Will oil price go up to $100/barrel?

Discussion in 'Business & Economics' started by Saint, Dec 7, 2016.

  1. Saint Valued Senior Member

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    Will oil price go up to $100/barrel?
     
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  3. billvon Valued Senior Member

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    No. Tight oil becomes economical at about $70 a barrel so that serves as an upper limit.
     
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  5. joepistole Deacon Blues Valued Senior Member

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    Not likely, oil prices have risen based upon speculation of an OPEC deal to supress global oil production, and now that speculation has become a reality. It's a modest attempt, and the deal almost didn't happen.

    At best, if the agreement holds, this deal will keep oil prices around 50 dollars per barrel. This agreement is very fragile. I think the question is who is caught cheating first. But here is the thing, the deal only applies to OPEC member states. At 50 dollars a barrel it's profitable for US oil producers to pump oil and they will. The days of hundred dollar oil are over. I think we will see oil trading between 40 and 60 dollars a barrel for the foreseeable future.
     
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  7. exchemist Valued Senior Member

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    Not for a very long time, for the reasons other posters have given. But I suppose it may eventually get back to $100/bbl, unless the rate of conversion of energy needs away from fossil fuel exceeds the rate of depletion. If that were to happen, prices would stay low indefinitely. The rate of conversion of transport fuel to non-fossil sources will be decisive.
     
  8. Russ_Watters Not a Trump supporter... Valued Senior Member

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    Depends on exactly what is meant by the question. As our economically challenged Peak Oil proponent likes to do, if we ignore inflation, oil will certainly rise above $100/barrel eventually - but it might be a decade+. However, I agree that tight oil makes it unlikely that we'll see oil above $70 a barrel at today's dollar value for a very long time. My guess is 50+ years of reliable oil production.

    Also, if Saint is referring specifically to OPEC's recent announcement that they are going to lower output, I doubt it will have much near-term effect. OPEC has been broken by fracking and now that everyone knows it, oil prices are no longer easily manipulated to create speculative shocks. Back before the recession when oil hit $150 people hadn't yet realized just how powerful fracking was. That price was speculative based on the incorrect belief that we were near Peak Oil. Now we know, so speculators aren't going to be so bold in bidding it up.
     
  9. iceaura Valued Senior Member

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    There's a hidden political assumption there - that the oil companies are going to continue to enjoy a favorably distorted market, in which they are allowed to externalize much of their costs of production.

    If the fracking and tar sands and Arctic and deepwater drilling operations have to cover even the currently externalized risk premiums for blowouts, pipeline leaks, rail accidents, and landscape contamination - never mind war in the Middle East, or the CO2 elephant in the room - the limit is going to be well north of $70.

    I don't see that happening, but it isn't actually impossible.
     
  10. billvon Valued Senior Member

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    Yes, that assumes we continue the current economic model. However, unless you capture the cost of carbon emissions, the remainder of the issues you mention (insuring against blowouts, rail accidents etc) is going to be in the noise. In other words, it might be $ 72 a barrel instead of $ 70, but it's not going to double.
     
    Last edited: Dec 8, 2016
  11. exchemist Valued Senior Member

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    Are those risk premia externalised? It seems to me the compensation regimes in the USA have been shown to be pretty severe and borne by the offending companies (Exxon Valdez, Macondo). Yet companies continue to invest in fossil fuel extraction in the US, in spite of these well-publicised risks and costs. That suggesst billvon is right: the risk premium when factored in a not a game-changer.
     
  12. iceaura Valued Senior Member

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    Don't be silly. Those were wrist slaps compared with the damage. Exxon actually made money - a profit - on the escrowed damages from the Valdez, which they were allowed to invest and keep the return above minimal adjustment - that's how long they were able to drag out the payments, which were peanuts and never got to half the people they injured (let alone the ecosystem damages - the oil is still there, still fucking things up).

    BP is still licensed to do business in the United States, and none of its executives are in jail - meanwhile, the harm just from the detergent they dumped to help hide what they did (never mind the oil) has not been measured, let alone paid for. They got away with murder, literally, and enormous continuing harm to the Mediterranean of the Americas, and paid what - a couple months' profits in a bad year?
    Which is probably a major reason those risks are allowed to be externalized, and those costs kept minimal.

    But that might change, and if it does the cap is going to go well past $70.
     
  13. exchemist Valued Senior Member

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    You may be right about Exxon Valdez: it was long ago and I was not close to the details.

    But with BP, you need to do better than cite alleged damage that you admit has not been measured (i.e. may not even exist). Regarding executive going to jail, there are, believe it or not, laws in civilised countries that determine the degree of criminal culpability in industrial accidents. Do you have evidence these laws are somehow circumvented by the oil industry?
     
  14. iceaura Valued Senior Member

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    What would you estimate the cost of ensuring the tar sands fields, deepwater wells, or Arctic wells, against contaminations, blowouts, leaks, and mishaps, would be if Exxon and BP had had to pay not only lump sum damages to a small percentage of directly injured parties who fought through their lawyers for twenty years,

    and not only the actual population of directly injured parties their full injury, which would be a major change in itself

    but also the ongoing deficits they created - the openended stream of losses, including (say) missing tax revenue, ecosystem services, long term cancer rates, infrastructure issues, etc - as long as they existed?
     
  15. iceaura Valued Senior Member

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    Something that is clearly due for a change, if nobody in BP can be held culpable for that degree of negligence killing eleven of their employees. So that's one of the changes I'm pointing at, if it's necessary in order to jail a few guys in that company.

    BP filed false safety equipment needs documentation with US government oversight agencies, and false claims of established safety protocols. As a direct result of the absence of the equipment they would otherwise have been required to install, and the absence of the safety protocols they claimed were in place, eleven of their employees were killed, several burned alive. That's negligent manslaughter, minimum, if it happened with a trucking company and the brakes on their trucks, in my town. It's plausibly a homicide trial, in court, with defendants on the stand answering questions or pleading the fifth.

    And it's among the least of the consequences of that blowout - it's not even the majority of killed and injured.
    Nah, I don't. The burden of evidence is on BP - just take the dispersant: everybody knows that dispersant is nasty and dangerous, everybody knows that thousands of people were affected by it, BP execs knew that would be the case going in, and anyone with a couple of weeks to spend on vacation can find people who believe with evidence that their health and their lives were damaged by it, but never got a nickel from BP. Meanwhile, the cancers and immune system problems take a while to show up - to measure the health effects of what BP did you have to track exposed people. That should be done, whatever it costs, and the bill sent to BP, and none of this "not measured" language should appear.
     
  16. exchemist Valued Senior Member

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    I'm still not clear whether you are saying you think the law on industrial criminal liability needs to be changed - and if so on what grounds and in what respects - or whether you are alleging the law was not properly applied in this case.

    As for your allegations about dispersants, I had not heard these. Can you direct me to reliable scientific sources of evidence about this? (Obviously I'm not interested in reports of opportunistic litigation, as I know this is a notorious phenomenon in the USA, due to no-win-no-fee.)
     
  17. iceaura Valued Senior Member

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    I don't know. If it does, then that change is part of what I'm pointing to.
    Geez - you are telling me that you think the damages paid by BP were "severe" and you hadn't even heard about the dispersants?

    Here, basic intro: https://en.wikipedia.org/wiki/Corexit

    Brief OSHA advice to professional cleanup employees using the stuff, page 63, 64, 65: https://www.osha.gov/Publications/Oil_Spill_Booklet_05.11_v4.pdf basically, don't get it on you, don't breathe it, wear protective gear. Professionals using Corexit normally receive 40 hours of training, much of that devoted to not poisoning themselves or anybody else with the stuff.

    The MSDS for Corexit, and some other info/links: https://saveourgulf.org/resources/dispersants_composition_and_msds
    https://www.msdsonline.com/blog/201...orexit-9527-and-safety-info-from-epa-cdc-osha
    • Note: No such monitoring was done, and cleanup workers who asked for respirators were denied them on the grounds that the photos would look bad. The people living nearby were of course not provided with respirators.
    Some high class science: http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0122275
    And an article in its wake with examples of BP's typical response: http://www.nola.com/environment/index.ssf/2015/04/dispersant_used_in_bp_spill_mi.html

    Liberal biased anecdotes, from doctors and the like: http://bridgethegulfproject.org/blo...nd-dispersants-say-medical-experts-scientists

    Liberal biased environmentalist whiners weigh in: http://www.biologicaldiversity.org/...t/oil_and_gas/gulf_oil_spill/dispersants.html I left out most of the environmental stuff because making BP pay money for that is fantasy, but note the passing comment in there: when ingested mixed with oil, the stuff can bioaccumulate in a marine food chain.
    More anecdotes, from professional divers and others, some connected with lawsuits: http://www.takepart.com/article/2013/04/17/corexit-deepwater-horizon-oil-spill

    And so forth.
     
    Last edited: Dec 9, 2016
  18. exchemist Valued Senior Member

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    But this is full of holes. For example, according to the info you quote, respirators are only indicated if personal air quality monitoring shows them to be necessary. So it is not a standard requirement. Furthermore, protective gear is only needed for the people applying the stuff, as it they can come into contact with concentrated droplets and aerosols etc. Residents would obviously not need any of that. Same goes for the MSDS. It is by the way quite normal for makers of proprietary formulated products not to release the exact composition. The format of an MSDS is designed to capture all the HSE related info without making this necessary.

    As for the effect on marine life, the obvious thing is to see what damage has actually been done. The incident was some years ago now, so we should be able to see some medium-long term consequences, if there are any. I am not aware of long lasting effects reaching the news media, at least. Or can you cite information to the contrary?
     
  19. billvon Valued Senior Member

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    Probably on the order of 1-10 billion a year, depending on how you calculated losses.
     
  20. joepistole Deacon Blues Valued Senior Member

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    Continental Resources CEO Harold Hamm, an oil and gas producer, predicts oil prices could hit $60 per barrel next year. I have my doubts. I think Hamm is talking his book a bit as oil producers are wont to do. Hamm's prediction may be more hope than reality. But I don't think his prediction is unreasonable. I would be happy if we did see $60 oil next year. Hamm thinks or says oil will bottom at $50 dollars a barrel. Coincidentally, that's about where oil is trading today. Earlier today oil (WTI) was trading at 51 and change.

    Hamm thinks American oil producers will not flood the market with oil production as they don't want to see oil markets devastated by oversupply as they have been. This depends on how much restraint OPEC can exercise. Russia, as part of the OPEC deal, has pledged to reduce oil production. When has Russia kept its word on anything? When has Russia not cheated? This is a feeble alliance at best. So it will be interesting to see this OPEC agreement plus Russia can hold.
     
    Last edited: Dec 9, 2016
  21. joepistole Deacon Blues Valued Senior Member

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    Here is the other thing that needs to be considered:

    The markets are expecting a massive stimulus spend next year. That's why the stock markets have rallied since the election. After 8 years of zealously opposing fiscal stimulus even to the point of attempting to default the government, the market now expects Republicans to pass a trillion dollar stimulus spending package in the form of infrastructure improvements and trillions more in tax cuts. If that happens the price of everything will rise, including oil. That stimulus package might be enough to offset any cracks in the OPEC agreement. For some perspective, that’s almost twice the stimulus package Democrats passed in 2009 during the Great Recession when Republicans were unanimously opposed to fiscal stimulus. Now, suddenly, deficits don’t matter – funny how that works. This should have been done 6 years ago when the economy was struggling.

    If this stimulus passes it will be huge boom for the economy. The price of everything will rise. It would be very inflationary, because the economy is now growing and we are near full employment. I’m thinking about buying gold for the first time in recent memory. The price of gold has been falling for some time now. Gold prices are low, but I think that’s about to change. We are near full employment and if Republicans pass this massive stimulus package as the markets believe they will, it could very easily ignite inflation – depending on how much and how fast they spend the stimulus. It’s a recipe for inflation. The Federal Reserve will then increase interest rates in order to slow the economy and keep inflation at or under 2%. So if you are a banker or a bank owner, 2017 should be a very good year for you. This week I purchased an interest in Prudhoe Bay oil. I expect and hope oil prices do rise this year. I think mid-fifties is a reasonable expectation. But if the OPEC alliance cracks, we are going to need to see that fiscal stimulus in order to support that price level.

    The irony here is that Congress will be feeding the economy massive amounts of gasoline while the Federal Reserve will be applying the brakes as opposed to the last 6 years when the Federal Reserve, due to congressional deadlock, was the only game in town which resulted in extraordinary and unprecedented monetary measures to stimulate the economy and prevent a recession.
     
    Last edited: Dec 10, 2016
  22. iceaura Valued Senior Member

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    Uh, they did not monitor. Not monitoring makes it worse, not better, as it removes every possible justification for refusing to provide gear to people literally wading in the stuff.
    The snark about the gear was illustrative - BP lied to everybody, and protected nobody, and paid pennies on the dollar for the harm they did.

    Meanwhile: You are assuming that residents would not be coming into contact with the stuff. May one direct your attention to the circumstances of the application? More than a million gallons of the stuff sprayed as aerosol unto the surface of the ocean, by airplane and by boat, over weeks and months, upwind and offshore of a populated landscape in which hundreds of thousands people lived and breathed salt air blown in from the surf all day every day, regularly ventured upon the sea in boats, and obtained a good share of their food from that same ocean.

    Note the doc's estimate: significant exposure (she estimated by the visible damage to people's health) to about 100 miles inland.
    It is not ok for BP to spray a million gallons of hazardous chemical formulation all over the open ocean while refusing to tell people what's in it. The fact that they did it to conceal the true scale and extent of the disaster they had caused just barbs the harpoon.
    And send BP the bill for the research, as well as the damages. Yep, that is kind of obvious, isn't it. Imagine not doing that, for some reason. You're going to be a radical lefty yet.
     
  23. Saint Valued Senior Member

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    Brent crude oil price is nearly USD57.
     

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