Oil prices crash

[madd0ct0r]

from http://www.vox.com/2014/11/28/7302827/oil-prices-opec

That source claims it's OPEC trying to use it's cheaper costs of production to undercut the US.
Reddit argues the US is encouraging it since it gouges Russia.

[K. A. Pital]

It is OPEC. They could have decided for a cut, but then the US-based competition would be still commercially viable. Saudis do not want that.

[Guardsman Bass]

Yep. The Russian government can ride it out for a year or so, since they have massive foreign-currency reserves (although it will still take an economic toll on the overall Russian economy). The country that is most in trouble from this is Venezuela, which is a credible threat for another major debt default because of it (which would also seriously endanger their economy, since they make up for its problems with imports paid for with oil money).

[LaCroix]

What is the price at which fracking & oil shale extraction are no longer viable?

My bet is on this becoming the new average price.

[Guardsman Bass]

Depends on the field. Vox had a piece on this:

The catch is that no one quite knows how low prices need to go to curb the US shale boom. According to the International Energy Agency, about 4 percent of US shale projects need a price higher than $80 per barrel to stay afloat. But many projects in North Dakota's Bakken formation are profitable so long as prices are above $42 per barrel. We're about to find out how this all shakes out — and which numbers are correct.

[sarevok2]

This must be an alternate universe. Because I was told on this forum we would be living in post apocalyptic wasteland due to peak oil. Bread lines in America, forum members building survival bunkers and exchanging survivalist tips, how to redistribute healthy women for genetic diversity...

[Starglider]

This must be an alternate universe. Because I was told on this forum we would be living in post apocalyptic wasteland due to peak oil. Bread lines in America, forum members building survival bunkers and exchanging survivalist tips, how to redistribute healthy women for genetic diversity...

Essentially, The Oil Drum crowd ignored hydralic fracturing and horizontal drilling, and assumed that Canada oil sands was a representative example of what unconventional oil extraction would be like. This is understandable for layman - both techniques were relatively specialised, expensive and rare prior to the mid 2000s - but experts really should have known better, with basic research on how to cost-effectively frak shale rolling along since the mid 70s. Personally I thought it was likely that oil would stay in the $200-$100 range, based on the published reserves and costs circa 2008, but progress on refining frakking to extract tight oil has been quite impressive.

Of course cheaper oil just means more fuel for the AGW doomer crowd.

[LadyTevar]

Remember, all of these have been repeated boom/bust of Oil Future Speculation. Any kind of scare can send prices up or down.

[madd0ct0r]

This must be an alternate universe. Because I was told on this forum we would be living in post apocalyptic wasteland due to peak oil. Bread lines in America, forum members building survival bunkers and exchanging survivalist tips, how to redistribute healthy women for genetic diversity...

Essentially, The Oil Drum crowd ignored hydralic fracturing and horizontal drilling, and assumed that Canada oil sands was a representative example of what unconventional oil extraction would be like. This is understandable for layman - both techniques were relatively specialised, expensive and rare prior to the mid 2000s - but experts really should have known better, with basic research on how to cost-effectively frak shale rolling along since the mid 70s. Personally I thought it was likely that oil would stay in the $200-$100 range, based on the published reserves and costs circa 2008, but progress on refining frakking to extract tight oil has been quite impressive.

Of course cheaper oil just means more fuel for the AGW doomer crowd.

Rifkind also makes the argument that oil prices cannot rise indefinetly - there's always a price at which consumption stops growing and economies stutter until the price falls (used to be about $100, I guess it's now $150?).
It depends what % of the price is current demand and how much is future expectation.

[Irbis]

Essentially, The Oil Drum crowd ignored hydralic fracturing and horizontal drilling, and assumed that Canada oil sands was a representative example of what unconventional oil extraction would be like. This is understandable for layman - both techniques were relatively specialised, expensive and rare prior to the mid 2000s - but experts really should have known better, with basic research on how to cost-effectively frak shale rolling along since the mid 70s. Personally I thought it was likely that oil would stay in the $200-$100 range, based on the published reserves and costs circa 2008, but progress on refining frakking to extract tight oil has been quite impressive.

Had you read what is environmental price we pay for fracking, or, if that is too complicated for you, what is energy return on one energy unit invested into fracking you wouldn't be so optimistic. Or wait, is that another thing evil COMMUNISM blocks in order to introduce new, overly regulated world?

Really, if you need to be a 'layman' to think wasting massive amounts of water to keep crap, inefficient economy afloat in a world where 800 million people has access to less than a liter of clean water daily, people living in warmer climates, might be somewhat wrong then I am happy to stay one.

Of course cheaper oil just means more fuel for the AGW doomer crowd.

Read, rational people who care about tomorrow longer than next quarter bonus?

[White Haven]

...Cool your shit, Irbis. He's talking economics, not ethics. I fucking swear, you're so desperate to cram your point down everyone's throat that even people who might agree with you just want you to, for once in your life, shut the fuck up.

[Irbis]

...Cool your shit, Irbis. He's talking economics, not ethics. I fucking swear, you're so desperate to cram your point down everyone's throat that even people who might agree with you just want you to, for once in your life, shut the fuck up.

What point?

One, I post maybe 10% on environment Starglider post on EVUL COMMUNIST REGULATION. Maybe you should post that criticism to him, not me. Two, learn to read - I was posting on economics, too. Just the kind that bother to look at externalities and costs that won't show up on simplistic, libertarian view of the economy. Gee, sorry I didn't bother to ask you for stamp of approval first.

Three, I don't fucking crawl thread after thread to post dismissive, ad personam, barely on topic replies to you, so maybe do return the favor and stop stalkery shitposting, pretty please?

Seriously, this is like your fifth post that was barely concealed mudslinging at me and at once first and last off topic one I am going to bother replying to.

[White Haven]

You're an amazingly prolific dickhead, man. I don't stalk you, you simply post in a shitload of threads about a shitload of subjects, and occasionally I respond. Heaven forbid that I actually participate in discussions from time to time.

The thread's topic was regarding possible reasons behind a crash in oil prices. Starglider (who, just to clarify, I generally disagree with on a number of subjects) posted regarding the technical and economic aspects of frakking and other alternative oil extraction methods as they relate to oil prices. And then, out of nowhere, you white knight in to attack him as if he were saying that that was a grand thing and can we please blow more emissions up a puppy's ass? Seriously, he's not a Captain Planet villain, and not every post has to be a morality play.

And yes, if you think that 'frakking is arguably a moral failing' is going to stop companies from developing frakking technology, then you're not only a layman but also hopelessly naive. If you want to discuss that, fine. If you want to discuss changing that state of affairs, great! Just please, for fuck's sake, can you maybe just this once avoid starting that discussion with yet another holier-than-thou attack sermon directed at someone discussing what is, rather than what you think should be? I actually agree with you on the frakking issue, but your tendency to just savage anyone standing anywhere even remotely near a topic you disagree with makes me wish I didn't, just so I could stand farther away from you.

[mr friendly guy]

This must be an alternate universe. Because I was told on this forum we would be living in post apocalyptic wasteland due to peak oil. Bread lines in America, forum members building survival bunkers and exchanging survivalist tips, how to redistribute healthy women for genetic diversity...

I remember all that doom and gloom stuff, well except for the how to redistribute healthy women for genetic diversity part.

Back on topic I am interested in who are the winners and losers of this.

Obviously big consumers like China, who I have read is preparing to stockpile more oil for its reserves. Losers will be big producers Russia, whose economy is barely growing due to the tensions with Europe and the US over Ukraine.

I do wonder how much the lower prices will help with economic growth in consuming countries which are either stuttering, eg Japan, or slowing down somewhat, eg China.

[amigocabal]

Essentially, The Oil Drum crowd ignored hydralic fracturing and horizontal drilling, and assumed that Canada oil sands was a representative example of what unconventional oil extraction would be like. This is understandable for layman - both techniques were relatively specialised, expensive and rare prior to the mid 2000s - but experts really should have known better, with basic research on how to cost-effectively frak shale rolling along since the mid 70s. Personally I thought it was likely that oil would stay in the $200-$100 range, based on the published reserves and costs circa 2008, but progress on refining frakking to extract tight oil has been quite impressive.

Had you read what is environmental price we pay for fracking, or, if that is too complicated for you, what is energy return on one energy unit invested into fracking you wouldn't be so optimistic. Or wait, is that another thing evil COMMUNISM blocks in order to introduce new, overly regulated world?

Really, if you need to be a 'layman' to think wasting massive amounts of water to keep crap, inefficient economy afloat in a world where 800 million people has access to less than a liter of clean water daily, people living in warmer climates, might be somewhat wrong then I am happy to stay one.

People waste what is cheap and conserve what is expensive.

It takes 2,400 gallons of water to process one pound of meat. At $4.00/lb for a New York steak, that, and giving the generous assumption that 95% of the price is reflected in the 2,400 gallons used to process this pound of New York steak, this means that the upper limit for the water costs
per pound of meat is $3.79. That translates to less than two tenths of a penny per gallon. One U.S. dollar will buy 633.25 gallons of water. (I assume this is clean, fresh water; presumably, meat is not processed with untreated water.)

so the question of whether fracking is efficient depends on if the price of the oil extractged exceeds that of the water used.

And I do not know why fracking would cause people to relocate to warmer climates- they are doing so already.

[Broomstick]

More like, warmer climates are relocating to the people!

(Yes, I know climate change is more complicated that simply "warmer", but increased hydrocarbon consumption will affect that as well.)

[amigocabal]

More like, warmer climates are relocating to the people!

(Yes, I know climate change is more complicated that simply "warmer", but increased hydrocarbon consumption will affect that as well.)

The thing about climate change is that most of it is influenced by the equivalent of a black box which we do not understand. (This is in sharp contrast to the simple logarithmic relationship between CO2 and temperature; one can literally calculate how much temperatures will rise by exhaling.)

[Frank the Tank]

Whatever did happen to all of the "End Of The World As We Know It!" folks who were proclaiming we were on the cusp of a global apocalypse just a few years back? I read back through the various gloom and doom and $150/oil barrel threads, and I don't recognize a lot of those names, so I can only assume these are people who've since left the board. Did they actually go live off the grid, as some were (loudly) saying they were going to? Or did they just grow up a bit and move on to other, less dramatic, things?

[madd0ct0r]

Let's have a longer period chart.



So around about the time of the 'we're doomed threads' oil prices would have started an exponential rise towards prices unseen outside of the 1980's crisis. It's not a totally unreasonable extrapolation, and it did end only with the financial crash in 2009.

I would be very surprised if this dip continues more then a few months. The steeper the change on the graph, the faster it corrects.

[Purple]

More like, warmer climates are relocating to the people!

(Yes, I know climate change is more complicated that simply "warmer", but increased hydrocarbon consumption will affect that as well.)

The thing about climate change is that most of it is influenced by the equivalent of a black box which we do not understand. (This is in sharp contrast to the simple logarithmic relationship between CO2 and temperature; one can literally calculate how much temperatures will rise by exhaling.)

What do you mean by "we do not understand"? Does the scientific community really not have any understanding of how this thing works?

[LaCroix]

What do you mean by "we do not understand"? Does the scientific community really not have any understanding of how this thing works?

They have a good understanding, but it's very hard to calculate to a degree that would make the sceptics crowd happy.
There are lot's of factors, like co2 is bad, but at the same time, the particles generated by combustion generated a solar dimming effect, that basically saved our asses to a degree. Add some variables like the water cycle, storms, volcanoes, solar intensity cycles, and you see that it's a calculatory nightmare.

[Purple]

They have a good understanding, but it's very hard to calculate to a degree that would make the sceptics crowd happy.

Now I am confused. I always thought this thing was a scientific fact that like other scientific facts (relativity, gravity, etc.) was something that's proven by science. Now you tell me that it's basically something more along the lines of "er... it works. But you know. It works. Trust me."

[Esquire]

You're basically asking climate scientists to simulate the whole world's interactions with both itself and humanity for an indefinite period; no self-respecting scientist would claim to be able to do that. The theories work out in experiments and over the short term, but there are way too many sources of uncertainty for accurate predictions far into the future.

So no, scientists can't say "the temperature will definitely, 100% certain rise at rate x for the next fifty years," but that doesn't mean they can't make broader claims or that they have no understanding at all of the situation. Science is not atheist magic, it's an ongoing process of discovery through testing.

[Purple]

Maybe it's just me but when you start saying things like "too many sources of uncertainty for accurate prediction" it just sounds like the argument I keep hearing from religious people. You know the "strange are the ways of god but it's totally what we say it is" one.

Don't get me wrong. I am not asking for people to perform perfect modeling for all of time past and future. But I at least expected there to be as much substance for this as was for say relativity before it was experimentally proven.

[Broomstick]

Maybe it's just me but when you start saying things like "too many sources of uncertainty for accurate prediction" it just sounds like the argument I keep hearing from religious people. You know the "strange are the ways of god but it's totally what we say it is" one.

Don't get me wrong. I am not asking for people to perform perfect modeling for all of time past and future. But I at least expected there to be as much substance for this as was for say relativity before it was experimentally proven.

OK, it's weather prediction but writ large.

Our ability to forecast the weather for an area (pick any size) for the next 24 hours is pretty damn reliable. for the next 2-3 days pretty good. For the next week... let's call it decent. The further out you go the less predictable this is. That's because it's an insanely complex system and our best theories and models only work so far.

It is STILL a science, but one with limited predictive abilities.

Climate models are like weather models, but even more complex and difficult. Such systems deal with vast numbers of variables, all of which interact in extremely complex ways.

At that - it's vastly improved over 30 years ago. I said in another thread once that when I was a small child you got a tornado "warning" of maybe a few minutes. When I was 25 that was upped to around 15 minutes. Now, it's not unknown to get 30-60 minutes advance warning. HUGE improvement, and that's because of weather science and improving models.

Likewise, we're just beginning to get to the point of predicting unusually hot/cold or wet/dry seasons with more reliability than folklore and superstition.

It's not that the science is weak, it's that what it's trying to describe is so complex.