The price of oil is creeping back up again, hitting $44 today at NYMEX. Deutsche Bank is warning that it could go as high as $100/barrel. http://business.scotsman.com/index.cfm?id=887522004 What's interesting about this increase is that it doesn't seem to be based as much on fear and speculation. It's driven more now by the basic supply/demand situation. Factors include the capacity of the exporters and the size of the proven oil reserves. There's still a fear element, of course, but it's not so much terrorism that they're afraid of now as they are about the "big turnover" point where capacity exceeds supply, and other possible scenarios. Prices could still come down as new capacity comes online, but it's going to be an interesting remainder of the year for the oil industry.
Nobody. But I do disagree with Pangloss because gripping but unpublicized fear is evident, a powerful fear that simultaneous petroleum supply interruptions could suddenly cripple world economies. There is also a realization of significantly increasing risk of simultaneous and even sustained interruptions in Arabian and Arabian Gulf oil at any time. The US Govt is hastening to fill her Strategic Petroleum Reserves, while murmuring "don't worry everyone, it's all under control". Every slight blip is now being exaggerated in the markets, and that spells Fear.
I expect the oil industry to come out with larger profits. PLus supply problems are the other difficulty. if Iraq could be brought back to full operation I suppose there wouldnt be much trouble. What I find interesting is how much more oil is likely to come online? I mean the SAudis are already pumping as much/ as fast as they can, and I havnt read anything about other countries having massive overcapacity, so where is the necessary increase in supply going to come from? China will continue to increase its use for the foreseeable future, its coming up to Winter in the USA etc, and I see no slow down in demand for oil for years. So, we're buggered. Please Register or Log in to view the hidden image! Pangloss, are you scottish? Finally, if I were an international terrorist mastermind, I would be hijacking oil and LPG tankers. The naval security community is aware of the dangers and cant relaly think of any way of stopping them.
The world supply of oil will be greatly disrupted if a terrorist attack were to take place in Saudi Arabia. The terrorists in that country have already tried to attack pipelines and I even think terminals. OPEC today provides only 30% of the world’s oil compared to 50% in the 70’s. But I fear inflation is back on the way, I don’t see the price of oil actually going down any time soon. Especially with China’s insatiable demand that would very easily match of the US: This is really crunch time the US and other developed states have to really start investing the alternative energy sources because oil is going to become a rare commodity and the world economy runs on it.
Here is an economist article on the oil situation: It has to get ready for steadily increasing prices and not so steady demands shifts upward to unsustainable levels. I did the math myself and with current levels of consumption the world’s current supply of oil is only 37 years! Demand is not going down, so one can accurately state that it will be really much less then 37 years. You can do the math yourself: http://www.cia.gov/cia/publications/factbook/geos/xx.html#Econ.
For china it would become increasingly harder to flood the us amrket with cheap products if the cost for producing these articles goes up? Also at 100 dollars a barrel it will be profitable again to explore the smaller fields in the north sea for example, so I think of it more as an economical problem than a true resource shortage.
