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Oil Falls Below $40 for First Time Since 2009 as Glut Grows

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Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#131

Post by eloff »

dwharrison wrote: post #25

And it will go lower! Canadian crude hit $23/bbl earlier in the week. North America is close to maxing out storage capacity...possibly within 90 days. We've not been this close to max storage capacity in more than 80 years. North American crude oil production currently exceeds demand (meaning what we have capacity to refine) by over 1 million barrels a day. All that extra is getting dumped into storage. And the sprea…

This is probably what's driving down the Canadian dollar: http://www.xe.com/currencycharts/?from=USD&to=CAD&view=2Y

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#132

Post by barney54 »

maerF0x0 wrote: post #75
ori_b wrote: post #11

This is slightly worrying, because if we want to reduce CO2 emissions, we need to leave the oil in the ground. High prices may not be ideal economically, but they do reduce demand for oil, and increase demand for alternative energy.

There are legion ways to mitigate expelled CO2. But probably the cheapest is just to leave it in the ground.

Leaving it in the ground with today's technologies is very expensive in terms of opportunity cost. You can leave it in the ground, but people don't want to pay $5 per gallon for gasoline. The climate models don't show high costs to warming for at least s few decades.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#133

Post by barney54 »

ryanmarsh wrote: post #30

Cheap natural gas also can mean cheap electricity, in case anyone was wondering about the effect this might have on companies such as Tesla. Natural gas produces more electricity in the U.S. than anything else, including coal (by a tiny margin).

Coal still produces more electricity than natural gas. There was one month recently when Mat gas produced more electricity but that was an anomaly. In a few years however, nat gas will dominate.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#134

Post by vonmoltke »

xrange wrote: post #82
Dylan16807 wrote: post #48

Earlier quoted context omitted.

"Peak Oil" just says we stop mining as much oil with a certain graph shape, not that the world ends. Transitioning to a new energy source is compatible and preferable.

>not that the world ends Lexcorvus and I apparently have similar memories, because my recollection is that all the articles discussing peak oil had a mandatory section predicting the eminent demise of Western Civilization (and quite a large percentage were giddy at the notion).

IIRC, the fearmongering was based on the idea that the world's consumption of oil was continuously increasing. Thus, if supply stopped increasing Bad Things would happen because it would put the brakes on society.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#135

Post by eloff »

slayed0 wrote: post #23
ori_b wrote: post #11

This is slightly worrying, because if we want to reduce CO2 emissions, we need to leave the oil in the ground. High prices may not be ideal economically, but they do reduce demand for oil, and increase demand for alternative energy.

The other way to look at this is that if the price is able to find equilibrium at a low enough point, it will not be economically feasible to extract certain types of oil from the ground (e.g. tarsands). The real question is how much of an effect low prices will have on demand.

Yes, but that's temporary. As demand exceeds supply again (because we're running out of oil) then the prices rise and suddenly all these unconventional oil projects become feasible again.

The only way to keep that oil in the ground is to eliminate the market for oil at profitable extraction prices through very cheap energy alternatives.

It's very difficult to solve the problem through regulation because you need all the countries making up a sizable portion of demand to regulate together. The incentive will be strong for individual countries to defy global pressure to do so, because cheaper energy means more economic growth. So far we've seen very little in the way of effective regulation and I'm not optimistic for a change, the incentives for short-term-minded politicians are in the other direction.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#136

Post by cowkingdeluxe »

beamatronic wrote: post #94
esaym wrote: post #90

So now that it is down and will go up to $120 again soon, how do I invest in it?

USO https://www.google.com/finance?cid=705740

You never want to hold commodity ETFs like USO overnight due to beta decay. http://www.etf.com/sections/blog/5362-uso-oil-usl.html

You're better off setting up an options account and buying futures.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#137

Post by jfoutz »

adventured wrote: post #60
ryanmarsh wrote: post #24

> ... OPEC members are planning to boost production In 2012 Saudi had a $2.3 trillion USD gross operating surplus in crude petroleum and natural gas. They can afford to play this game (market share) for really long time.

No they can't. They can play the game for about three more years, max. And that's at the risk of destabilizing their kingdom. They're currently issuing debt [1] for the first time in a decade or more, trying to slow the erosion [2] of their $670 billion of reserves. As of today they've lost 10% of their financial reserves in one year, and that's going to get a lot worse as the new lower average price of oil sets in a…

They could also cut social programs. Scaling back the subsidies for face throwing acid might buy them some time.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#138

Post by paulsutter »

ori_b wrote: post #11

This is slightly worrying, because if we want to reduce CO2 emissions, we need to leave the oil in the ground. High prices may not be ideal economically, but they do reduce demand for oil, and increase demand for alternative energy.

The solution is a 10x better energy source. And it's only going to happen if smart people get focused on it. Fluctuations in the price of oil affect funding, etc, but the people working on the problem are a bigger issue.

Elon Musk is doing his best to drive down the price of batteries and solar power. What will you work on? Baseload power probably needs nuclear. There are a number of nuclear energy startups right now.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#139

Post by astrodust »

mhurron wrote: post #63
zkhalique wrote: post #61

I wonder why so many people are only looking at the economic side of this DO THEY NOT REALIZE THE IMPLICATIONS FOR THE ENVIRONMENT AND HOW WE USE FOSSIL FUELS? We burn (no pun intended) through resources as fast as we want until there are none left. And then what?

Pretty clear the majority of people don't care. So just hope that when the music stops, you're already dead.

As much as life extension technology is going to cause tremendous social conflict, it would certainly give people a better perspective on these things.

Living roughly eighty years on average does frame things very narrowly. The Koch brothers, for example, aren't stuck with the legacy of their policies, they only care about making their mark. If they were stuck living with the consequences they might think differently.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#140

Post by jfoutz »

lexcorvus wrote: post #122
TillE wrote: post #12

Earlier quoted context omitted.

It's obviously a matter of when, not if. It's difficult to put an exact estimate on when oil scarcity will become a true crisis, but we can all agree that it's a non-renewable resource which will not be around forever.

It's obviously a matter of when, not if It was just as obvious a hundred years ago that horse manure piling up in city streets was just going to keep getting worse. we can all agree that it's a non-renewable resource which will not be around forever True but irrelevant. The oil supply is finite only in physical terms, not in economic terms. It is possible to extract an unbounded amount of value from a bounded resourc…

In some sense, peak oil happened. All of the easily accessible, abundant oil has been used up. Now you need a higher level of technology to extract oil. Because that's more expensive to produce than the easy stuff, renewables are catching up.

The stuff really is more challenging to produce, you need much more understanding and higher quality tools. Fortunately we're enjoying the compound interest of computers, software, material science and a million other fields that make difficult things simpler.

I won't take your transition bet, but i would bet if we had to extract oil using only technology older than 2000, we'd be pretty screwed.

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