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Oil soars 6 percent as OPEC reaches deal to limit output in November

reuters.com

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Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#21

Post by jdhawk »

joezydeco wrote: post #13

The US producers have promised they would turn fracking back on if oil crossed above the mid-40s. Canada will also be back online as the wildfires have burned out. http://www.cnbc.com/2016/02/29/us-shales-message-for-opec-ab...

These prices need to show some resiliency before any producer is going to throw serious cash towards more production. There is a pretty large lag time to build back all the services and bring new wells "online", 6-12 months?. Producers need to be confident that those prices will maintain at $45+ before you'll see any major activity.

Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#22

Post by wyldfire »

drcross wrote: post #16
the_economist wrote: post #12

Earlier quoted context omitted.

Major energy sources and percent share of total U.S. electricity generation in 2015 Coal = 33% Natural gas = 33% Nuclear = 20% Hydropower = 6% Other renewables = 7% Biomass = 1.6% Geothermal = 0.4% Solar = 0.6% Wind = 4.7% Petroleum = 1% Other gases = An electric fleet (powered by coal, natural gas, and nuclear) will reduce demand for oil, so movement in that direction is likely cause falling oil prices. Which could…

I think the genie is out of the bottle with regards to electric cars. They've proven they work and can compete with internal combustion cars on most metrics that people care about and exceed ICEs in a number of ways. Battery capacity generally increases 8% per year, and battery production is ramping up in ways never seen before. The mindshare has already left Gas cars, it's just a matter of time before sales slip to…

By the time electric cars are ready for ubiquity, transportation-as-a-utility will have exploded thanks to autonomous vehicles. Why buy an electric car with less maintenance than a gas one when you can just skip out on owning a car entirely? Governments and/or insurance can directly or indirectly subsidize this move for the sake of safety.

Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#23

Post by jballanc »

nnq wrote: post #18
Retric wrote: post #15

Earlier quoted context omitted.

The 60-80$ range US Oil only lasts for a few years at US consumption rates, but that's plenty to influence OPEC. The real issue is Expensive Oil has a lot of competition but Cheap Oil does not. Further, it takes years for substitutes to get onto the market. So, OPEC is better off with large price swings than a steady state which causes long term demand to fall off a cliff or uses up their supply at very low prices. O…

> small scale Russian aggression Let's hope they keep it small and don't try to covertly start a big fire that will drive oil prices back up. It's scary to see a world economic situation where starting/fueling wars starts to make more and more economic sense... I can almost imagine a future "WarEnron" selling the future profits indirectly caused by future wars :) We should find a way to make sure we have profits alig…

> I can almost imagine a future "WarEnron" selling the future profits indirectly caused by future wars

Pretty sure you just described every fund that's big into Honeywell, General Dynamics, Lockheed, etc. Many of these companies profits depend on the US insisting on maintaining the largest military in the world (by a lot) as a hedge against just these sorts of "profit wars" from being waged.

Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#24

Post by elsonrodriguez »

yessql wrote: post #11
jseliger wrote: post #2

Possible corollary: "Tesla stock rises in response." We may be heading towards a world of permanently low oil prices, as rising prices will cause more people to switch to electrics or plug-in hybrids. Car buyers exhibit amazingly lemming-like behavior, switching to more fuel-efficient cars as prices rise and switching away from those fuel-efficient cars as prices fall. That process is likely to become more pronounced…

Yes, we saw people switch to more efficient transport in the US at $4/gallon. I think this is the long term ceiling, where people will switch to at least a plugin hybrid and cover 90% of their driving on electricity.

That's a pretty great point.

People started trading in their SUVs last time, this time they will be getting something that doesn't need gasoline at all.

I don't think OPEC realizes how dangerous of a game they are playing.

Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#25

Post by irln »

nnq wrote: post #18
Retric wrote: post #15

Earlier quoted context omitted.

The 60-80$ range US Oil only lasts for a few years at US consumption rates, but that's plenty to influence OPEC. The real issue is Expensive Oil has a lot of competition but Cheap Oil does not. Further, it takes years for substitutes to get onto the market. So, OPEC is better off with large price swings than a steady state which causes long term demand to fall off a cliff or uses up their supply at very low prices. O…

> small scale Russian aggression Let's hope they keep it small and don't try to covertly start a big fire that will drive oil prices back up. It's scary to see a world economic situation where starting/fueling wars starts to make more and more economic sense... I can almost imagine a future "WarEnron" selling the future profits indirectly caused by future wars :) We should find a way to make sure we have profits alig…

It seems like a major influence in the price of oil is the US Dollar, [1][2] rather than geopolitical issues.

[1] Price of Oil Chart: https://fred.stlouisfed.org/series/DCOILWTICO [2] Dolar Chart: https://fred.stlouisfed.org/series/DTWEXM

Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#26

Post by _FKS_ »

joezydeco wrote: post #13

The US producers have promised they would turn fracking back on if oil crossed above the mid-40s. Canada will also be back online as the wildfires have burned out. http://www.cnbc.com/2016/02/29/us-shales-message-for-opec-ab...

Smoke & mirrors. Art Berman has shown that none of the Tight&Shale producers are/has been profitable. They are largely there because of credit/debt (which of course can't grow for ever)

"Tight oil companies outspend cash flow by an average of 120%: spend $2.20 for every dollar earned from operating activities." "Tight oil company debt-to-cash from operating activities ratio averages 3.3: would take more than 3 years to pay down debt if all cash flow was used."

Please see: http://www.artberman.com/wp-content/uploads/The-Shale-Revolu...

Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#27

Post by sokoloff »

philipkglass wrote: post #20
jorblumesea wrote: post #17

Is it possible that oil prices will never be that high again due to renewables? Part of me feels like the games OPEC members are playing will be to their long term detriment. Renewable cost is only going down year after year, really the oil states have a limited time to extract as much money as possible before alt energy kicks into high gear. By the time they're done fighting with each other it may be too late to get…

I'd say say that transport electrification is going to be more directly responsible for reducing oil demand. It's very important to the climate that electric vehicles get charged with low-emissions sources, but the petrostates are equally in trouble whether people are driving EVs charged with wind power or coal power. It's hard to tell when electrification is going to kick into high gear. Projections for numbers of E…

I don't expect my 2015 LEAF to be on the road in 2035. The current generation of battery electrics do not have 20 year battery packs, and I don't know that it will be worthwhile to re-battery the car twice to get to the 20 year mark with good range and the way the battery tech is improving. (I'd probably rather buy a new BEV 8 years from now, even though I'm normally the guy who buys a 6-10 year old car and drives it 6-10 years.)

I do agree that people all but throwing away large SUVs when gas hit the mid $4 range was mystifying to me. I work with and hang around generally smart people and I saw people trading in 2-3 year old cars for brand-new fuel efficient cars.

Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#28

Post by blahi »

wyldfire wrote: post #22
drcross wrote: post #16

Earlier quoted context omitted.

I think the genie is out of the bottle with regards to electric cars. They've proven they work and can compete with internal combustion cars on most metrics that people care about and exceed ICEs in a number of ways. Battery capacity generally increases 8% per year, and battery production is ramping up in ways never seen before. The mindshare has already left Gas cars, it's just a matter of time before sales slip to…

By the time electric cars are ready for ubiquity, transportation-as-a-utility will have exploded thanks to autonomous vehicles. Why buy an electric car with less maintenance than a gas one when you can just skip out on owning a car entirely? Governments and/or insurance can directly or indirectly subsidize this move for the sake of safety.

Why would insurance companies do this? They stand to lose a TON by autonomous vehicles. Estimates are in the 60 to 80% of the market to go away.

Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#29

Post by emp_zealoth »

_FKS_ wrote: post #26
joezydeco wrote: post #13

The US producers have promised they would turn fracking back on if oil crossed above the mid-40s. Canada will also be back online as the wildfires have burned out. http://www.cnbc.com/2016/02/29/us-shales-message-for-opec-ab...

Smoke & mirrors. Art Berman has shown that none of the Tight&Shale producers are/has been profitable. They are largely there because of credit/debt (which of course can't grow for ever) "Tight oil companies outspend cash flow by an average of 120%: spend $2.20 for every dollar earned from operating activities." "Tight oil company debt-to-cash from operating activities ratio averages 3.3: would take more than 3 years…

Does it really matter if you can just print more money? As in borrow indefinitely at tiny tiny rates?

Re: Oil soars 6 percent as OPEC reaches deal to limit output in November

#30

Post by danmaz74 »

_FKS_ wrote: post #19
jorblumesea wrote: post #17

Is it possible that oil prices will never be that high again due to renewables? Part of me feels like the games OPEC members are playing will be to their long term detriment. Renewable cost is only going down year after year, really the oil states have a limited time to extract as much money as possible before alt energy kicks into high gear. By the time they're done fighting with each other it may be too late to get…

Renewables depend on oil. You can't make renewables with renewables energy, because their overall EROI is insufficient to both maintain the current standard of life, and make them. The other issue is mobility, oil has the best volume/energy content ratio of all energy sources we know (except uranium). Renewables can only make electricity and you need about 10x the same battery volume (and weight) to move a vehicle, c…

> Renewables can only make electricity

If renewable energy becomes abundant/cheap enough, you can convert electricity into hydrogen or other high energy density chemicals.

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