Record High Gas Prices?

[Arragonis]

This chart give a nice history of production.



What isn't mentioned are the political pressures behind this.

1970s - OPEC (mostly arab world) decides to punish the west for supporting Isreal so cuts supply and increases storage.

Late 1970s - OPEC comes under pressure to increase supply as a) they need the money and b) the world recession is threatening their markets - you can't kill the goose that lays...

1980s - USSR invades Afghanistan, Arabs want them out so agree with the US to cripple the USSR financially by increasing supply to cut oil prices. Oil is one of the USSR's main exports so this works.

1990s - Kuwait - again Arab (OPEC, Saudis) want us to do the work so they steady prices. Also non-OPEC supply increases so they have less control.

During this period Saudi has maintained the balance between the world's demand and supply. If an OPEC member goes offline for a while (e.g. Iran, Iraq, Kuwait) then they make up the shortfall and we pay them to do it. The problem is when they do they risk damaging their super giant fields which need time offline to recover.

So when is the peak ? Based on current world estimates of available reserves this will be when Saudi Arabia peaks. They may have already or it may be anything up to 10-20 years away.

The key thing to note though is that Saudi Aramco is drilling offshore. Why would they need to do that if they have enough stocks onshore ? Its much more expensive and dangerous.

The economic danger to the west, and especially to the US is that those new economies like China and India have the cash. US/China trade in 2009 was $266 bn in China's favour and thats just in one year and in a recession.

So if supplies become short and it ends up being a bidding war to retain supply then they have the money to bid more - and of course the military muscle to prevent anyone bullying them out of the way. Their population will demand it and their political leaders are willing to maintain power by supplying it. They are also buying most of Africa too.

Russia and India are also spending $bns on defence at the moment as they think they may need it to counter China. NATO's influence by comparison is falling.

As for prices, I think we have seen the plataeu for this year at $150 barrell. It may bounce at that level before falling back. Next year demand will be higher as we all finally start to get some of our cash back from the !*&^ing banks we bailed out and start spending again.

That will drive up demand and that is when we will start to have the problems and pressures. The period 2013-2018 is going to be "very interesting" times.

[darcane]

Originally Posted by Arragonis

This chart give a nice history of production.

Note that this only shows spare capacity, not actual production which has increased nearly every year since the 70's

Originally Posted by Arragonis

As for prices, I think we have seen the plataeu for this year at $150 barrell. It may bounce at that level before falling back. Next year demand will be higher as we all finally start to get some of our cash back from the !*&^ing banks we bailed out and start spending again.

That will drive up demand and that is when we will start to have the problems and pressures. The period 2013-2018 is going to be "very interesting" times.

I dunno about your banks, but ours are basically just as bad as before they were bailed out. For example, Bank of America just split it's mortgages into two: good and bad, and about half of them are bad. This is about a trillion dollars in assets that are delinquent or are likely to go delinquent. Not all of those loans are owned by BAC, about 3/4 are on the books of the GSEs or are in Mortgage Backed Securities and BAC just services them, but there is still enough that BAC could go bankrupt. And US taxpayers and pension funds get to foot the bill for the rest of the bad loans.

The other big banks are just as bad. Citibank went on record reporting that 60% of their loans made in 2006 were bad and 80% in 2007. Even though the banks can't get anywhere near full loan value from these loans, accounting laws here allow the banks to keep them on the books at 100% of the loan value. So there are tremendous losses here that have not been recognized in the US economy.

Very interesting indeed (In the Chinese sense of the word).

[Arragonis]

Good point Darcane - I had meant to change the wording around that chart. There are of course different histories too - Mr Simmons (aka Peak Oil) has his but the caveat I've always had about him is that he runs an investment company specialising in energy, so perhaps not all that impartial - not that I'm implying any stock pumping or similar obviously.

Yes our banks have dumped their bad loans onto us (i.e. Mr, Mrs and Ms Tax payer) to deal with too and keeping the ones that may pay out to themselves. They are all technically insolvent really.

Interesting times ahead - glad you got the reference.

[Frank Lee]

Up until very recently, U.S. motorists STILL burning more!

Earlier, prices tumbled on signs that the recent surge in fuel prices is slowing economic growth. So far this year, the U.S. is consuming more gasoline despite price increases of 50 cents per gallon in just three months. But Americans may finally be pulling back, experts said.

Motorists recently have started to buy fewer gallons of gasoline, according to SpendingPulse, a research firm that tracks retail spending. Consumers were buying more in February, and that trend was supposed to continue toward the summer.

The rapid increase in gas prices "blew through" everyone's comfort level, SpendingPulse Vice President Michael McNamara said. He called it the first real sign that consumers are rearranging their habits to conserve gas.

Oil rallies on Saudi news, erasing most of decline - Yahoo! News

[Arragonis]

Until people change their habits and/or vehicles in huge numbers, overall consumption will always rise.

[vskid3]

Originally Posted by Arragonis

Until people change their habits and/or vehicles in huge numbers, overall consumption will always rise.

Yep. Along those lines, there is an event on Facebook called National "No- Fill Up Day". So instead of buying gas on Saturday, they'll just buy it Friday or Sunday. A lady even commented to do exact that. What's funny is that most people only fill up every week or two. So there was a 1/7 to 1/14 chance that they were going to fill up tomorrow anyway.
The overall consumption will stay the same unless they do something to actually reduce their own consumption, not just change the day they buy it.

[user removed]

Temps up in the mid 40s here mid morning. Rode the 250cc Rebel 4 days, about 175 miles. Right around 2 gallons of gas. Got tired of filling it up 1 gallon at a time and put 5 gallons in one of my plastic cans and top it off every 100 or so. Will calculate the mileage when the plastic can is empty and I fill the bike and can again. Should be over 500 miles on 6 gallons or less.

regards
Mech

[Arragonis]

Originally Posted by vskid3

Yep. Along those lines, there is an event on Facebook called National "No- Fill Up Day". So instead of buying gas on Saturday, they'll just buy it Friday or Sunday. A lady even commented to do exact that. What's funny is that most people only fill up every week or two. So there was a 1/7 to 1/14 chance that they were going to fill up tomorrow anyway.
The overall consumption will stay the same unless they do something to actually reduce their own consumption, not just change the day they buy it.

Not much point, they still sell the same volumes just at different times.

[aero84]

95 octane is at 1.63€ per liter at the moment.







Don't know if I got the math right (why can't the US use metric as the civilised world does?), but if I am right, that's 8.83$ per gallon.

[SentraSE-R]

I last filled my gas tank 7 weeks ago, and shouldn't need to fill it for a couple more weeks. Most of our local gas stations are ~$4.10/gallon for regular, $4.30/gal for premium.