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?

Very interesting theory. I like it.;)

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.

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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).

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.

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

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.

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.

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

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?

I burn ethanol-free premium. Before the down-turn, it was $5.19/gallon. My last purchase was at $4.20.

OTOH I pay 5¢ per kilowatt-hour for electricity.

The Saudis are never going to do anything to hurt themselves.

Back in the day, everyone else relied on SA to cut production to prop up prices during supply gluts. But every time they did, they simply lost market share. It's like asking the farmer with the biggest field to stop growing food so everyone else can get in on the action.

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This time Farmer Brown didn't budge.

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And that is probably going to be the theme every time the prices go back up to the $80-$100 level and there's a new oil rush in fracktown... at least until the seemingly bottomless Saudi reserves start to falter.

$2.65/gallon here for 87 octane (with 10% ethanol).

I hope North Dakota and the Canadian oil sands can survive what OPEC is doing to the market.

During the peak of "The Peak" in the mid-2000s several people suggested that the Saudis and in particular Ghawar was in decline. Once that happens then, it was said, the world oil output is in decline. Of course now we know different.

Its interesting that the low oil price now coincides with the Saudis getting "militaristic", e.g. Yemen and probably more action against IS and Iran - maybe there is some panic / worry there, could also explain the recent change in the succession line.



Highest price I have paid was £1.42 a litre which is ~£5.62 a US Gallon, or at today's exchange rate $8.72 a US gallon.

And you wonder why we don't buy trucks ? :D

I wouldn't expect the Saudis to engage in a direct confrontation against ISIS.

Agreed - more likely by proxy, not direct.

US "blood" for Arab "oil" time...again?

Probably not as US has it's own oil these days. More local agents.

Dangerous game.

https://www.google.com/search?q=saud+pakistan+yemen

Pakistani boots on the ground.

Pakistan said no to putting troops in, but is "supporting" in the UN and elsewhere.

Andy- I respect that you called yourself out on that prediction. When prices began to rise, I was tempted to bring up the thread where you made the prediction. I've much respect for people that admit when they were wrong. Also much respect for making a prediction in the first place.

Your forecast for oil prices seems reasonable to me. The only thing I would add is that oil will always be necessary since our world is made of it, and certain transportation such as planes, trains, and ships will need oil for the foreseeable future. As easily obtainable oil is exhausted, prices will increase as the difficulty in mining it increases.

All that said, I believe the price of most everything will drastically reduce in the next 50 years as automation and robotics drives the cost of production ever closer to near zero marginal cost. Finding useful employment will become more challenging as most jobs are eliminated.

https://www.youtube.com/watch?v=5-iDUcETjvo

Opec 'will bow to the Saudis’ and keep oil prices low - Telegraph

Always nice to mix a little competition with some conservation.

regards
mech

I have been thinking about this lately and i have concluded that oil prices will rise. Oil producers are pushing for legislation that will allow them to export oil and compete on the world market.

Now, Obama and the EPA really are fond of their cafe standards and ever increasing efficiency, so why would they pass up the chance to increase oil prices and give a reason for better efficiency.

I think the ban on oil exports will be lifted and oil prices in the US will rise back to where they were. Roughly 3.50 to 4 $/gal gas.

It seems likely to an increase, but at a certain point it might turn the market more favorable to biofuels, not just the ethanol and algae-based biodiesel but also biomethane.

For WHOM does the USGooberment "work"?

OPEC exists to control prices.

Not one to shrink away from the hard questions, eh?

From my perspective, the top of the 'payramid' (typo, stet) is wreathed in clouds. But I suspect—ultimately—the wealth is going off-planet.

My PoV .. not 'work for' ... but ultimately it is an extension of the US governed.

Which is perhaps might be even 'scarier' than if it did 'work for' person X , or top 1% , etc. :eek:

A product of our own creation? That's what the Quantum physicists and Buddhists assert*.

Where from the 'manufacture of consent' as Chomsky put it? Is that what we get to deserve?

Edit: *The Wheel of Karma says that you get the karma that someone else deserves, so play the odds and be nice.

Thanks. I'm still not *technically wrong because average US gasprices are about $2.75. We'll see how long it stays under $3. The "experts" expect it to fall over the summer...

I'm happy to discuss things like this, right or wrong, because it's interesting and I have no skin in the game. Now to get myself in a better financial position so I can afford a used Volt...

'technically not wrong'—the best kind of not wrong.

What do you know, gas is still under 3 bucks. Pretty crazy.

Diesel cheaper than Petrol now here, first time since 2000.

Same here about 1 penny less. So this explains why there are so many diesel trucks being sold;)

Yep, lower here in VA, first time in a long time.

regards
mech

Gas is about $4 a gallon here.

Diesel £1.12 a litre, Petrol £1.13 as Asda this morning.

£1.13 ~ $7.00 a US Gallon.

Diesel has been subsided here, but it's getting too close to gasoline prices. CNG is still the cheapest fuel available, followed by ethanol.

Saudi Arabia going bust, end of OPEC ?

Saudi Arabia may go broke before the US oil industry buckles - Telegraph