Gas prices this summer

User Forum Topic
Submitted by Bubblesitter on February 22, 2011 - 5:01am

All these Mideast revolution stuff pushing up crude prices. That pesky notion of democracy seems to be spreading. Can you image having George W or Obama or (insert your political villian here) as dictator for 40 years.

China out buying the US in cars 2 years running now. Global economic slow recovery.

Is peak oil and overstated reserves (see recent Wikileaks Saudi embassy cable) true?

What we may have coming is a perfect storm of supply, demand and geopolitics hitting oil prices. Drill baby drill may have a few cent impact on global commodity prices in 5+ years. My head is spinning.

Will Nissan leaf owners zipping by in carpool lanes, sneering at "smokers" seem like geniuses?

My prediction of San Diego average gas price at peak summer driving season, say July 4th is $4.67. With 39% chance of over $5.29. Ok ok I pulled those numbers out of an orifice.

What is your prediction?

Full disclosure. I'm invested heavily in diversified oil, oil services along with some speculative bets in alternative energy, eg natural gas engine tech, etc. I'm also on Nissan leaf list this delivery later this year. Is that a contradiction?

Submitted by Zeitgeist on February 22, 2011 - 4:25pm.

duplicate

Submitted by Zeitgeist on February 22, 2011 - 1:08pm.

Once the prices get high enough, maybe 200. per barrel, then they will drill and refine again in this country, even off the Coast of Kali. It is just a matter of greed prevailing. The corporations do not care about the environment.

Submitted by Arraya on February 22, 2011 - 1:24pm.

The 2008 price spike was a pretty good case study. I think it is unlikely the world can sustain above $120-130 for any length of time. It's when airline-trucking starts going bankrupt, things shipped long distances profit gets eaten up, food riots in the third world and fuel riots in Europe start flaring up. $100-120 is the orange zone and 120 plus is the red zone. We'll have to shed jobs again if oil gets to high. Consider it the world putting a ceiling on economic growth.

Submitted by Zeitgeist on February 22, 2011 - 6:39pm.

http://lindseywilliams101.blogspot.com/2...

Williams predicts $150-200 per barrel- your mileage may vary.

Submitted by paramount on February 22, 2011 - 8:55pm.

Gas will be back in high $2/gal range by September.

This is just a blip on the radar.

Oil is $80 by September 2011.

Take advantage of the hysteria and buy a nice house in Temecula.

Submitted by Zeitgeist on February 23, 2011 - 3:08pm.

"Oil prices hit $US100 per barrel for the first time since 2008, driven by growing concerns about global supplies, as Libya's Moammar Gadhafi continued to lose his grip on the oil-rich country."

http://news.ninemsn.com.au/article.aspx?...

Submitted by Arraya on February 23, 2011 - 3:37pm.

That is the benchmark (WTI) that hit a $100 - all ten or eleven other types of oil are up around $105-115.

Submitted by enron_by_the_sea on February 23, 2011 - 3:34pm.

I am all loaded up with oil stocks. Until our country has sensible long-term energy and transportation policy, the only useful thing one can do is load up XOM.

Submitted by carlsbadworker on February 23, 2011 - 5:10pm.

Rich says "The recovery will continue until something blows up."

I am getting concerned if the gas price is going to be that something.

Submitted by Aecetia on February 23, 2011 - 5:19pm.

YES! Gas (gouging) prices will go up, interest rates up, real estate prices down, Mid-East blow up, government exploding over debt, just wait for something to happen along the line of another Katrina. This is going to be a very trying year. Rich is right. Fasten your seat belt.

Submitted by Bubblesitter on February 24, 2011 - 3:00am.

Agree, shaping up to be a wild ride. Hope it is not a repeat of 2008 financial meltdown. I'm betting it's probably a bad repeat of that 70's show, perhaps 1979 style stagflation.

Seems like lots of elevated risk put there,e.g. sovereign debt and muni downgrades and defaults, oil, botched Fannie/Freddie reform, etc. Not sure how private industry gonna step in without increasing borrowing costs. Isn't F&F still funding & backing nearly all mortgages now?

Bubblesitter

Submitted by Arraya on February 24, 2011 - 7:45am.

http://www.postcarbon.org/article/260011...
The standard economic assumption is that, as a resource becomes scarce, prices will rise until some other resource that can fill the same need becomes cheaper by comparison. What really happens, when there is no ready substitute, can perhaps best be explained with the help of a little recent history and an old children’s story.

Once upon a time (about a dozen years past), oil sold for $20 a barrel in inflation-adjusted figures, and The Economist magazine ran a cover story explaining why petroleum prices were set to go much lower.[1] The U.S. Department of Energy and the International Energy Agency were forecasting that, by 2010, oil would probably still be selling for $20 a barrel, but they also considered highly pessimistic scenarios in which the price could rise as high as $30 (those forecasts are in 1996 dollars).[2]

Instead, as the new decade wore on, the price of oil soared relentlessly, reaching levels far higher than the “pessimistic” $30 range. Demand for the resource was growing, especially in China and some oil exporting nations like Saudi Arabia; meanwhile, beginning in 2005, actual world oil production hit a plateau. Seeing a perfect opportunity (a necessary commodity with stagnating supply and growing demand), speculators drove the price up even further.

As prices lofted, oil companies and private investors started funding expensive projects to explore for oil in remote and barely accessible places, or to make synthetic liquid fuels out of lower-grade carbon materials like bitumen, coal, or kerogen.

But then in 2008, just as the price of a barrel of oil reached its all-time high of $147, the economies of the OECD countries crashed. Airlines and trucking companies downsized and motorists stayed home. Demand for oil plummeted. So did oil’s price, bottoming out at $32 at the end of 2008.

But with prices this low, investments in hard-to-find oil and hard-to-make substitutes began to look tenuous, so tens of billions of dollars’ worth of new energy projects were canceled or delayed. Yet the industry had been counting on those projects to maintain a steady stream of liquid fuels a few years out, so worries about a future supply crunch began to make headlines

Submitted by Arraya on February 26, 2011 - 6:57am.

Now things are getting interesting

Iraq's largest oil refinery shut down after sabotage attack
http://news.xinhuanet.com/english2010/wo...

Submitted by paramount on February 26, 2011 - 11:29am.

carlsbadworker wrote:
Rich says "The recovery will continue until something blows up."

I am getting concerned if the gas price is going to be that something.

Recovery or the illusion of a recovery?

Submitted by GH on February 27, 2011 - 8:17am.

Gas prices will most likely climb to around $4 -$5 a gallon as issues in the middle east heat up. In a month or so Gadaffi will be a distant memory and most likely other hot spots will chill. So after a brief spike and a whole lot of Prius sales I suspect gas prices will settle back around $3 a gallon...

Submitted by patb on February 27, 2011 - 8:20am.

Arraya wrote:
http://www.postcarbon.org/article/260011-how-markets-may-respond-to-resource

Instead, as the new decade wore on, the price of oil soared relentlessly, reaching levels far higher than the “pessimistic” $30 range. Demand for the resource was growing, especially in China and some oil exporting nations like Saudi Arabia; meanwhile, beginning in 2005, actual world oil production hit a plateau. Seeing a perfect opportunity (a necessary commodity with stagnating supply and growing demand), speculators drove the price up even further.

it helped the tax code subsidized SUVs

Submitted by Arraya on February 27, 2011 - 8:23am.

Robert Fisk, in the Sunday Independent, looks at the unrest sweeping the MidEast and concludes:

The Arab revolt that finally threw the Ottomans out of the Arab world started in the deserts of Arabia, its tribesmen trusting Lawrence and McMahon and the rest of our gang. And from Arabia came Wahabism, the deep and inebriating potion – white foam on the top of the black stuff – whose ghastly simplicity appealed to every would-be Islamist and suicide bomber in the Sunni Muslim world. The Saudis fostered Osama bin Laden and al-Qa'ida and the Taliban. Let us not even mention that they provided most of the 9/11 bombers. And the Saudis will now believe they are the only Muslims still in arms against the brightening world. I have an unhappy suspicion that the destiny of this pageant of Middle East history unfolding before us will be decided in the kingdom of oil, holy places, and corruption. Watch out.

Submitted by Bubblesitter on February 27, 2011 - 8:53am.

Yes, lots of extremism out in the MidEast. Long simmering ethnic, religious, national feuds. They seem to have a long memory, centuries and centuries.

Every-time you pump gas, a good percentage is going straight to various petro dictatorships. Iran is actually getting $ cash from US consumers , even though there is a formal trade embargo. Until recently, yesterday noted Nut case Quaddafi was getting your money also. UN sec council embargo is now in place. Another dictator Hugo Chavez of Venezuela is also getting your money, right out of your pocket.

Oil money just fuels those conflicts and dictatorships

This is one other factor in me looking seriously into PV-EV. I want to personally decouple from the volatility of energy markets and not hand my money over to Petro-dictators.

http://piggington.com/solar_car_wtf

Bubblesitter

Submitted by Bubblesitter on March 6, 2011 - 7:42pm.

You folks following the oil commodity market?

Interesting to see the very high call volume in the $160, $170 strike prices.

The unrest in Libya has turned into a full fledged civil war.

Next Friday's "day of rage" protest will cause problems throughout the oil producing Mideast.

Should be an interesting week ahead in the markets.

Bubblesitter

Submitted by SD Realtor on March 6, 2011 - 8:01pm.

You may want to also look at the volume for the shorts on he dollar.

Submitted by flu on March 6, 2011 - 8:16pm.

I guess I should buy more oil and gas stocks...Hey, I got to makeup for spending $4.50/gallon on premium fuel on a 4 banger, 6 banger, and 8 banger turbo...Lol....Good news is so far, race fuel has almost stayed constant.... $11-12/gallon.

Submitted by Bubblesitter on March 7, 2011 - 2:43am.

Yes, sorta like farmers playing in the commodities markets, certainly good way to hedge.

These personal hedging strategies make alot of sense in uncertain times.

I can see a bumper sticker on that corvette...."gas paid by my oil futures hedging strategy"

Here's some snide Nissan Leaf bumper stickers...

"Doing my part to lower YOUR gas prices"
"Look no tailpipe"
"Pull my finger....no emissions"
"Petro Dictator free driving"
mmmmm....

I'm not a bumper sticker kind of guy, but I wonder why they seem more prevalent in the east. You just don't see alot in SoCal, other than the occasional car plastered with them on a particular topic

Submitted by flu on March 7, 2011 - 6:25am.

Bubblesitter wrote:
Yes, lots of extremism out in the MidEast. Long simmering ethnic, religious, national feuds. They seem to have a long memory, centuries and centuries.

Every-time you pump gas, a good percentage is going straight to various petro dictatorships. Iran is actually getting $ cash from US consumers , even though there is a formal trade embargo. Until recently, yesterday noted Nut case Quaddafi was getting your money also. UN sec council embargo is now in place. Another dictator Hugo Chavez of Venezuela is also getting your money, right out of your pocket.

Oil money just fuels those conflicts and dictatorships

This is one other factor in me looking seriously into PV-EV. I want to personally decouple from the volatility of energy markets and not hand my money over to Petro-dictators.

http://piggington.com/solar_car_wtf

Bubblesitter

Chances are, everytime you eat, you contribute to Monsanto's bottom line.

Submitted by Jazzman on March 7, 2011 - 10:05am.

Saudi Arabia would cause real problems if supply is disrupted, but there have been no significant demonstrations ...as yet. The royal family is wealthy enough to pump cash into social programs to help extinguish unrest. Peak oil is a problem waiting to happen, and you hear a lot about substitutes, but no radical shifts in the way we do things. Europe absorbs a much higher $ per gallon of gas, so why can't the US consumer? One problem is that infrastructure in the US is built around the car. High speed trains must come, and public transportation dramatically improved. The auto industry must wake up and dump the truck, and over-sized sedan. Build cities up, not out. Find alternatives for all those products that include oil.

Submitted by afx114 on May 26, 2011 - 5:51pm.

WikiLeaks cables show speculators behind 2008 oil bubble

Well, thanks to Wikileaks, we now know that when the Bush administration reached out to the Saudis in the summer of '08 to ask them to increase oil production to lower prices, the Saudis responded by saying they were having a hard time finding buyers for their oil as it was, and instead asked the Bush administration to rein in Wall Street speculators.

...

All of this is significant because both the Bush administration and the Obama administration have denied this narrative to various degrees. The CFTC only recently admitted that speculation played a role in the 2008 mess, having originally (and stubbornly) blamed supply and demand issues. Subsequent analyses have shown that the Saudi position, that worldwide demand for oil never increased nearly enough to account for the gigantic 2008 price spike, was almost certainly correct.

More on this to come later. Given the surge in commodities prices in the last year (which may in part have caused the rise in food prices that led to disturbances in the Middle East) and the Obama administration's seeming reluctance still to rein in speculators, it's remarkable that this issue doesn't get more press. It'll be interesting to see how much ink these Wiki cables get.

Submitted by bearishgurl on May 26, 2011 - 6:30pm.

afx114 wrote:
WikiLeaks cables show speculators behind 2008 oil bubble

Well, thanks to Wikileaks, we now know that when the Bush administration reached out to the Saudis in the summer of '08 to ask them to increase oil production to lower prices, the Saudis responded by saying they were having a hard time finding buyers for their oil as it was, and instead asked the Bush administration to rein in Wall Street speculators.

...

All of this is significant because both the Bush administration and the Obama administration have denied this narrative to various degrees. The CFTC only recently admitted that speculation played a role in the 2008 mess, having originally (and stubbornly) blamed supply and demand issues. Subsequent analyses have shown that the Saudi position, that worldwide demand for oil never increased nearly enough to account for the gigantic 2008 price spike, was almost certainly correct.

More on this to come later. Given the surge in commodities prices in the last year (which may in part have caused the rise in food prices that led to disturbances in the Middle East) and the Obama administration's seeming reluctance still to rein in speculators, it's remarkable that this issue doesn't get more press. It'll be interesting to see how much ink these Wiki cables get.

Duh!! Gas is currently 4.11 to 4.37 up and down the state. Some SF outlets may be slightly higher. Of course the runaway prices are caused by the exuberance of mostly "day-traders."

Bubblesitter wrote:
...My prediction of San Diego average gas price at peak summer driving season, say July 4th is $4.67. With 39% chance of over $5.29. Ok ok I pulled those numbers out of an orifice.

What is your prediction?

Bubblesitter, I think you're right on target for July 4th (4.67) and, of course, I'll be on the road during that time, albeit in states where gas typically costs a bit less than here :=}

Submitted by CA renter on May 27, 2011 - 2:33am.

afx114 wrote:
WikiLeaks cables show speculators behind 2008 oil bubble

Well, thanks to Wikileaks, we now know that when the Bush administration reached out to the Saudis in the summer of '08 to ask them to increase oil production to lower prices, the Saudis responded by saying they were having a hard time finding buyers for their oil as it was, and instead asked the Bush administration to rein in Wall Street speculators.

...

All of this is significant because both the Bush administration and the Obama administration have denied this narrative to various degrees. The CFTC only recently admitted that speculation played a role in the 2008 mess, having originally (and stubbornly) blamed supply and demand issues. Subsequent analyses have shown that the Saudi position, that worldwide demand for oil never increased nearly enough to account for the gigantic 2008 price spike, was almost certainly correct.

More on this to come later. Given the surge in commodities prices in the last year (which may in part have caused the rise in food prices that led to disturbances in the Middle East) and the Obama administration's seeming reluctance still to rein in speculators, it's remarkable that this issue doesn't get more press. It'll be interesting to see how much ink these Wiki cables get.

Good stuff, afx.

But, "nobody could have seen it coming."

Submitted by Arraya on May 27, 2011 - 5:21am.

http://www.guardian.co.uk/business/2011/...
The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.

However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.

According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as "peak oil".

Submitted by Rich Toscano on May 27, 2011 - 10:10am.

Speculators can contribute to short-term spikes and drops (eg they surely played a role in the rapid 2008 runup to $147 and subsequent crash to $34).

But they aren't responsible for the general trend towards high oil prices that we've seen this decade. Global oil production has basically not increased at all for 5 or 6 years against a trend of increasing global demand.

Speculators, along economic booms and slowdowns, can cause a lot of volatility around the underlying upward trend in oil prices. But they aren't responsible for the trend itself... the "blame" there lies with the inability of oil production to keep up with rising demand.

Submitted by Arraya on May 27, 2011 - 1:50pm.

The only thing that could prevent another major oil shock from happening before the end of 2012, would be another major economic contraction. Without a contraction, keeping inflationary policies, in the face of a major oil shock, should be interesting. Throw in the wall street gambling cartel pushing up prices and that is what causes revolutions in third world countries

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