Oil at $100 Barrel

[Neo]

I believe we will see the oil market crash much like the housing market did. Oil has become way over valued and when demand drops significantly, investors will be left holding a lump of coal.

I'm not so sure we'll see a crash in the cost of oil. I believe we have reached peak oil and are on the down slope which means remaining oil will be increasingly harder to come by. It isn't that the oil isn't there, it's because it is in harder to get places such as shale. Combine that with increasing demand and a weak dollar and you have the recipe for disaster that is currently being cooked up. The weak dollar seems to be driving a lot of this and I don't see it getting any better anytime soon. I would wager that the cost for oil will not drop by the time our dollar gains considering worldwide demand will only go up and the slope to the right of peak oil will continue to fall.

[suburban george3]

hmmm... 6pm yesterday gas was over $133 a barrel.. 8 am this morning it has raced past $135!! I feel for resort towns, there business will probably be down this summer....

[Captain Worley]

restaurants, too. I read in the paper this morning that business was down 40%. Thhey didn't say in comparison to what, however, so take it with a grain of salt.

[Neo]

I was reading an article in the local paper here this morning about a couple who own an RV and made the trek from California to here in North Carolina. They said tround-trip they will spend roughly $6,000 in fuel for the RV. With prices like that it is a no brainer that folks will stop leisure traveling.

Does anyone know what oil futures for May delivery ended up being per barrel? I know that the current $135 price is for July delivery so I'm curious at what price we can expect gas to be in July in relation.

[runawayjim]

unfortunately, my honeymoon is coming up in about 3 weeks and we're going to vermont... driving. luckily, both our cars get over 30 mpg on the highway. the only thing is, we're planning on doing some driving and sightseeing while we're up there. good thing people gave us money for gifts.

[swh1972]

Does anyone know what oil futures for May delivery ended up being per barrel? I know that the current $135 price is for July delivery so I'm curious at what price we can expect gas to be in July in relation.

[Neo]

Futures for April delivery closed at $103.24 on 3/19

Futures for May delivery closed at $119.17 on 4/22

Futures for June delivery closed at $129.07 on 5/20

If my math is correct and given a mid-may gas average of $3.72 we should be seeing $4.21 gas (regular) if oil per barrel is $135. For June we should be seeing $4.02 gas (regular). I have a hunch those numbers are on the low side of reality though. Using the same equation we should be at $6.24 gas if cost per barrel reaches $200.

*UPDATE*

I wanted to take numbers from Chicago since I have heard those prices are more in line with what the east coast should see at the end of this month. Regular is roughly $4.25 in Chicago which means at the end of June it may be roughly $4.60 and given $135 futures for July delivery it would translate into $4.81. The same numbers for $200/barrel would be $7.13.

[dxartist]

If my math is correct and given a mid-may gas average of $3.72 we should be seeing $4.21 gas (regular) if oil per barrel is $135. For June we should be seeing $4.02 gas (regular). I have a hunch those numbers are on the low side of reality though. Using the same equation we should be at $6.24 gas if cost per barrel reaches $200.

[swh1972]

As of 2 PM on May 22, Futures for July 2008 delivery were trading at $131.42.

Futures for delivery in June of 2016 were trading at $141.36.

It was discussed on one of the finalcial programs the other day, CNBC I think, that typical markets for oil will show the short term delivery being more expensive than the long term deliveries - as companies are willing to pay a premium if they actually need oil soon. To put it another way, if short term supply was a serious issue, the short term deliveries would be much higher than long term deliveries. It was stated that the current oil price curve showing that long term deliveries points towards there being a lot of speculation built into the market - they went on to say that this did not mean that oil was poised for a fall, though.

Take this for what it's worth - it was just someone's opinion.

[Neo]

As of 2 PM on May 22, Futures for July 2008 delivery were trading at $131.42.

Futures for delivery in June of 2016 were trading at $141.36.

Check out the following chart:

http://trendlines.ca/TrendLinesBarrelMeter...sChart80518.gif

Oil extraction costs are rising amongst other things and while oil futures for 2016 may be trading at just $10 more than today, I really don't think we can get an accurate figure from that far out with so many variables between.

I got this from an article up on Bloomberg.com:

"UBS AG forecast that Brent crude oil, a benchmark for two-thirds of global supplies, would rise to $200 a barrel by 2015. The increase results from demand outpacing spare supply capacity sometime in 2013 to 2015"

It is just too early to tell what costs will be in 2016, but I'm fairly confident things will not be returning to numbers much lower than we're seeing now. If Americans think this is a temporary issue and that they just need to wait it out they will be crudely punished.

[Gard]

^^^

I think that at this rate, the oil world will be a whole different ballgame by 2016. That is 8 years away, which is enough time for trends to change (not in price, but rather in how people get around) and new technology to show itself. GM has test model hydrogen cars on the roads already with some refueling stations for them, so such technology could be closer than we think. On top of that, it would be very wise of the auto industry to start phasing out inefficent motors in their vehicles NOW. People are not going to want them and fuel efficiency will be king and like I've said before, I don't beleive that congress can hold out by just having hearings for much longer and I am getting a very strong impression from people I know on the inside that congressional action against the oil companies is just over the hill. Hopefully they will cap the price at which oil companies can charge gas stations and in turn cap how much gas stations can charge customers. Something has to give to end the nasty cycle we are in now between housing and gas.

They were just showing clips of the oil hearing before the senate today on tv and a couple senators flat out told the oil executives that if they did not get this under control soon that the US Government would take over the oil companies, which would pretty much nationalize the oil industry here in the US.

[sean]

The Hydrogen fuel cell stuff is a joke. Hydrogen fuel cell platforms for automobiles require an initial input of energy in order to separate out the hydrogren; usually its from burning natural gas and thus it is a net energy loser. Its like using gold to make lead.