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Quote:
Originally Posted by Escort Rider
My thought is that the chances of crude oil going as low as that "analyst" predicts are pretty much zero. Therefore, I will not speculate about the consequences of something which is not going to happen. I put "analyst" in quotes for a reason.
I wouldn't be completely, completely surprised if oil tests the $50's, but I WOULD be pretty astounded if we saw $16 oil. Alternative fuel and green/renewable energy research and development would be set back by a decade for lack of funding, the internal combustion engine would be perpetuated for another 20 years, Russia implodes, coup in Argentina, the sky falls in W. Africa, dollar plummets, China is furious, etc. etc.
I wouldn't be completely, completely surprised if oil tests the $50's, but I WOULD be pretty astounded if we saw $16 oil. Alternative fuel and green/renewable energy research and development would be set back by a decade for lack of funding, the internal combustion engine would be perpetuated for another 20 years, Russia implodes, coup in Argentina, the sky falls in W. Africa, dollar plummets, China is furious, etc. etc.
Since there is a couple hundred years of crude sitting under the USA I doubt we will see the end of the internal combustion engine any time soon. If all those electric cars were viable alternatives the government would not have to give insentives for people to buy them. Business would be building them with larger production numbers now.
Since there is a couple hundred years of crude sitting under the USA I doubt we will see the end of the internal combustion engine any time soon. If all those electric cars were viable alternatives the government would not have to give insentives for people to buy them. Business would be building them with larger production numbers now.
Regardless of the total amount of crude oil which is sitting under the ground either here are elsewhere, the fundamental truth of the matter is that the low-hanging fruit has already been picked. That is, the oil that is easy to get out of the ground has been gotten, and it is now increasingly difficult (read: expensive) to continue to get more out.
Most change is gradual and incremental. It is in our long-term self-interest to wean ourselves off oil, at least to some extent. Domestic production is not enough for our current needs, despite what you claim; otherwise why are we importing so much oil? Therefore, the government is offering incentives to encourage and speed up a change which will benefit the nation as a whole.
Personally, I do not want an electric vehicle. But my personal preference does not blind me to the realities that will force changes, sooner or later. If we can make some of the changes sooner they will be less painful and disruptive.
If oil prices crashed to 16 bucks a barrel and stayed there, we would go into a boom like you've never seen in history.
Everything is tied at least indirectly to energy prices and insanely cheap energy is the drug America craves most. But it ain't gonna happen thanks to global growth and Hubbard's peak.
How so?
When gas was at 80 cents/gal or so just over a decade ago, a lot of workers were suddenly laid off. Energy companies ain't charities and they aren't paying workers to sit and do nothing when their products isn't in demand. Then there are the folks that they indirectly pay the bills for...on-site contractors, small chemical manufacturers that take on their outsourced needs, etc. I worked for a company that made products that many local petrochems put to use. Good bye, paycheck!
The last time it dropped to around $40 was in late 2008/early 2009. The only thing that went down in price was gas. No one else passed the savings onto us. Companies that charged us service charges continued charging them. Tire prices didnt drop. Food prices continued up. Nothing came down except for gas and fuel for our homes. And even today as prices are dropping at the pump, prices (and shrinking packages) are still going up.
This^^
This profiteering will act somewhat to artificially counteract the effects of a U.S. oil glut. It's probably worth looking at oil futures as counter-measure.
If oil prices crashed to 16 bucks a barrel and stayed there, we would go into a boom like you've never seen in history.
I hate to tell you, but it's a pipe dream. There a break even cost to pump oil and it's way more than $16 a barrel. You need pumping stations, pipelines, ports, ships, and employees to run them all to bring oil to the market. That's even before refinery costs. If an oil company or government can't make a certain amount of money on the oil they produce, they are going to stop pumping it and wait till the price goes up again before they pump more. They are not going to take massive losses on a product they sell, just not going to happen.
True the Middle East is a volatile place. Would lower oil prices calm or aggravate the problem? Hard to say. Another tough one is will enthusiasm for rail transit falter? It may as more switch back to driving. But that would make traffic worse, so there may be even more demand for rail lines to ease traffic.
I hate to tell you, but it's a pipe dream. There a break even cost to pump oil and it's way more than $16 a barrel. You need pumping stations, pipelines, ports, ships, and employees to run them all to bring oil to the market. That's even before refinery costs. If an oil company or government can't make a certain amount of money on the oil they produce, they are going to stop pumping it and wait till the price goes up again before they pump more. They are not going to take massive losses on a product they sell, just not going to happen.
Correct. The US will do exactly what it has repeatedly done in years past: Shut down oil wells.
Right off the bat, I'd say all 4,000+ wells pumping Illinois Intermediate will immediately go idle.
Have fun paying for gasoline in the Midwest.
Another obvious candidate is North Slope/Prudhoe Bay. Since that is heavy oil, and since the whole world is awash with an extreme over-supply of heavy oil, and seeing how the US doesn't even have the refinery capacity to process heavy oil, and seeing how North Slope/Prudhoe Bay are nasty sour crude oils high in sulfur and seeing how heavy oil always sells significantly less that Brent or WTI per barrel, they'd be shut down too.
And then of course, um what about Canada and its highly expensive tar sands?
That would basically crash the Canadian economy.
And what big brains were pushing the XL Pipeline?
And what about fracking and shale recovery in the US? It goes belly up too.
The OP's "analyst" needs to pull his head out of his anus.
Economically...
Mircea
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Crude oil, electric cars, etc.
