting DC10GUY (Reply 6): Bullshit. Bush & Co. have put way too much work into getting these oil prices up. They aren't going to let up anytime soon. |
Wanna put some concrete numbers and solid facts behind your remarks or are you just wanting to turn this topic into a anti-Bush rantfest? Sounds a lot like my brother in L.A.
Personally I do not believe that the world is a peak production as some analysts have stated and I do believe that this is a bubble, still when the bubble will burst is anyone's guess.
Thomas
RE: Finally Someone With Good News On Oil Prices
| Quoting Thomasphoto60 (Reply 11): Personally I do not believe that the world is a peak production as some analysts have stated and I do believe that this is a bubble, still when the bubble will burst is anyone's guess. |
So do yah,
| Quoting Thomasphoto60 (Reply 11): Wanna put some concrete numbers and solid facts behind your remarks |
The oil war in Iraq sure did help them oil prices ... The "fear" premium has got to add a few bucks to the cost of a barrel ... And that will be here for a while.
RE: Finally Someone With Good News On Oil Prices
Why is it that when someone tries to predict a good thing, people rather believe him/her, rather than the other guy who believes oil will hit 105/barrel next year? Denial at its' best. 
This guy sounds like he did his research just as the other guy did, so all in all, we're are still clueless as to how much it's going to cost next year.
All I know is that in the long run (5 year), price of resources like oil only goes up.
Cheers!
This guy sounds like he did his research just as the other guy did, so all in all, we're are still clueless as to how much it's going to cost next year.
All I know is that in the long run (5 year), price of resources like oil only goes up.
Cheers!
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lightsaber
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RE: Finally Someone With Good News On Oil Prices
| Quoting Flying_727 (Reply 7): I miss the old days of A.net (6 years ago when I joined) when we didn't have to read worthless replies like this, that have no relevant information or rational thought. |
Ok, I wasn't around on airliners.net then, but I agree with you idea!
| Quoting Sanjet (Reply 13): All I know is that in the long run (5 year), price of resources like oil only goes up. |
??? In the long term, alternatives are found or production efficiencies occur. Commodity prices have declined for 200 years in general. Those few that didn't... have long ago been replaced. Yes, sperm whale oil would cost a fortune today (and be on the black market); but who cares.
| Quoting Sanjet (Reply 13): This guy sounds like he did his research just as the other guy did, so all in all, we're are still clueless as to how much it's going to cost next year. |
Alas, short term I'm pessimistic. Long term I'm waiting for a bioengineered crop to grow our own oil!
Lightsaber
RE: Finally Someone With Good News On Oil Prices
| Quoting A340Spotter (Reply 10): All I know is that nearly every time OPEC has increased production, the price of oil has gone up instead of down...The worst was about 6-8 months ago when the Saudis said they would increase 1.5%. Price went down 1.50 or so on that news, but by day's end, oil ended up for the day...even OPEC scratches their heads about this trend of late. |
I think people assume OPEC does what it says. In fact, evidence is OPEC is more for show. They agree on something but do whatever they want. They are all probably producing like mad and when a glut hits the market the bubble will burst.
However, long-term, the hard numbers show oil production growth has stopped and there aren't a whole lot of ideas of where they are going to find large new reserves and given the growth rates of China and India, the popped bubble won't stay popped for long.
There is some evidence that the cold war era mentality of the Bushies is slowly starting to change and they are seeing not just oil but ALL energy forms as a strategic issue and there might be more money for alternative fuel sources. Even before the oil spike, the same venture capitalists who financed the high tech boom started investing in solar and other alternative energies. Alternative energy is the next big tech boom -- you heard it here. I've gotten a 30% bump on my stocks already.
This will help airlines in that competition for oil will decrease but I suspect people will convert slowly so airlines will be forced to ride the front of the price wave from here on out. Boeing realized this first and has a huge advantage on Airbus because of it. That advantage will be very noticeable on the 787 sales. Nobody smart will buy the A350 - they just can't afford to have their disadvantage magnified by increasing oil prices. However, Airbus is smart and is probably already working on new projects.
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- flying_727
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RE: Finally Someone With Good News On Oil Prices
| Quoting DC10GUY (Reply 12): The oil war in Iraq sure did help them oil prices ... The "fear" premium has got to add a few bucks to the cost of a barrel ... And that will be here for a while. |
Maybe the Iraq war wasn't for oil, and that's why it hasn't drove prices down, and check the number of congressmen from both sides of the isle that would laugh at you for saying that's what the war was for. do what Thomasphoto said.
| Quoting Thomasphoto60 (Reply 11): Wanna put some concrete numbers and solid facts behind your remarks or are you just wanting to turn this topic into a anti-Bush rantfest? |
Or go away, so the rest us don't have to read your crap, I see you posting all over the forum saying stupid and pointless things. If you can't stop, then go away.
Flying_727
RE: Finally Someone With Good News On Oil Prices
The high prices today for oil are being driven up by China, India and other fast-developing countries, limits on production in places like Iraq, high demand continuing in places like the USA with wasteful ways, limited transportaion and refining capacity and other reasons. I doubt we will see prices drop below $40 in the near future, and that is about a $17/bbl drop, and considerable by itself. High pricing, even in the $40's range will hurt many economies throughout the world and the recent $50's pricing is already having negative affects upon many economies and in part may trigger a moderation in pricing to the $40's. For airlines, majors and LCC's, including those with hedging deals and high fare yields, it still isn't a good situation and will push more of them in the peak summer months to push prices up or push some to their demise.
RE: Finally Someone With Good News On Oil Prices
The only thing more certain than a temporary short-lived dip in oil prices, is an even bigger increase afterwards. Anyone who thinks the price of a finite, non-renewable source of energy will not continue to go up and then some more, must be drinking the the GWB magic coolaid.
RE: Finally Someone With Good News On Oil Prices
$2.00 a gallon is hard on a college budget!
In Canada, some areas have 1 gallon going for $3.20 USD. The US is paying half that rate in most areas. And yet here in Canada, the most popular vehicle is still the huge SUV. I drive a Toyota Echo for that reason. But even if gas was free, I'd still drive the Echo. I'm not going to line the pockets of arab dictators and scumbag islamic terrorists.
In Canada, some areas have 1 gallon going for $3.20 USD. The US is paying half that rate in most areas. And yet here in Canada, the most popular vehicle is still the huge SUV. I drive a Toyota Echo for that reason. But even if gas was free, I'd still drive the Echo. I'm not going to line the pockets of arab dictators and scumbag islamic terrorists.
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- UnitedStarGold
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RE: Finally Someone With Good News On Oil Prices
| Quoting Flying_727 (Reply 7): I miss the old days of A.net (6 years ago when I joined) when we didn't have to read worthless replies like this, that have no relevant information or rational thought. |
The downside to democracy is that ignorant clods like the person you are quoting actually has the right to express his views at the ballot box.
Fortunately, most of society is reasonably rational.
RE: Finally Someone With Good News On Oil Prices
Many people are forgetting that a good portion of what you pay at the pump is tax. For an inelastic resource that is NOT a luxury good nor a 'sin' item, it's quite amazing how heavily it's taxed and that no one complains. The average tax per gallon in the US is 42 cents. So your $2/gallon of gas if treated as most other essentials (food, etc) and not taxed would be $1.58. Europe is MUCH worse, the UK is horribly penalized by fuel taxes.
Nonetheless, I too believe that this is a speculative bubble. Oil consumption did not just skyrocket overnight. China and India aren't consuming exponentially more than they were two years ago. Sure they're buying more oil but certainly not enough to justify a $20/bbl rise.
We've seen similar problems in the cattle industry. Cattle prices are at an all time high. Consumption is down, beef producers can't move product but cattle prices are sky high because of all the 'paper' investing. Here, too, there's a bubble. At some point,consumption utterly stalls out and fails to justify the higher price, the major institutional buyers bail and the market utterly craters.
Nonetheless, I too believe that this is a speculative bubble. Oil consumption did not just skyrocket overnight. China and India aren't consuming exponentially more than they were two years ago. Sure they're buying more oil but certainly not enough to justify a $20/bbl rise.
We've seen similar problems in the cattle industry. Cattle prices are at an all time high. Consumption is down, beef producers can't move product but cattle prices are sky high because of all the 'paper' investing. Here, too, there's a bubble. At some point,consumption utterly stalls out and fails to justify the higher price, the major institutional buyers bail and the market utterly craters.
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- clickhappy
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RE: Finally Someone With Good News On Oil Prices
The worst part of these lame ass gas prices is, over time the price goes up 50 cents a gallon, and when the wholesale costs retreat to the pre-rise levels, the gas companies cut prices by say, 35 cents, thus keeping an extra 15 cents a gallon for themselves. Everyone is glad that gas dropped by 35 cents, but what they should be asking is why doesn't it ever go down to what it was before the rise?
RE: Finally Someone With Good News On Oil Prices
DC10GUY:
Ask yourself this question. Why would George Bush run up the price of oil, when the major airlines and high-level executives contirbuted so much money to both campaigns?
George Bush does not stab his friends and supporters in the back.
A friend of mine works for BP. Management likes to see oil between $25 and $35 a barrel. If the price is too low, then BP doesn't generate enough profits to explore for new oil and undertake major capital projects. If the price is too high, the the federal government starts investigating.
That said, I saw the CEO of Haliburton on CNBC this morning. Despite the prolonged hike in prices, oil companies are still skittish to buy new exploration and drilling equipment. The belief is that these prices will not last, and new oil found will not generate enough cash flow to pay for the investments.
That view tends to fall in line with the views of Tim Evans.
Ask yourself this question. Why would George Bush run up the price of oil, when the major airlines and high-level executives contirbuted so much money to both campaigns?
George Bush does not stab his friends and supporters in the back.
A friend of mine works for BP. Management likes to see oil between $25 and $35 a barrel. If the price is too low, then BP doesn't generate enough profits to explore for new oil and undertake major capital projects. If the price is too high, the the federal government starts investigating.
That said, I saw the CEO of Haliburton on CNBC this morning. Despite the prolonged hike in prices, oil companies are still skittish to buy new exploration and drilling equipment. The belief is that these prices will not last, and new oil found will not generate enough cash flow to pay for the investments.
That view tends to fall in line with the views of Tim Evans.
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- TheRedBaron
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RE: Finally Someone With Good News On Oil Prices
Psssss......dont tell anybody here is a secret...sooner or later oil will be gone, so price in the long run will keep going up.....
P.?D I hope it gets to 28 a barrel, but in the long run (10 years onward) price will be triple that at least, Heck just see some Arab countries diversifying their economy because they know their oil will be gone someday....
P.?D I hope it gets to 28 a barrel, but in the long run (10 years onward) price will be triple that at least, Heck just see some Arab countries diversifying their economy because they know their oil will be gone someday....
RE: Finally Someone With Good News On Oil Prices
Personally I think that good news on oil prices would mean a price at which consumers begin to alter their consumption of crude based fuels. That price will be well above current levels.
A steady price rise to levels at which consumers start actively conserving this irreplacable energy source ($100+?) would be in the best interest of all, encouraging the development and use of alternatives to gasoline.
A steady price rise to levels at which consumers start actively conserving this irreplacable energy source ($100+?) would be in the best interest of all, encouraging the development and use of alternatives to gasoline.
RE: Finally Someone With Good News On Oil Prices
| Quoting DC10GUY (Reply 6): Bullshit. Bush & Co. have put way too much work into getting these oil prices up. They aren't going to let up anytime soon. |
| Quoting DC10GUY (Reply 12): The oil war in Iraq sure did help them oil prices ... The "fear" premium has got to add a few bucks to the cost of a barrel ... And that will be here for a while. |
| Quoting LTBEWR (Reply 17): The high prices today for oil are being driven up by China, India and other fast-developing countries, |
As LTBEWR stated , one of the main factors in high oil prices are China and India . Espescially China , which has maintained a GDP of over 10% for years and higher than 13% at times . Both nations have of populations in the billions . China and India did not have the growth back in the early 90's like they do now .
Gas still is not as expensive as it was in 1980 .
Ajusted for inflation : gas was close to $3.00 a gallon in 1980-81. And there was no demand problem back then.
So we still have a way to go to top President Carter's days of high unemployment , double diget inflation and extremely high gas prices . And allowing Pol Pot to killing millions of his own people !
Appeasement really helped gas prices !!!
I don't know what it is but when the word OIL is spoken , some people really get excited !
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