[quote=temeculaguy]Oil is done, it will have pops but that cat isn’t getting back in the bag…
The tesla and other startups may fail and the prius was just a novel start but the auto industry is heading to entirely oil free because that is what the customers want… [/quote]
I want to make a couple points.
1 – Once the world economy picks up, lowering gasoline consumption in itself will not lower crude demand. The way I understand it a barrel of oil can produce three lines of products, chemical products used by industry like plastics, fertilizer, asphalt?; diesel and airplane fuel, gasoline for autos. The percentage of each line that can be extracted from a barrel oil is fixed. I.e., lowering gasoline consumption will get you no more diesel or airplane fuel per barrel of oil. Therefore, in order to decrease world demand for oil, we need to find alternative sources for all three lines, not just gasoline, and or airplane fuel, or diesel. I’ve read of attempts to create bio-diesel bio-airplane fuel by doing stuff like modifying bacteria genes. However, if memory serves the estimated level or profitability is when oil is above $120/barrel.
2- Most steady industry analysts believe that oil will go back up once world economy recovers. However, no one is sure when that will occur, and just as importantly, I don’t know how to safely long oil for that eventuality. I am pretty sure you can’t buy oil for delivery in 2015 today. I’ve posted elsewhere on this blog cautioning against buying stock in oil multi-nationals because they control less and less of the oil in the ground. Most of new fields are controlled by states that are not friendly with us (Russia, Venezuela, Iran, Saudi Arabia (not directly, but via the dominant Wahhabism Islam promoted by the state), former Soviet republics). I’ve read suggestions to invest in companies that specialize in oil field service and oil field discovery when crude was ~$140/barrel. Well, that is assuming these companies survice the lack of activity in the next few years due to low prices.
