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ME_Andy 05-20-2015 10:46 PM

My predictions on OPEC and oil prices
 
I have to eat my hat regarding my earlier estimation that average US gas prices would never again exceed $3/gal. It looks like the low oil prices have driven so many US drilling rigs away that gas prices will surely take a hard bounce.

Now here's my most recent theory: I expect OPEC to drive oil prices down, then let them bounce back periodically, like a sine wave. By doing so, they will keep their average price/gallon high enough to cover their bills. But the smaller oil producers who don't have strong cash reserves are going to be wrung out of the market on the downswings.

I think this game might work for a few years, maybe even a decade. But eventually, I still think electric cars and higher fuel efficiency standards will slowly kill off oil.

Your thoughts?

pgfpro 05-20-2015 11:54 PM

Very interesting theory. I like it.;)

IamIan 05-21-2015 06:13 AM

1 Attachment(s)
Historically (~60 year trend) US $/Gallon adjusted for inflation averages long term around ~$2.50 Gallon (based on 2012 $dollar).

But there have been up to +40% highs and -40% lows in the fluctuations.

Soo I expect it to continue to track on a long term average roughly with inflation .. but with those + and - fluctuations on shorter periods of time.

The absolute value of the magnitude of those +/- fluctuations I expect to roughly fit a bell curve.

- - - - -
Long run ... over 50 years down the road .. I also expect BEV will replace oil as a transportation fuel (2σ) .. and over 100 years down the road I expect RE to replace fossil fuels in general (2σ).

cRiPpLe_rOoStEr 05-21-2015 06:42 AM

Leaving the energy security float at the willing of the oil sheiks doesn't seem like a wise decision. Anyway, at least for me it seems like OPEC drives oil prices down every time an alternative fuel becomes cost-effective enough to be perceived as a viable replacement to either gasoline or Diesel fuel.

Eddie25 05-21-2015 07:53 AM

what was the highest u guys in the us paid for fuel? talking recently not like 10 or more years ago

BabyDiesel 05-21-2015 04:35 PM

You've been eating quite a number of hats here lately, ME_Andy :p

I do not see oil every being replaced until it runs out. There is too much in the way of money and power worldwide for oil to slowly fade away.

Eddie25, I payed over $4.00/gallon for 93 octane less than 3 years ago. I filled my Escort up yesterday. It was $2.899 for 89 octane.

Arragonis 05-21-2015 05:58 PM

Quote:

Originally Posted by ME_Andy (Post 480294)
I have to eat my hat regarding my earlier estimation that average US gas prices would never again exceed $3/gal. It looks like the low oil prices have driven so many US drilling rigs away that gas prices will surely take a hard bounce.

Now here's my most recent theory: I expect OPEC to drive oil prices down, then let them bounce back periodically, like a sine wave. By doing so, they will keep their average price/gallon high enough to cover their bills. But the smaller oil producers who don't have strong cash reserves are going to be wrung out of the market on the downswings.

I think this game might work for a few years, maybe even a decade. But eventually, I still think electric cars and higher fuel efficiency standards will slowly kill off oil.

Your thoughts?

Opec cut prices and over produced in the 80s to kill competition I. E. The USSR. Once done they imposed limits based on reserves which 'adjusted' which reduced output and put up prices. This led some to think the peak was here.

Then came the crash and unconventional oil and the world has loads of the stuff.

Now Opec is driving down the price to try and kill competition again. E.g. Off shore is already shutting down.

We will always need oil, maybe less for energy which is good but for other essential stuff.

My bet on price is a medium term rising trend until ~2030 then perhaps stability as alternatives come online.

Unless the Malthusians take over, then we're fe***d.

user removed 05-21-2015 07:29 PM

I am at 5 cents a mile. It's possible I will sell the Sentra and all 3 of my two wheeled vehicles within the last week, ending tomorrow. That will leave me my project and the Mirage, with 33% of the funds I spent on the Mirage back in my bank.

I say $2.50 a gal in the US, but it could jump if there is an incident.

Gas and gold seem to generally follow parallel price pathways.

regards
mech

Eddie25 05-22-2015 04:49 AM

Quote:

Originally Posted by BabyDiesel (Post 480399)
You've been eating quite a number of hats here lately, ME_Andy :p

I do not see oil every being replaced until it runs out. There is too much in the way of money and power worldwide for oil to slowly fade away.

Eddie25, I payed over $4.00/gallon for 93 octane less than 3 years ago. I filled my Escort up yesterday. It was $2.899 for 89 octane.

after all the strikes here in our mining sector our currency has dropped against the USD. we pay USD for oil so the drop in price didn't benefit at all.

next month we are paying $4.22 per gallon. at its peak when the oil price was so high we were paying nearly 5$ per gallon. currently my small car that averages 40mpg costs 7 cents per km or 11 cents per mile converted to us

cRiPpLe_rOoStEr 05-22-2015 05:10 AM

Quote:

Originally Posted by Eddie25 (Post 480454)
after all the strikes here in our mining sector our currency has dropped against the USD. we pay USD for oil so the drop in price didn't benefit at all.

next month we are paying $4.22 per gallon. at its peak when the oil price was so high we were paying nearly 5$ per gallon. currently my small car that averages 40mpg costs 7 cents per km or 11 cents per mile converted to us

Wasn't most of the gasoline used in South Africa made out of locally-sorced coal by Sasol?


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