Oil Prices Now

[SpaceBus]

Mickey Thompsons? Sweeeeeet! It must really hook up!

Sorry, I meant "Mud Tires/Maximum Traction" tires, not Mickey Thompson brand. They are actually Yokohamas, but the ground is so soft right now and my rear end so light I have to use 4x4 unless I am on our hard packed gravel. Even just letting the clutch out without using any accelerator pedal results in my truck not moving and the rear tires just slowly spinning in the mud until I engage 4x4. They are great in the mud and deep snow, but the MT's offer little grip on ice. Eventually I would like to get commercial 19.5" aluminum wheels so I can use the really long life tires, at the expense of ride comfort. I also have crazy short gearing, so I wouldn't mind the reduction in gearing from taller tires.

 

[Ashful]

Mickey Thompsons? Sweeeeeet! It must really hook up!

I was thinking the same thing, until I got to the next sentence. 😄. Anyone who’s ever raced immediately reads MT as Mickey Thompson.

We love our Gen 2 Volt. Due to market demand, it's worth more now than when we bought it 2+ yrs ago.

I don’t think this is an “EV thing”, but just a market condition created by recent demand and price increases. I was checking prices on used SRT’s for a buddy in January, and found my 6 year old 12 mpg gas guzzler is also now listed at about the same price used, as I paid new back in 2016. It appears that the car market is nearly flipped right now, so it’s not hard to imagine many used car models following this trend, or at least nearly so.

 

[ABMax24]

Oil back up to $110 this morning, talks of the EU banning Russian oil have resumed, along with attacks on Saudi oil infrastructure are being blamed for the increase.

 

[begreen]

 

[vinny11950]

Remarkable chart.

 

[EatenByLimestone]

Isn’t that a good thing?

 

[SpaceBus]

It is something, not sure if it is exactly good.

 

[EbS-P]

They lost theirs shirts have been naked for a long time and now can afford a pair of pants. The infrastructure was not abandoned. Chart was based on 88$ /barrel average crude price. Not sure how that affect the numbers but is seems if we are talking cash flow using and average isn’t the best way.

The drilling and fracking has already happened. i imagine they learned their lesson and won’t be investing much in new production but it could happen. They still haven’t token even. The current supply/demand situation won’t last forever won’t last forever. I want to the the oil and gas breakdown.

 

[johneh]

I don't care what they say ! Gas here this morning is just under 9$
an Imperial Gallon somebody is making a chit load of money

 

[Rusty18]

Unleaded $4.15 diesel $5.69 today...will see where it goes tomorrow. It’s gonna hurt bad when that fuel surcharge finally hits groceries.

 

[ABMax24]

I was going to write a long winded post, but this article comes pretty close to my own opinion on why oil prices have risen the last couple weeks:

Russia's Victory Day Could Be A Crucial Moment For Oil | OilPrice.com

While the Kremlin has publicly stated that it won’t be declaring war on Ukraine or announcing a military mobilization on Victory Day on May 9, the markets are jittery heading into the weekend

oilprice.com

 

[SpaceBus]

I don't expect prices to come back down.

 

[kennyp2339]

This is a great video that explains a lot about the prices and the oil age in general.

 

[EbS-P]

This is a great video that explains a lot about the prices and the oil age in general.

I will summarize my key takeaways.
1. Price is driven by supply and demand. (We already knew that).
2. Opec+ Was a reaction to the shale boom in a attempt to regain control of supply.
3. Producers are not reinvesting in new supply infrastructure like they have in the past.

The last point is the most telling. They are going to pocket record profits betting that demand will keep prices high and by not investing in new production capacity almost ensures that even if demand levels off or drops it (the demand) will keep prices high because they have limited the future supply. They have no reason to drop prices whe. The future is predicting a drop in consumption.

I don’t see how this strategy would ever allow oil back down to the or below the 75-85$ a barrel price. I think odds are Better that the price stays above 100$ and and the economy picks back up producers choose not to increase supply and we could even settle in to the 120-135$ a barrel. Europe will reduce or nearly eliminate consumption of Russian energy products.

Good video.

Just my thoughts

 

[kennyp2339]

I don’t see how this strategy would ever allow oil back down to the or below the 75-85$ a barrel price. I think odds are Better that the price stays above 100$ and and the economy picks back up producers choose not to increase supply and we could even settle in to the 120-135$ a barrel. Europe will reduce or nearly eliminate consumption of Russian energy products.

I agree with you 100% I kind of believe Europe is going to be forced into energy independence from fossil production (at a high cost) meanwhile in the USA we will actually increase fossil production to subsidize the European movement w/ some form of muscle, whether it be with weapons, new tech or food, we will also let this be a test to see how they change there lives and how the global economy fairs out, then we'll go and copy them 10 yrs later after the biggest bugs of the system are worked out. In any event, our way of life has already changed, its a good idea to wrap all this up into the end of the oil age and know tough times may be ahead for all of us.

 

[SpaceBus]

I want to stop using FF, but it's hard when I have to manage my property, build infrastructure, etc. Long term I'd like to only use FF in my tractor and maybe my truck, and use solar generation for the majority of our energy needs. I can't see that happening for at least a decade at my pace.

 

[woodgeek]

Isn’t that a good thing?

The problem is that the people (investors) that lost the money in the past, and the people (investors) making it now are DIFFERENT.

The US shale industry lost $300B 10 years ago. A big wave of bankruptcies, assets auctioned off. New companies bought the assets. By and large, the shale sector is supported by investment banks and large holders. So the money is being made by wealthy speculators that got in at the right time.

Ideally, we would like to see that money poured into worker's paychecks. But the consensus is that development (requiring roughnecks) is not surging. The money is going into rich folks pockets.

Ofc, the oil majors are also getting a cash infusion, and they are held by a bunch of retail investors (including me through my index funds) including the proverbial grandma living off XOM dividends. I suppose that is a good thing.

But as the video above suggests, the entire industry is going through a terminal spasm of profiteering before getting devalued. Not because the taps will get turned off and there is no more oil. Just a few years of profiteering before all the oil assets (in the ground) get written down bc the projected total global future usage drops from exponential growth to (slow) exponential decline, and those assets will not get developed in any investor's lifetime.

If you currently own the shale assets and are setting these production/pricing inputs, you are a vampire capitalist. You know your business is going to get written down in the future (like how US coal company market caps got wiped out more than a decade ago, never to recover), so you are going to make as much money as possible with minimal reinvestment, and try to sell out at the right future moment.

And those proverbial grandmas (and us index investors) and taxpayers will get left holding the (debt and toxic waste filled) bag.

 

[ABMax24]

The problem is that the people (investors) that lost the money in the past, and the people (investors) making it now are DIFFERENT.

The US shale industry lost $300B 10 years ago. A big wave of bankruptcies, assets auctioned off. New companies bought the assets. By and large, the shale sector is supported by investment banks and large holders. So the money is being made by wealthy speculators that got in at the right time.

Ideally, we would like to see that money poured into worker's paychecks. But the consensus is that development (requiring roughnecks) is not surging. The money is going into rich folks pockets.

Ofc, the oil majors are also getting a cash infusion, and they are held by a bunch of retail investors (including me through my index funds) including the proverbial grandma living off XOM dividends. I suppose that is a good thing.

But as the video above suggests, the entire industry is going through a terminal spasm of profiteering before getting devalued. Not because the taps will get turned off and there is no more oil. Just a few years of profiteering before all the oil assets (in the ground) get written down bc the projected total global future usage drops from exponential growth to (slow) exponential decline, and those assets will not get developed in any investor's lifetime.

If you currently own the shale assets and are setting these production/pricing inputs, you are a vampire capitalist. You know your business is going to get written down in the future (like how US coal company market caps got wiped out more than a decade ago, never to recover), so you are going to make as much money as possible with minimal reinvestment, and try to sell out at the right future moment.

And those proverbial grandmas (and us index investors) and taxpayers will get left holding the (debt and toxic waste filled) bag.

But the money is also going into workers pockets, come up here, I can point you to more than a few companies in town desperate for workers, starting wage is $30/hr assuming no experience in any relevant industry, just bring your work boots.

What energy source is going to replace all this oil and gas? There isn't enough manufacturing capacity on earth today to build the solar panels, wind turbines, or storage batteries to replace fossil fuels. If anything the phaseout of coal has given oil and gas companies more power and control. The same will happen again with natural gas, natural gas will be a dominant, and increasingly used, during the renewable transition, further driving up prices and centralizing control of energy to a select few.

We're also failing to recognize the largest culprit in both the shale oil price crash, and the current oil price run up. OPEC+ and especially Russia are behind both of these. Yeah it sucks the rich get richer taking advantage of the situation, but there's also a pile of retail investors like myself taking advantage of the situation by directly buying and selling oil and gas stocks. I don't feel bad making 80+% returns in a few months on an oil stock when the price of natural gas heating my house or the diesel fuel powering my truck has also doubled in price.

 

[woodgeek]

OIl and gas is not going away. And I am fine with workers getting paid. A lot of my students go work in the oil patch and for oil services industry.

What is going away is the future projections of exponentially growing oil and gas demand far into the future. There ARE alternatives. They are not at full scale in 2022, nor will they be in 2030, but that day is coming. The 'TINA' philosophy (There Is No Alternative) underpins the financialization of the entire industry, bc it gives (or gave) the oil majors a false sheen of being low/zero risk of loss as investments.

The value of the oil majors is tied to assets in the ground. Much of those assets WILL be developed (and will need to be developed) during the 21st century, BUT a lot of the assets currently seen as having a monetary value will NOT be. Picking which will and won't be developed (and at what price point) is a moving target, but one that is mostly moving DOWN over the next decade.

The oil majors will continue to exist for a long time, but their historical market caps ($ amounts and fraction of GDP) are well into a process of secular decline from which they will never recover. They are not good long-term investments in a post-TINA, post-Paris COP 21, climate constrained world.

So, are the current investors grannies making a solid dividend? Will those retail investors make out (e.g. do better than the index) over the next 20-30 years? I doubt it, they are bag holders. Lot's of speculators will make money on the ups (and downs) during the whole decline. And when the majors declare bankruptcy (reorganizing like the coal majors did a decade ago without going away) a lot of super-fund sites are going to magically appear that will need to be cleaned up at taxpayer expense, as yet another 'unfunded externality' of the oil business.

I'm just saying the current windfalls are not evidence of financial health, low risk, or a net positive for the North American economy.

 

[woodgeek]

If anything the phaseout of coal has given oil and gas companies more power and control. The same will happen again with natural gas, natural gas will be a dominant, and increasingly used, during the renewable transition, further driving up prices and centralizing control of energy to a select few.

We're also failing to recognize the largest culprit in both the shale oil price crash, and the current oil price run up. OPEC+ and especially Russia are behind both of these. Yeah it sucks the rich get richer taking advantage of the situation, but there's also a pile of retail investors like myself taking advantage of the situation by directly buying and selling oil and gas stocks. I don't feel bad making 80+% returns in a few months on an oil stock when the price of natural gas heating my house or the diesel fuel powering my truck has also doubled in price.

Totally agree with the above. And if you want to speculate in a well-informed way on FF investing, be my guest.

over the next couple decades... Oil DOWN, Gas UP.

But I hear a lot of 'buy and hold' retail investors who seem to think that oil-heavy investments have to be UP UP UP, bc, TINA. I worry about them, and the taxpayer bill that will come due at the end.

 

[EbS-P]

Looks like we are nearing a peak. But we are one minor catastrophe away from oil going up even more.
Refining capacity will limit any refined fuels quickly following the price of oil down I think.

120$ per barrel. And very limited extra pumping capacity. High prices are here to stay throughout the summer I imagine.

Citi raises oil price forecasts on "heavily delayed" Iran deal

Citi Research on Monday raised its quarterly oil price forecasts for this year and its year-average outlook for 2023, because additional supply from Iran looked heavily delayed, adding to tighter market balances.

www.reuters.com

 

[begreen]

What energy source is going to replace all this oil and gas? There isn't enough manufacturing capacity on earth today to build the solar panels, wind turbines, or storage batteries to replace fossil fuels. If anything the phaseout of coal has given oil and gas companies more power and control. The same will happen again with natural gas, natural gas will be a dominant, and increasingly used, during the renewable transition, further driving up prices and centralizing control of energy to a select few.

This denies a primary alternative, reduced consumption. Not every industrialized nation lives on a glut of oil. Reduced waste, better efficiencies, and reduced consumption are less expensive options for the short term.

 

[ABMax24]

This denies a primary alternative, reduced consumption. Not every industrialized nation lives on a glut of oil. Reduced waste, better efficiencies, and reduced consumption are less expensive options for the short term.

While I completely agree with you, changing North American attitudes toward rampant over-consumption is no small feat either.

 

[Ashful]

...reduced consumption are less expensive options for the short term.

While I completely agree with you, changing North American attitudes toward rampant over-consumption is no small feat either.

I was with you guys until these last two posts. If it were actually less expensive, it would already be the way it's done. The purchase decision of 100 million primary consumers in this country alone wouldn't allow for anything else.

You can punch some idealistic holes in Capitalism, I'll admit it ain't perfect. But it is the ultimate cost optimizer.

 

[ABMax24]

I was with you guys until these last two posts. If it were actually less expensive, it would already be the way it's done. The purchase decision of 100 million primary consumers in this country alone wouldn't allow for anything else.

You can punch some idealistic holes in Capitalism, I'll admit it ain't perfect. But it is the ultimate cost optimizer.

The point being it's cheaper to reduce current use of fossil fuels than to replace the same amount of energy with renewables.

We don't all need large houses with substantial heating and cooling requirements, pickup trucks don't need to be used as commuter cars, etc.