Oil Breaks $135

[Admiral Valdemar]

I don't know if anyone else is seeing this, but the past few days have been pretty scary. Not only have I just witnessed a $5+ premium added to oil over 24 hours, but CNBC had Hirsch and Pickens talking, uninterrupted by retarded talking head economists, about peak oil; the FT and Telegraph have been discussing peak oil and rationing which is being considered in China, India and Australia; the IEA have just come out basically proving myself and others correct in what we've been saying for years (100 mbpd production a pipe-dream, never mind 120+ by 2030) and the markets have seen the strengthening dollar slide majorly along with gold rushing up to near its highs at moonshot strength.

On top of that, the US inventory is showing a massive draw down in crude not expected as imports falter from quite remarkable constant highs of late. We're not even in peak driving season and the hurricane season, which could rival 2005 if temperatures thanks to La Niña get an even bigger boost this early is yet to start too.

In short, things are unravelling far faster than anything I've ever predicted on here. And I saw myself as quite a pessimistic doomer, so it shocks me that I'm seeing these events and people I discuss such matters with actually worrying over events now when they were in the "We're going to get alternatives after a minor price spike and things will be fine by 2015" crowd.

My local fuel prices are also the fastest rising in recorded history for the country and the highest period here. It's 117 for unleaded 95-octane and 130 for diesel with these prices only just factoring in $100 oil. You'll notice fuel protests are starting to gain momentum again with one planned for the 27th in London and more besides. It's getting serious.

[The Duchess of Zeon]

Call it ten to twelve years 'till we hit the era of oil prices which never dip below $300 a barrel in 2007 dollars? That's still probably conservative of me. They're certainly never coming down below $100.00 now.

[J]

I just mentioned in the HoS that it's going to get real ugly when the costs are finally passed along to consumers. Oil & gasoline prices have gone up 50%, that's right, 50% in the last 3 months. Let me say that again, up 50% in the last 3 months. So far, prices at the pumps have only gone up around 10-20% in the same time period, in other words big oil has been eating some of their profit margins for reasons known only to them. If and when those costs are finally passed down to consumers, that's going to be another 30-40% jump in fuel prices.

On a related note, there's a couple gas stations in my area that have been out of gas for the last week or so, both of them are Shell stations. The big Shell station a few blocks from my place is in service but not the small neighbourhood stations, I don't know if this is just a coincidence or a sign of things to come.

[Admiral Valdemar]

$300 oil will be next spring if this continues. In ten years, you're looking at well over $1000 for a barrel, if not more. $200 is well within our sights for autumn this year and we've just gone from $126 to $135 in 24 hours. The global economy will collapse at $200, to say nothing of what we're going to get with the shortening of every doubling time for the price.

Can anyone say "panic"? I think the market is finally getting it. If that's the case, this is the last good summer we'll be getting. It's downhill from here if Export Land is ramping up at the pace we're seeing now.

For the first time in history, the oil futures are all in contango too, that is, oil is predicted to be more expensive in the future, not cheaper.

[Enforcer Talen]

Some of the my sites are saying it will hit 12-15$ a gallon before rationing sets in. Whomever makes it into office will have a very interesting time of it for the next eight years.

[Admiral Valdemar]

People will probably pay that and even more. We're not even seeing demand destruction on any real scale yet, in fact, we're seeing the opposite in some areas. It's going to take far higher prices to get people to cut back, especially in the States where cars are your whole life given the sucky alternatives.

However, I see actual physical shortages hitting long before prices from the hallowed free market make a real dent. The declines in fields may be high in places, but the fall off in exports is far worse.

[Colonel Olrik]

In a couple of days, the Euro gained against the dollar practically everything it had been losing in the last weeks. The gas here in Munich is at seemingly surreal prices, I just saw it now at €1.58/L for normal unloaded and that's at the cheapest gas stations. At the stations along the autobahn it has long past €1.6/L. Thankfully, while Germans like their cars German cities (the whole country in fact) are a model for mass transportation and I do see more people taking the trains now than before.

[Enforcer Talen]

Im definitly wishing we had better mass transit. Im thinking about my commute from my dad's house to my mom's house, for example (sixty miles, two gallons), and not liking what Im coming up with.

[Vaporous]

Gas prices by me have zoomed straight past $4.00 a gallon with no sign of stopping. In Manhattan it's looking to hit $4.50. Business coverage is still rambling about speculators and oil bubbles with the occasional mention and quick dismissal of peak oil.

[tim31]

This all has me stressed for my sister and brother-in-law; he is a primary producer and the running costs of the farm are hard enough as it is... The drought's barely broken.

[Singular Intellect]

And to think people right now are only getting a faint glimpse of how bad things can get...we haven't even begun to pay the price for our short sightedness and stupidity.

I wish I could say people would smarten up if and when we recover from the impending hardship that most don't seem to grasp the scale of, but humanity's track record would say almost certainly "No".

So my indifferent opinion on the issue would be: "We deserve every hardship that we currently face and are about to face; we worked very hard to bring them about."

[Ryan Thunder]

And to think people right now are only getting a faint glimpse of how bad things can get...we haven't even begun to pay the price for our short sightedness and stupidity.

I wish I could say people would smarten up if and when we recover from the impending hardship that most don't seem to grasp the scale of, but humanity's track record would say almost certainly "No".

So my indifferent opinion on the issue would be: "We deserve every hardship that we currently face and are about to face; we worked very hard to bring them about."

Not to sound selfish, but I certainly don't deserve it. It's not like I've had a chance to do anything about it.

If I had a choice, and a well-established income, I'd be taking an electric train to work every day, living in a city powered entirely by nuclear plants, wind turbines, and solar arrays. I'd have an electric scooter. My house would be as energy efficient as I could reasonably afford for it to be.

But my prospects for getting either choice or decent income are rather low, given the state of things.

I guess that people in North America will either have to take mass-transit or telecommute, though, so I my future as a computer scientist may not be so boned as I thought...

[K. A. Pital]

$135? Let's make another run of bets now, guys, what would the price be in July, say, on July 15.

[The Kernel]

Of course the price hasn't translated into cutting into demand yet in the US. Even at $4.25 a gallon, I'm only paying ~$200 a month for gas which is significantly less than 5% of my income. I could probably handle gas at $10 a gallon before I'd really start to care.

If there's any place where demand has to get hit first, it's India and China. They are seeing tremendous growth in the number of automobiles hitting the streets, but this kind of growth is going to hit a brick wall with the populace not being able to afford filling up their tanks. The US still has quite a ways to go before it's a serious problem, for now most of the economists have noticed that Americans are just tightening their belts in other areas to compensate, and I'm assuming that the Europeans are doing the same.

[J]

$135? Let's make another run of bets now, guys, what would the price be in July, say, on July 15.

4 Yergins.

If there's any place where demand has to get hit first, it's India and China. They are seeing tremendous growth in the number of automobiles hitting the streets, but this kind of growth is going to hit a brick wall with the populace not being able to afford filling up their tanks.

With regards to India you're probably right, with China it's hard to say since they can and do subsidize their petro products, and they have the currency reserves and cashflow to continue doing so for some time. How long and how much is anyone's guess though, that depends on when the world economy crashes along with demand for made in China goods. So far things are holding up and they're seeing double digit increases in consumption.

The US still has quite a ways to go before it's a serious problem, for now most of the economists have noticed that Americans are just tightening their belts in other areas to compensate, and I'm assuming that the Europeans are doing the same.

Depends on the income and financial management skills of the people, a lot of Americans are already hurting right now and some are being forced to cut back on their driving. I haven't heard of any fuel shortages yet but if inventories keep dropping like they have in the last few weeks it's entirely possible some areas will be dry by the end of the summer.

It should be interesting to see the DOE oil inventory numbers in a couple weeks and compare the gasoline consumption numbers for the Memorial Day long weekend this year with those from previous years. That, I think will be a good indicator for seeing if high prices are actually starting to sink in.

[Butterbean569]

Since learning about peak on this very board about a year ago I've tried to take proactive steps for Peak Oil and I'm sitting pretty (I think...)

* I Live 3 miles from work. My rent is about $50-$100 a month more than if I worked 10+ miles away, but not only is living close to work convenient it's starting to save me a lot of money...I spend $20 a week on gas at most (assuming I don't drive anywhere but work and back, plus grocery store or something).

* I work in workers' compensation insurance...which is based off of state law...so my job is secure unless they change the laws (or if my particular company, Liberty Mutual, goes out of business). To combat this I've been going after insurance industry designations to add to my bachelor in Econ I earned at Purdue, so hopefully I'll at least be one of the last to get cut if something bad happened....

* I've begun playing peak oil in the stock market. About a month ago I put about $400 in USO (US Oil) and about $300 in CSX (railroad)...both are up double digit percentage points. This extra profit makes up for the extra amount I'm paying at the pump, and then some. While I don't have thousands and thousands to throw into the stock market so I can make REAL money, I'm trying to get my portfolio geared up for peak oil (and the solutions to peak) so I'm making money while everyone is spending/losing theirs. Wealth is relative, isn't it? Next purchase I'm looking towards is some natural gas...we'll see...

(Not to hijack the thread, but thoughts on natural gas vs. nukes vs. wind vs. solar would be appreciated (i.e. which one will see most growth in next 5-10 years? I personally wish it were nukes but you know what people think about nukes...maybe $200, $400, $1000 oil will change their minds))

Should be interesting. I'm going to do my best to thrive instead of just survive, but if the macro side of everything is as bad as everyone here is saying, it might be tough to even survive....

Let's just say I'm glad I don't live in a 3rd world country.

[TimothyC]

It's threads like this that make me glad I already have my plane tickets for my summer vacation this year.

[K. A. Pital]

I only travel via train, and in the city I use public transport, I have no car, and see no change in that decision in the future.

[Adrian Laguna]

I only travel via train, and in the city I use public transport, I have no car, and see no change in that decision in the future.

Similar thing here. I do use car/airplane during vacation, but someone else is driving/paying, so I'm not complaining.

[Shinova]

If peak oil hits though, it's apparently going to affect more than just your driving usage, or lack of. Every product involves transportation of some kind, so prices everywhere are going to get a boost.

[Shinova]

Though yeah it's easier if you're saving money not driving.

[MPC2163]

Just great. I was assigned to student teach at a school 30 miles away from my college, which is in the middle of Iowa. We are like 40 miles from Amtrak and public transit doesn't exist. I suppose I could hop on the freight train that comes through three times a week to get to the school. At least the college will pay something for gas money since they forced me to go all the way to Marshalltown to get my teaching certification...

[wautd]

> 1.4€ for diesel now over here

[wautd]

> 1.4€ for diesel now over here

That's 2.21$ for you yanks

[Vaporous]

> 1.4€ for diesel now over here

That's 2.21$ for you yanks

per liter, I'm presuming, since it's already far passed that per gallon here.