The inexorable march of Oil prices: $145/bbl +.

[The Duchess of Zeon]

Here we go, next step, $150/bbl!

Oil heads past $145 for 1st time; pump cost up too

By ADAM SCHRECK – 40 minutes ago

NEW YORK (AP) — Soaring fuel costs are taking some of the celebration out of this holiday weekend.

Oil prices headed into the busy Fourth of July break by racing past $145 a barrel for the first time Thursday. The story was no different at the gas pump, where the national average soared to within a whisker of $4.10 a gallon.

For a nation accustomed to hopping in the car or jetting cross-country on what is typically one of the busiest travel weekends of the year, the numbers are sobering:

_Last Independence Day weekend, drivers were paying just $2.95 a gallon for gas, about $1.15 less than today.

_Oil prices are up more than 50 percent since the start of the year. Prices rose by a similar amount in 2007 — but it took almost the entire year for them to make that trip.

_Just this week alone, the price on a barrel of oil jumped 3.6 percent. And that was a shortened week.

Light, sweet crude for August delivery settled at a record $145.29 Thursday on the New York Mercantile Exchange, up $1.72 from the previous day. Earlier in the session, the contract rose to $145.85 a barrel, also a new high.

Oil has set trading or closing records in each of the last six trading sessions.

"Prices that you once would've associated with the lunatic fringe are now mainstream," said Tom Kloza, chief oil analyst at the Oil Price Information Service.

Drivers in about three-quarters of U.S. states are now paying more than $4 for a gallon of gasoline. Nationwide, the average retail price for regular gasoline jumped six-tenths of a penny to $4.098 a gallon, according to AAA, the Oil Prices Information Service and Wright Express.

The latest surge in oil prices was propelled by a midweek report of lower crude stockpiles in the United States, lingering concerns about conflict with Iran and comments by Saudi Arabia's oil minister suggesting his country would not boost production.

Prices might have gone even higher Thursday were it not for a sharp gain by the dollar against the euro. The greenback strengthened considerably after the European Central Bank raised interest rates by a quarter point as expected but did not signal additional rate hikes that might further boost the 15-nation European currency.

"The strength in crude oil is amazing given the price of the euro," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

A slumping dollar has been a key driver pushing oil prices up by half this year. Many investors buy commodities such as oil as a hedge against inflation when the greenback weakens, and a falling dollar makes oil less expensive to investors overseas. When the dollar strengthens, traders typically have less incentive to buy commodities.

Oil prices are also rising because investors have been pumping more money into the commodity to compensate for what are perceived to be anemic returns elsewhere, analysts say. The major stock market indexes are all down by double digits since the start of the year.

Recent saber-rattling in the Middle East is another reason for this week's increase. Traders are concerned that a conflict with Iran could disrupt what are already seen as uncomfortably tight global supplies.

"There's a whole lot of thinking right now that prices haven't risen high enough to meet demand growth," Cordier said.

Speaking Thursday in Madrid, Saudi Arabia's oil minister said the world's biggest oil exporter had no immediate plans to boost crude output because there was no need to do so.

Ali Naimi said he was "concerned about the (price) level" and suggested Saudi Arabia is ready to raise production if the kingdom determines supply-and-demand fundamentals have changed. But for now, the minister told reporters, "all our buyers are satisfied and happy."

Traders were also keeping an eye on storms brewing offshore.

A system developing near the Cape Verde Islands off the western coast of Africa was upgraded to become the second tropical storm of the hurricane season, although it was expected to turn northward and avoid the oil and natural gas platforms scattered throughout the Gulf of Mexico.

"It's more of a psychological thing," Cordier said. "It reminds traders that hurricane season is ahead of us, not behind us."

In other Nymex trading, heating oil futures rose 3.45 cents to settle at $4.106 a gallon, while gasoline futures added 2.16 cents to settle at $3.571 a gallon. Natural gas futures jumped 18.8 cents to settle at $13.584 per 1,000 cubic feet.

In London, Brent crude futures rose to a trading record of $146.69 a barrel on the ICE Futures exchange before settling at $146.08, up $1.82.

AP writer George Jahn in Madrid, Spain, contributed to this report.

[Admiral Valdemar]

It helps that we have such prescient world leaders too.

[J]

Relax everyone, the Saudis assure us there's 5 to 7 trillion barrels of oil available, it's all about the politics and speculators and everything's going to be ok. Breathe. Relax. You'll be fine.

Naimi Says Politics, Not Geology, Limit Future Oil (Update2)

By Ayesha Daya and Fred Pals

July 3 (Bloomberg) -- The world has as much as 5 trillion to 7 trillion barrels of oil yet to be developed, located in ``challenging'' areas or acreage closed to exploration, Saudi Arabian Oil Minister Ali al-Naimi said.

``The limits to future supplies have more to do with politics than with geology and resource availability,'' al-Naimi said in Madrid, speaking at the World Petroleum Congress, where he is receiving an industry award. Concern over supply can be overcome by allowing ``explorers to explore and find hydrocarbons where they aren't allowed,'' he said.

Oil prices have doubled in the past year, touching a record $145.85 a barrel today on concern that conflict with Iran over its nuclear program would cut Persian Gulf supplies. Iran is OPEC's second-largest member.

Saudi Arabia, the world's largest oil producer and de facto leader of the Organization of Petroleum Exporting Countries, decided to unilaterally raise output by 500,000 barrels a day during June and July as investors bought into commodities as a hedge against a weakening dollar, falling equity markets and on concern supply may be disrupted.

Oil Supply

The kingdom, which said it would add 300,000 barrels a day to the market in June, held an emergency meeting last month for oil producers and consumers in Jeddah to discuss ways to stabilize the oil price. It will pump an additional 200,000 barrels a day in July, taking daily production to 9.7 million barrels.

The minister maintained that there is enough oil supply, echoing comments from other OPEC ministers this week. ``How many times do I have to tell you, prices have nothing to do with supply and demand,'' al-Naimi said.

Record prices, which the minister blamed on factors including geopolitics and a weak dollar, are affecting economic growth. ``It affects everybody equally,'' he said. ``High oil prices affect economic growth worldwide.''

Yesterday energy ministers from Iran and Angola said oil prices are being led higher by speculation and the weak dollar rather than by any shortage of supply, echoing comments from fellow OPEC members Algeria, Qatar and Saudi Arabia.

``There is no need for more supply to the market,'' Iranian Oil Minister Gholamhossein Nozari said in Madrid yesterday. ``If there was a need, we would contribute.''

Ashley Heppenstall, chief executive officer of Lundin Petroleum AB, the largest Swedish oil explorer, predicted in a Bloomberg Television interview today that oil prices will remain high because of supply problems and geopolitical tensions, dismissing the argument that speculators are behind oil's rally.

``There is more potential on the upside than downside,'' he said. ``We remain positive on oil.'' He was speaking after Lundin announced the discovery of a ``major oil accumulation'' in the northern Caspian Sea.

To contact the reporter on this story: Ayesha Daya in Madrid at adaya1@bloomberg.net

[Admiral Valdemar]

Al-Naimi's last name should be changed to Marx, as in, the brothers Marx.

And, uh, America? Stop bugging them.

[Rightous Fist Of Heaven]

92 euros a pop for barrel. Pump prices have remained pretty much unchanged for a month back here.

[Shinova]

I bet they won't even show these increases on the news anymore since it happens practically day by day.

[Sea Skimmer]

If you counted all shale oil deposits you probably could come up with 5-7 trillion barrels, but much of that can never be reached. Politics certainly is a huge factor, especially environmental politics in preventing us from using nuclear reactors power the melting and digging of the stuff out of the earth.

[Surlethe]

If you counted all shale oil deposits you probably could come up with 5-7 trillion barrels, but much of that can never be reached. Politics certainly is a huge factor, especially environmental politics in preventing us from using nuclear reactors power the melting and digging of the stuff out of the earth.

To be perfectly honest, if we did manage to find some cheap way to extract shale oil via large-scale nuclear heating and digging, we would simply double the size of our economy and keep a nonrenewable energy foundation. The ensuing correction to a renewable base from which we could grow again would inevitably be twice as bad.

[Guardsman Bass]

If you counted all shale oil deposits you probably could come up with 5-7 trillion barrels, but much of that can never be reached. Politics certainly is a huge factor, especially environmental politics in preventing us from using nuclear reactors power the melting and digging of the stuff out of the earth.

To be perfectly honest, if we did manage to find some cheap way to extract shale oil via large-scale nuclear heating and digging, we would simply double the size of our economy and keep a nonrenewable energy foundation. The ensuing correction to a renewable base from which we could grow again would inevitably be twice as bad.

Yeah, but who knows? If we burn the oil shale, I would imagine that correction would be the lesser of our problems; it would have to get in line behind the disastrous climate change caused by said use of oil shale.

[Sea Skimmer]

Yeah but then we’d already be investing heavily in nuclear power and a whole infrastructure/trained personal base to operate it with. Humanity is perfectly capable of building its way out of the energy crisis with proper planning and the means to implement plans over a long period. Oil shale could be a valuable tool for bridging the gap.

Now that’s not what I really expect would or will happen, but without so many political factions working against each other and pushing insane restrictions with no alternatives we could do it.

[Admiral Valdemar]

The problem has always been those able to make a difference not getting the hint. When they also get hit last by such hard times too, it really screws the normal citizens.

[Admiral Valdemar]

Remember those desal plants discussed in that thread about Aussie water supplies? The Law of Receding Horizons again.

[Imperial Overlord]

Remember those desal plants discussed in that thread about Aussie water supplies? The Law of Receding Horizons again.

So the Aussies are going to have no desal plants and no nuke plants to feed those desal plants reasonably cheap power even when they clue in and try to buy them? Nasty.

[Admiral Valdemar]

They could probably buy them still, just not for the bargains they once were. Energy going up has a nasty habit of making everything go up, since my physics prof. taught me we need the stuff to do anything.

It's a cruel irony, lost on most people, that in order to get out of an energy crisis, we have to practically move into one without some very good planning and sacrifice now.

For the record, Tapis is over $153 now and I've had a shit enough week without seeing this stuff get even pricier.

[Raptor]

Don't worry about estimated reserves. when doing my Geology degree, my lecturer said constant reserve estimates were pointless as there are many fields not tapped or under mined. Changing economic climate could change this, smaller, harder to get to fields becoming more economically viable.
I think the problem with fuel prices is speculation. This is also helped by the 'warnings' on oil reserves. Remember this is probably done by the same type of people who said:
-Lets give mortgates to people who can't pay them back
-Lets sell that bad debt, as thats a real money spinner (how the fuck does buying bad debt make a money making scheme, on this basis does anyone want to buy the debt, my brother owes me?)
-What to do if they don't pay? We won't think that far ahead.

Of course OPEC isn't going to up production too much. Why would they? A better price for you product nearly everyday. They should keep their heads though, stiffing your best customers maybe a rising oil price will make the alternatives much more attractive price wise

[Chris OFarrell]

Remember those desal plants discussed in that thread about Aussie water supplies? The Law of Receding Horizons again.

And what the heck does rising crude oil price have to directly do with building Desal plants that run off the electricity grid, when Australia gets most of its power from coal stations?

Though for political reasons, Sydney's new Desal plant will be powered by renewable energy, which has already been set aside for it, the fact is we have plenty of base load power for it.

[Imperial Overlord]

Though for political reasons, Sydney's new Desal plant will be powered by renewable energy, which has already been set aside for it, the fact is we have plenty of base load power for it.

That's good to hear. The only problem I have with renewable energy is that there isn't enough of it to go around, but its good to know you southern sun-whores are doing something right.

[Admiral Valdemar]

And what the heck does rising crude oil price have to directly do with building Desal plants that run off the electricity grid, when Australia gets most of its power from coal stations?

Though for political reasons, Sydney's new Desal plant will be powered by renewable energy, which has already been set aside for it, the fact is we have plenty of base load power for it.

So Australia uses no oil at all? That's quite amazing.

[The Duchess of Zeon]

$150.00 before Labor Day, obviously. $175.00 by New Year's? It is now the optimist who speculates on $200.00 a gallon by this time next year, and 2012 will surely see prices permanently above $300.00/bbl. Which will last for a decade or so, and then they'll start going even higher, rapidly.

[Admiral Valdemar]

Someone managed to get a trendline showing on the moving average that could be used as a handy predictor. I'll need to dig up the thread I saw it in again, the bottom line is that the price could quite easily reach $200 by Xmas if things continue unabated. The acceleration may drop off, but I don't see anything getting cheaper any time soon.

[J]

Don't worry about estimated reserves. when doing my Geology degree, my lecturer said constant reserve estimates were pointless as there are many fields not tapped or under mined. Changing economic climate could change this, smaller, harder to get to fields becoming more economically viable.

In which case I ask, why has oil production been stagnant since 2005?

Of course OPEC isn't going to up production too much. Why would they? A better price for you product nearly everyday.

To make even more money than they already do. If they have significant spare capacity, they can short all the open contracts up to the limit of their excess capacity right before the close of options expiration and deliver against those contracts. They make a nice chunk of money from shorting and another batch from the actual sale, in effect, they've sold their entire production capacity for the pre-shorted price as opposed to say, 90% of their full production for the same price. In other words, they can deliver more oil for the same higher price.

And what the heck does rising crude oil price have to directly do with building Desal plants that run off the electricity grid, when Australia gets most of its power from coal stations?

Coal doesn't mine itself. The electrical grid doesn't build itself either, nor do desalination plants. A lot of oil is needed to make all that stuff work, oil to build & run the machines & factories, gasoline to get all those workers to work, and so on and so forth.

[Surlethe]

Yeah but then we’d already be investing heavily in nuclear power and a whole infrastructure/trained personal base to operate it with.

This is true. However, the oil we get from the shale will itself be invested into a newly-growing economy -- the nuclear infrastructure will be in place, but we'll still see a long fall from the new heights before the nuclear infrastructure catches us.

Humanity is perfectly capable of building its way out of the energy crisis with proper planning and the means to implement plans over a long period. Oil shale could be a valuable tool for bridging the gap.

Absolutely agreed. And as Her Grace is so fond of pointing out, even if we can't crack it into oil, we can always burn the stuff.

Now that’s not what I really expect would or will happen, but without so many political factions working against each other and pushing insane restrictions with no alternatives we could do it.

Indeed. I suspect that there will be some major investment there anyway in the next few decades as oil prices continue to increase -- energy companies would be stupid not to do that. In fact, isn't Shell doing it already?

[Surlethe]

Don't worry about estimated reserves. when doing my Geology degree, my lecturer said constant reserve estimates were pointless as there are many fields not tapped or under mined. Changing economic climate could change this, smaller, harder to get to fields becoming more economically viable.

First, those fields are included in estimated reserves. Second, the changing economic climate will certainly make those fields more viable; however, in investing in smaller fields, you're essentially downgrading the economy of scale: the per-barrel capital investment for a smaller field is much higher than for a giant field. So you still have necessarily elevated oil prices. Moreover, the new fields are smaller, so they will max out more quickly and decline faster -- and they won't come online until oil production from current fields has declined already.

At the end of the day, you're still looking at a bell curve shape for oil production over time; Hubbert's model takes into account smaller oil fields as simply another part of the decline.

I think the problem with fuel prices is speculation. This is also helped by the 'warnings' on oil reserves.

Speculation is pushing the volatility in oil prices, but the underlying increase is basic supply and demand. Do you honestly think that constant supply and increasing demand isn't going to push prices up? Even oil company executives agree that supply won't meet demand at current prices over the next decade; the price will go up until the market is cleared. That's the way it works.

Of course OPEC isn't going to up production too much. Why would they? A better price for you product nearly everyday. They should keep their heads though, stiffing your best customers maybe a rising oil price will make the alternatives much more attractive price wise

OPEC isn't going to up production too much -- because they can't. End of story.

[Sarevok]

$150.00 before Labor Day, obviously. $175.00 by New Year's? It is now the optimist who speculates on $200.00 a gallon by this time next year, and 2012 will surely see prices permanently above $300.00/bbl. Which will last for a decade or so, and then they'll start going even higher, rapidly.

That's frightening.

Would not the third world countries without their own fuel sources just explode into anarchy by 2010 ? I mean over here in Bangladesh we are heavily strained by 1.5 USD / liter oil prices. There is tremendous public disconent over the sky rocketing prices of everything. If it rises any further and we buy oil at US rates I could see total chaos and collapse all around.

[Broomstick]

Why do I open these threads? Gloom... doom... doom... gloom...

Every time I read this shit I wish I had expanded the garden to fill the entire backyard and could somehow better insulate my current living quarters. I don't the the US will starve but things could get VERY unpleasant. I can't save the world, but I would like to save my family.

Um, yeah, the Third World could erupt pretty badly. Let's get real -we could get ugly riots and violence in the First World, too, if things get bad enough. Large groups of people tend to get pissy about freezing to death in the winter.

On the morbidly up side - a massive die-off of humanity will go a long way to solving many of our current problems. It's just that trying to live through a die-off is absolute hell.