'08 Predictions: Oil to reach $100 a barrel (China: how much, new home, buying)

[Elcarim]

Crude Oil Will Top $100
When will the world see $100-per-barrel oil? Paul Horsnell, head of commodities research at Barclays Capital, is betting that 2008 will be the year. Horsnell bases his prediction on broad fundamentals in the industry, which he says are reflected in the behavior of the futures curve for oil prices. (Update: Crude oil futures hit $100 a barrel for the first time on Jan. 2)


Do you think they are correct? What will this do to Maine's heating costs?

[Acadianlion]

I believe that they are correct. We as a nation have deluded ourselves into thinking that we are impervious to everyone else in the world, and have continued to live as though unlimited use of oil is a sort of birthright. Since the vast majority of proven oil reserves do not belong to the USofA, the cost of oil is going to make a vast difference in the lifestyle of anyone who has allowed themselves to become enslaved by the black goo.

The cost of running that SUV? Forget it: figure how much driving you really NEED to do, when a gallon of gasoline costs $5.25. A new diesel pickup? You gotta be kidding me: since the diesel engine option in new pickups adds between $2500 and $5,000, and the cost of a "regular" oil change for the diesel is about twice as much as the oil change for a conventional gasoline engine, AND since diesel fuel in Maine is currently about thirty cents per gallon MORE than for premium unleaded, if that diesel pickup isn't delivering about 40 miles per gallon, and isn't driven about 75,000 miles per year, there is NO way that it makes a penny's worth of sense to buy one.

And HOW ABOUT HOME HEATING OIL? I pay all of the bills for my parent's house, and they "locked in" fuel prices last fall at around $2.30 per gallon. Good thing, too, because in their nineties, they keep the house very, very warm, and will burn 2000 gallons this year. NO options.

With $100/barrel of oil, it is my opinion that oil for domestic heat is now an outmoded concept, and RIGHT now, anyone heating with oil who are thinking that at any time in the next ten years they might have to replace the oil burner, they had better start looking into alternative energy sources for heat and for hot water.

We also need to seriously consider how our electricity is generated? Maine actually produces a surplus of energy, and since we are a member of the northeast power grid, we are helping to keep those folks in Connecticut and western Mass out of the dark. Why is that in Maine's best interest, I wonder? Maine should probably be most closely allied with eastern Canada, and thus more energy developed by hydro than by burning either oil or coal. Whatever the case, I expect electric rates to rise in Maine right along with the cost of a barrel of oil.

We are planning to build a new home now, and I am feverishly reading everything that I can get my hands on about geothermal heating, passive and active solar power generation. Our intent in the next house is to achieve a zero carbon foot print because I believe that whatever the additional cost of construction will be returned during my lifetime due to the rising cost of a barrel of oil.

[Elcarim]

Do you think, as with electricity, other heat sources will continue to rise with the increase in demand? I can see even the price of wood escalating as more and more people are forced to turn to alternatives. Maine's forests may become an endangered species!

[Coaster]

Oil already has traded at $100 briefly twice since the first of the year, although it hasn't closed above $100 yet. Several specialty grades already trade above $100 on a regular basis. So $100 oil is sort of a foregone conclusion for me.

Whether it stays there as the country slips into recession this year remains to be seen, since a recession in the US will have the effect of reducing oil demand -- or at least reducing the increase in oil demand -- worldwide. It all depends on if demand drops faster than the supply of oil is dropping -- and it is dropping, make no mistake. Right now July 2005 looks like the peak month for global oil production.

The comments about the future of heating with oil are right on. (Says the guy who is getting another three cords of wood delivered this evening.) We all should be looking for alternatives in home heating, transport, and lifestyle. Conservation is vital. We can live on less; Europe's per capita energy consumption is half that of the US, and they live a pretty good life.

Maine does produce a surplus of electricity right now, but that is largely generated from natural gas imported from the Sable Island gas field off Nova Scotia. That field is in decline now, but the balance is supposed to be picked up with LNG imported through St. John, NB. The sources of LNG aren't nearly as secure as we would like them to be.

The bottom line is that we are facing major changes over the next ten years in the way we heat, the way we eat, the way we travel.

Acadianlion, it appears you've given some serious thought to all this. Do you follow any of the peak-oil discussion boards at all?

[Coaster]

Never mind $100 oil. This from Bloomberg News. There's more at the link.

www.app.com | Printer-friendly article page

January 7, 2008

Speculators bet on $200-a-barrel oil

BLOOMBERG NEWS SERVICE

The fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year.

Options to buy oil for $200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5,533 contracts, a record increase for any similar period. The contracts, the cheapest way to speculate in energy markets, appreciated 36 percent since early December as crude futures reached a record $100.09 on Jan. 3.

While analysts at Merrill Lynch & Co. and UBS AG say the slowing U.S. economy will lead to the biggest drop in prices since 2001, the options show some traders expect oil to rise for a seventh straight year.

[Northern Maine Land Man]

Gold hit $875 an ounce today. Let me know when oil hits 100 Euros. I believe it will get to $200 a barrel for several reasons. The Red Chinese have a huge and growing demand for oil. So does India. We are the world's largest debtor nation. We borrow to support our enormous spending habit. We owe the money to Red China and the Muslim countries. The dollar is going down in flames.

Here is some historic perspective. In 1908 you could buy a cow with a $20 gold piece. Today you can still buy a cow with that same $20 gold piece. A $20 bill won't get you very far down the meat counter.

[mrs1885]

I'm buying a horse.

[Northern Maine Land Man]

I like your handle mrs1885. My house was built in 1885 and I know how to live as they did. Not many people do these days. It's going to be an important skill and sooner rather than later. I own another farm with just a cellar hole where the house used to be. It burned in 1949. There is mature timber where there used to be fields. I bet that ground will be fields or pasture again before we are done. I believe it was Confucious who said, "May you live in interesting times." We are about to live in very interesting times.

Without getting onto a soap box, there is only one candidate in the field of Presidential candidates that shows any understanding of this at all.

[CapeCodder]

Please share the name of that candidate...this thread is disturbing.

I want to do more to become less dependant on oil.

Thanks

[Mainer61]

At this moment the price of heating oil Downeast is $3.42 per gallon. Yikes.