Crude Oil headed to $30 per barrel

[Doctor Bob]

Here is some good news, the only problem, is that we are 18 months to 3 years away!!! RONTGLMAO....

http://www.indiadaily.com/editorial/8388.asp

This will be a great thing for the professional Installation Tech, and for any of those folks that have to drive for a living... It will also bring the cost of good down as well...

Now all we have to do, is figure out how long we have to quit doing Satellite Installs, before the price comes back up to the 1994 - 1996 levels... After all, they made these things so that the Consumer could install them their-own-selves, didn't they...LOL

 

[animalhouse]

THat sure is contradictory to what the mainstream press is saying. But it certainly would be good news if true.

 

[animalhouse]

That sure is contradictory to what the mainstream press is saying, but good news if true.

 

[vurbano]

You know this article was written by someone named "Sunny"???

 

[landlocked]

Horse hockey! OPEC will throttle back production so prices go back up to $50+ per barrel. They get the same amount of money for less work!

I personally think the oil giants know their days are numbered and are running up the price now. What is Saudi Arabia going to sell once the oil runs out or alternate fuels dominate? Milk that cash cow while you can, boys.

 

[Doctor Bob]

You don't really pay attention to the "Main Stream Liberal Press" do you???

 

[Stargazer]

I have been thinking along the same lines as landlocked. I think they have jacked the prices up because they know that alternative fuel is just around the corner so they need to make money on the oil while they can. The thing is we would not be going to hybrid and alternative fuel sources nearly as quickly if the gas and oil prices would not jump up as high and as quick as they have the past five years.

 

[ERSanders]

They are obviously afraid that some of the "newer" (some no-so-new) technologies will compete with expensive oil.

Advertising a lower future oil price will cut-off capital investment in the necessary infrastructure, e.g., shale oil, ethanol, tar sands, etc. due to the long return on investment. Thus their "prediction" protects their ability to maintain expensive oil.

 

[BobMurdoch]

Actually, this isn't far fetched....

The last time they raised prices this high was in the late 70's, early 80's....

Gas doubled in price from 75 cents to $1.50. People dumped their gas guzzlers for smaller cars that sipped gas instead of gulping it...

Sound familiar?

SUVs are being abandoned for hybrids. Hummer drivers are ridiculed. Smaller cars are being introduced like crazy and CAFE standards are being readdressed to possibly raise them.

I think prices WILL tank in 2-3 years when demand falls. Right now, India and China are keeping supply from backing up. If the US drops its consumption (which it is right now), then it is likely that history will repeat itself.....

Of course what this will do is kick the crap out of those that invest in alternative energy sources when the prices fall back below $2 a gallon. At that price none of the competing technologies can compete for oils bang for the buck in energy generation... So if you think you are going to get rich on Hydrogen development or solar energy, you may want to diversify a tad....

 

[Van]

I think prices WILL tank in 2-3 years when demand falls. Right now, India and China are keeping supply from backing up. If the US drops its consumption (which it is right now), ....

Really think we are? I drive for a living to do my installation work and I do not see any less drivers on the roads, with people moving further and further outside of the metro's and further and further away from where they work at this would increase consumption not lessen it.

 

[Stargazer]

Did the oil companies make record profits back in the late 70's and early 80's?

 

[BobMurdoch]

The problem back then was that they tried to institute price controls that restricted their markups. The oil companies fought back by cutting supply (causing all those red flags and "No Gas" signs to go up).

The record profits are a result of them pocketing a fixed percentage (let's say 30% on top of their costs). 30% on top of $1 gas is 30 cents. 30% of $3.5 is over a buck. Voila, record profits.

The main factors in prices shooting up are crude oil costs going up 250% over the last five years and the NIMBYs in the this country that won't let us expand our refining capacity. The rest of the world has increased their capacity by 30% over the last 3 years. We've increased ours 2% (by expanding slightly in areas that already had refineries).

If Bush wants to do something he should come up with some incentive plan to encourage run down coastal communities to take on new refineries. They can give local tax breaks to residents like they did in Alaska to grease the wheels for the pipeline 30 years ago. Guaranteed jobs and new industry should be easy to sell, but look for the greenies to fight any attempts to do such a thing.

As for oil running out? Uh uh. $30 a barrel oil is running out. $80 a barrel oil is not. What's the difference? Right now in Saudi Arabia, they do the geologic equivalent of jamming a beer tap into the ground and then pumping out millions of barrels of oil. When those easy sources dry up, they move to places like Canada that have a gazillion barrels of oil in the ground, but it is in a sludge that must be heavily processed before it can be put in a barrel. It is more expensive to produce, but plentiful.

Ironically, here's my prediction though. Within 2 years, the price will PLUNGE. People are dumping Explorers for Honda Elements or hybrids. Smaller cars are in vogue again. CAFE standards may be revisited soon. The world has added 30% refining capacity in the last few years but only had demand go up 3%. In 1982, Americans loved gas guzzlers like Coupe De Villes and their ilk. After prices shot up (to a level even higher in today's dollars), people switched to rice burners. Demand fell, and then prices collapsed. Look for the same to happen now. Within 2 years we'll be talking about how rough the oil companies have it. Start dumping those energy stocks now and cash in those profits.


(P.S. sorry if I repeated myself a little there... I forgot I had responded earlier with a few of the same points)

 

[Doctor Bob]

Thanx Bob Murdoch, you must be studying the markets a bit!!! These are the kinds of insites that we need, to be able to grasp the reality of things to come...

 

[BobMurdoch]

People should study history (and not just Columbus and Franklin, but Carter and Reagan and others from the last 50 years). Few ideas are "new", most have been tried before, but many don't remember the problems they caused.

In NJ, Corzine came up with the "brilliant" idea to save gas by trying to lower the speed limits back to 55 from 65. Sigh. Due to poor planning, the roads have not been widened in decades yet more and more cars are put on the road here as farmland turns into developments. Traffic moves OK most of the time, but rush hour is tough. If a man has to travel 60 minutes to work at 65 miles and hour, he will add another 10 minutes to his trip. So basically, you've added 16% more vehicles onto a road by not getting them off the road sooner. Yes, you may lose 2 mpg, but you lose 20-30 mpg when you are stuck in beep and creep traffic. Deaths per vehicle mile travelled FELL when they raised the speed limit to 65 here (although the number of deaths rose about .5 %, the insurance guys pushing for a lower speed limit (and more speeding tickets that they can then make you pay more for being a "dangerous driver") didn't account for the fact that the number of cars on the road GREW by 6% over the same time).

I read a lot of magazines (business and fluff), and I have a long memory for bone headed decisions from the past. Unfortunatley, most politicians either forget or choose to ignore those lessons.

The fun thing is that these posts live for years. In 2008, I get to come back and either eat crow or gloat, but I'm pretty sure I'll be gloating.... And all those that bought hydrogen fuel stocks will be licking their financial wounds as oil prices collapse again....

 

[Stargazer]

I remember reading something in the papers here where the number of accidents dropped when they raised the speed limit from 65 to 70 here but the number of deaths increased slightly.

 

[Doctor Bob]

There is a fellow named Denny Klein, out of Clearwater Florida, that has come up with the solution to the OIL problem, that we have... But I'm sure that the Oil Companies will do everything in their power to keep this invention from becoming a reality!!!

Here is just one article on the company, and I even have a video clip, that was on Channel 26 Fox, but I can't seem to find it on their site... LOL

http://www.foxchicago.com/_ezpost/data/23255.shtml

You can also link, from this Fox article, to his site... This is very promising stuff!!!

 

[Tom in TX]

People are dumping Explorers for Honda Elements or hybrids. Smaller cars are in vogue again.

Not if you look at actual production:

"GM said that it is raising production of its new, full-size
SUV and pickup line by up to 12,000 vehicles a year at plants in Texas,
Wisconsin and Mexico.

"GM isn't stuffing these models down their dealers' throats just to try to
manufacturer more profits," he added. "They're responding to what they see in
the marketplace."
And what GM executives saw last month was a big appetite for its freshly
scrubbed lineup.
Buyers coming back
Even though the climate was less than ideal, expectations were running high for
the new crop, and the February sales results along with the recent increase in
production is the first concrete evidence that GM's move has hit the mark.
"It's still early, but we're exceeding all of the important targets for our new
full-size SUVs, particularly the Tahoe, which is the first one to arrive in
dealerships," said Mark LaNeve, head of GM's North America sales, early this
month.
Tahoe sales in February jumped 47% to 15,431 vehicles from a year ago, while
Escalade sales surged 38% to 2,787.
The 2007 Chevy Tahoe and Escalade are two of the first models in the GMT900
lineup to hit showrooms early this year. "

Lots of new SUV's around here!!

Tom in TX

 

[Tom in TX]

SUVs are being abandoned for hybrids.

Where??? Here's what I found, along with my previous post (both stories within the last month):

NEW YORK — Honda Motor Co. (HMC) may cut production of the
Honda Accord hybrid because sales have been so slow, Honda
Executive Vice President Dick Colliver said Thursday at the
New York Auto Show.
Colliver was the second executive in as many days to question
the direction of hybrid sales during media previews for the
show, which opens to the public Friday. Nissan Motor Co. Chief
Executive Carlos Ghosn said Wednesday that hybrid sales appear
to be slowing down, something he has warned could happen as
consumers decide whether hybrids are worth their additional
cost.

Colliver wouldn't give exact sales for the Accord hybrid,
which went on sale in December 2004, but said they make up a
tiny percentage of Honda's overall sales. Overall Accord sales
were down 4 percent last year, according to Autodata Corp.
"We've had to reevaluate our position," Colliver said. "It's
having a hard time in the market."

Granted, this is only Honda, but do you have some facts to base your claims on? Not trying to be mean, it's just that I've heard recently about these hybrid sales and production slowdowns, and you state the opposite!

Tom in TX

 

[jvc]

It WOULD be nice, huh?

 

[BobMurdoch]

Apologies if it is different in your part of the woods. I'm seeing tons of hybrids here in NJ, but it may just be the blue states that are embracing the things....

Actually, I agree that the hybrids may be falling out of vogue as many have seen the news articles that state that they extra 10K these things cost won't pay for themselves for several years of use (ie. the extra gas used vs. the extra vehicle cost).

The main thrust of my argument was that is 1982 people made a conscious decision to switch to vehicles that used less gas. There HAVE been double digit percentage drops in SUV sales for most of the established models (yes, new models like the H3 are doing well, I was merely trying to state that the sales of SUVs as a whole were plunging.... a news story example post Katrina last year.... http://www.washingtonpost.com/wp-dyn/content/article/2005/10/03/AR2005100301657.html )