Oil at $200/Barrel

[Raintree21]

Let's go with the conservative estimate and say that peak oil will occur in 2030. That's only 20 years away! We are sitting ducks if that turns out to be a reality... the number of fuel-efficient vehicles is growing but still only a tiny fraction of the overall fleet. There are cars being produced today that will still be on the road in 2030 -- how many of those are SUVs or large trucks? -- and public transit in most cities is a joke. We would have to make quick, dramatic changes in order to prepare for a sharp decline in oil production. Frankly I don't see the political or corporate will to make it happen, regardless of what warning signs are beginning to appear. We are truly screwed if this is the Beginning Of The End in regard to oil production.

In the grand scheme of things, 20 years is not very long at all. But if you think of the developing technology we have today, 20 years is forever. We could easily wean ourselves off oil by 2030 and have alternative fuel technology throughout the world as an everyday thing. What is the saying, human technology doubles every 10-20 years or so? In this case, we already have the alternatives, we just have to make them affordable and even more efficient.

[Neo]

What is the saying, human technology doubles every 10-20 years or so? In this case, we already have the alternatives, we just have to make them affordable and even more efficient.

Actually, knowledge doubles every year and IT doubles every 12-18 months (has held true for decades) so if that stays the course then in 20 years we won't need oil as we're likely not to be traveling much of anywhere by way of vehicles as you know them today.

What was the quote from Back To The Future? "Where we're going, we don't need roads."

[monsoon]

A lot of these doom and gloom articles are just re-hashes of exactly the same articles that were written in the 1970s during the oil shortage then. Those shortages were caused by wars and politics, but it didn't stop the predictions the world was going to run out of oil in 20 - 30 years.

I do think the lesson to be learnt here though is that you can't fix this problem by increasing production. There is an infinite demand for cheap oil and as we have during the misguided energy policies of that have been in place since Reagan was in office, you can increase supply, but the problem keeps coming back.

[Gusterfell]

A lot of these doom and gloom articles are just re-hashes of exactly the same articles that were written in the 1970s during the oil shortage then. Those shortages were caused by wars and politics, but it didn't stop the predictions the world was going to run out of oil in 20 - 30 years.

I do think the lesson to be learnt here though is that you can't fix this problem by increasing production. There is an infinite demand for cheap oil and as we have during the misguided energy policies of that have been in place since Reagan was in office, you can increase supply, but the problem keeps coming back.

Indeed. History demonstrates that increasing energy production will lead to increased consumption. This is not inherently a bad thing, and it is necessary if we are going to have a future of continued economic growth. What we need to be doing is converting to sustainable, green energy sources of energy so that in the long term we can increase energy production without stifling ourselves.

As for peak oil, it is likely a real issue, but not the doom and gloom scenario many predict. Let's say we hit peak oil in 2030. All that means is that world oil production has peaked, and is beginning to decline. It doesn't mean that there will be no more oil in 2031. It just means that production that year will not be greater than the year before. Oil will still be widely available for decades after peak oil, but in reduced quantity.

At worst, this will lead to a scenario like we see today, in which prices rise and demand falls as people cut back on consumption. Far more likely is that demand for oil will already be declining as alternative energy sources come online and energy consumption becomes more efficient. This would make falling oil production moot.

[sean]

The growing demand that Congress authorize drilling in the Artic and very deep water is essentially an incognizant acknowledgement that there is very little 'low hanging fruit' left to be harvested.

[Justadude]

. Far more likely is that demand for oil will already be declining as alternative energy sources come online and energy consumption becomes more efficient. This would make falling oil production moot.

Considering we have been talking for 30 years about alternative energy sources and have yet to actually see a significant number of non-oil-driven vehicles on the road, I'm not holding my breath.

Combine the total lack of will to change our habits, with the exceedingly slow development of alternative energies, and the inevitable uptick in demand as large new economic centers (China, India) continue to modernize, and the steady decline of America's ability to either buy or steal whatever resources it needs, and we might just as easily be seeing a perfect storm brewing on the horizon.

[Gusterfell]

^A year ago, I would have agreed with you, but I think we've reached a point where people are being forced to realize this is a real issue that isn't going to go away by being ignored. Have you noticed how many hybrid vehicles have appeared on the roads in recent months, and how many new hybrid models have been announced by the automakers? Then there are upcoming vehicles like the Chevy Volt that are a step beyond hybrid technology. We're also beginning to see signs of momentum behind the push for green electricity. I can't speak for the whole country, but in my region it seems that virtually every city, town, and institution is at least considering building wind turbines to generate their electricity.

The only thing that has kept alternative energy from developing has been its expense relative to cheap oil-based energy. As oil is getting ever more expensive, we're bound to reach a tipping point were alternatives become affordable in comparison, and I believe we're just about at that point.

[Raintree21]

Just to illustrate part of the above point:

[Gard]

I dont' think that it will take 20 years to change over a good portion of our transportation, at the least to mostly fuel efficient vehicles. As Neo pointed out, IT changes very rapidly, computers are obselete as soon as you buy them. With the growing hunger for fuel efficient vehicles, the automakers are circiling the waters like sharks, smelling the blood in the water from the oil industry and looking for it next sales. I think we are going to see all the major automakers ramp up their research and speed up their schedules for getting the new stuff online. They are already bringing over their successful fuel efficient models from overseas, which is a good start.

[Justadude]

^ True, but again we were in the exact same position saying the exact same things in 1978. 30 years later not only has nothing changed, we have actually gone in the diametrically opposite direction that one would have expected.

[Raintree21]

Fuel economy has increased over the years as well as technology. The automakers have had the knowledge and capability to make alternative fuel cars for some time, it's just been that the consumer has not demanded them and it hasn't been profitable for the companies.

[monsoon]

I dont' think that it will take 20 years to change over a good portion of our transportation, at the least to mostly fuel efficient vehicles. As Neo pointed out, IT changes very rapidly, computers are obselete as soon as you buy them. .....

It's an interesting comparison.

If gas mileage is equivalent to computing power, then consider the cars that are on the road today have actually devolved. The most fuel efficient cars on the road (production models) were built in the 1970s and 1980s. In those days it was not unheard of a car getting 40+ mpg on the highway with the record being close to 50. The Datsun B210, the Geo Metro, and the original Honda CVCC, are all examples and they did it without exotic hybrid technology. (computers were not even common in cars then.)

So in effect we have gone back to using computers like the original IBM PC, the Commadore Vic-20, and the Apple II when it comes to car choices.

It's not really a question of technology but rather a question of will of the American people to make the hard choices to move forward again. We don't have highly efficient very high mileage diesel powered cars here as they do in Europe because we have not invested in the fuel delivery system to move the ultra clean diesel available across the country. The oil companies have not invested in the pipeline system in decades and we are now using lines that were actually closed in the 1980s. Europe on the other hand invested in a new very efficient system for creating and delivering fuel and that is why they have really high mileage cars buring clean diesel.

On the issue of more drilling. I think this is nothing more than a big land grab by the oil companies while they still have an oil man in office on their side. They already have 68 million acres of land available to them to drill in which they are not using. They know that after this election their favored status in the White House is going to end and this is their last chance to get as much as they can from Bush and Cheney.

[nowensone]

^As far as efficient gas-only vehicles, even more recent than that - my '96 Nissan Sentry got 40 mpg. Weird because I don't even think Nissan has such an offering anymore, one would think a Japanese maker would only improve in that regard.

[erdogs]

I found this website for converting your car to run on water for under $150. It sounds too good to be true, but maybe it is. http://www.runyourcarwithwater.com/?hop=watertt

**ADMIN NOTE**

This is nothing but spam. I relate it to the $99 eBooks on "How To Get Rich Quick"

[Neo]

Looks like oil passed $140 for the first time today (I don't believe it had hit this mark yet). I noticed at 2:47PM today, August futures were trading at $140.02/barrel.

[suburban george3]

The president of OPEC has predicted oil should go to $150-170 a barrel by the end of the year and then decline. Also, Libya(an OPEC country) says the market is well supplied and will cut production.

With the dollar still declining, I'd say $170 is a good guess of where it's headed. That would equate into gas at $5-5.50 a gallon?

[suburban george3]

The local TV station was talking about a new membership program offered on a website called mygallons.com. You pay a membership fee of $29.95-$39.95 for 12 months and then you purchase gasoline at the average price in your neighborhood. You then use the membership card like a debit card at the pump and it withdraws the 'correct' amount of your balance. It says it works at most stations that accept the Voyager fleet card (most stations.)

[monsoon]

The president of OPEC has predicted oil should go to $150-170 a barrel by the end of the year and then decline. ...

If this happens, then it is proof the current high prices have been "engineered" and are not really due to uncontrollable supply and demand issues.

I also predict that once oil crosses $150 mark there is going to be a psychological hit to the stock markets.

[suburban george3]

I also predict that once oil crosses $150 mark there is going to be a psychological hit to the stock markets.

True, I also wonder now that the 'experts' claim we are in a Bear Market which may last 12-14 months or longer and we can shed 20-30% off current levels in the market; if we might go into a near depression. News hasn't been good all around, oil included. Unemployment is rising, auto sales tumbled last month, most companies are revising earnings downward, and consumer confidence is at a 17 year low. We may be in uncharted waters as far as the economy goes, and ever increasing oil and gas is just helping to drive it..

[Captain Worley]

Car Industry Carnage

While the industry fell about 19% as a whole in June, it is interesting to see how much the individual companies fell.

http://jalopnik.com/397650/car-industry-ca...wn-188-for-june

To say Chrysler and Mitsubishi are not doing well would be quite an understatement.

[monsoon]

So Hondas and Mercedes Benzs are flying off the lot with the rest doing bad and very bad. There has to be a story in that, but I can't think of it at the moment.

[Neo]

So Hondas and Mercedes Benzs are flying off the lot with the rest doing bad and very bad. There has to be a story in that, but I can't think of it at the moment.

For the most part, Honda hasn't beefed up the size of their line as much as Toyota and the other car makers have. They do have some mistakes that I think they'll come to regret. The Civic has become larger over the last few years (of course, it still boasts one of the best mpg available today) but so has the Accord. The Accord for the 2008 redesign year is the largest sedan Honda has ever made and is no doubt an attempt to ride the wave of cheap oil and high demand for such large vehicles. Of course, we now know that such vehicles simply will not last much longer since no one wants them.

Mercedes is a car that is mostly purchased by the elite in this country and I highly doubt many of the rich are penny pinching enough to warrant them driving a smaller car such as the Civic.

My wife and I just purchased a new Civic to replace her aging car (as it is becoming expensive to repair). We're members of USAA and typically get a nice discount on the purchase of a new car but discount programs no longer apply to the Civic (or the new Honda Fit for that matter). Honda is having no problem selling these cars. In May Honda sold 4x as many Civics as they are able to produce in a month so obviously the wind is shifting in that direction in a fast way. The dealership all but begged us to purchase an Accord instead of a Civic. I can't help but think that Honda is regretting making their move to make the Accord larger.

[Neo]

Looks like we have another record today. Oil jumped to $143.91 143.96. At this rate we should be at $150 by month's end if things keep climbing as they have been in recent months.

*Update*

Oil is now pushing above $144

[Neo]

Toyota is the interesting one, since they have hybrids and good small cars.

As for the Accord, i don't think the size is going to hurt it anywhere near as much as the looks just aren't what people are particularly looking for. The new Civic is pretty attractive, the new Accord just looks weird.

Toyota's problem is that they have a lot more larger vehicles in the market than Honda has, and obviously the sales of those aren't doing so well these days. My boss just got rid of his Toyota Tundra and purchased a Camry instead for example. Honda has one model of truck (which is fairly small and streamlined anyway) and the larger SUV (Pilot) which is also well under Toyota's largest SUV.

Toyota has tried way too hard to be toe to toe with Ford and GM, and unfortunately for them the market is heading away from those large, gas guzzling vehicles. While Honda has made some changes in that direction (such as the up-size of their Civic and Accord), it hasn't been anywhere near as much as Toyota.

This morning oil went well above $145 (as I type this it is at $145.64) and continues to climb at record pace. We broke a record yesterday and have already broken another record today. We may see $150/barrel by mid-July instead of the end of the month as I had previously guessed. The $200 mark is well within reach by the end of the year IMO and unless something profound changes between now and then, I don't see anything stopping it from reaching that price.

[monsoon]

.. Mercedes has strength in Europe, and can benefit from the A and B class for people moving to economical but fancy cars. ....

The numbers posted above were for US Sales not global sales. Mercedes does not sell the A & B classe in the USA.