Peak oil? Maybe later.

[pscot]

Oil prices have dropped more than 10% recently. Experts say the world is awash in oil and expect further sharp declines. $40 puts are selling for about two bucks, in case anybody feels like a flutter.


http://www.latimes.com/business/la-fi-oil4-2009jul04,0,311438.story

The reasons are simple, said Philip K. Verleger Jr., an expert on energy markets at the University of Calgary in Canada: The still-sputtering economy has lessened demand at a time when there is already a big surplus of oil.For eight straight months, oil supplies have been running about 2 million barrels a day higher than the global demand of 83 million barrels a day, Verleger said. Eventually, he and others predicted, suppliers will tire of paying to store all of the surplus oil and flood the market....

"That is the largest and longest continuous glut of supply that I have seen in 30 years of following energy prices," Verleger said. "It's a huge surplus. There has never been anything like it."

Crude has traded in the range of about $70 a barrel for much of the last month, closing Thursday at $66.73. The markets were closed Friday.With so much oil available and so little need for that amount, investors, oil companies and even some banks have bought and stored surplus oil everywhere they can. By one estimate, before oil surged to its high this year of $73.38 a barrel in June, as many as 67 supertankers -- each capable of carrying 2 million barrels of oil -- were being used as floating storage....

Verleger said it represented a largely risk-free investment for those who could sell that oil for huge profits on the futures markets.
But the glut has gone on for so long, he said, that the cost of all of that storage is bound to rise. When it rises enough, some suppliers will refuse to pay and a lot of that oil will be dumped onto the market.....

[Andy823]

1. It's all about greed!

Just a few minutes ago the price of oil was at $62.57, last week it went up to about $72.00 a barrel and gas prices have been going up for the last few months almost on a daily bases. Earlier this year predictions said it might get up to $60.00 a barrel, maybe! Goldman Sachs, who is one of those who was buying up all the cheap oil, storing it and hoping for a big run "up", came out and revised their figures saying it would "not" hurt the economy if oil hit $80.00 a barrel, and that's what they thought it would peak out at. That caused prices to rise, just like they wanted it to. Now it's about $10.00 less per barrel than it was last week, and it just like this article sated, it looks like it is going to go lower when those who are stockpiling it in hopes of something making it go sky high, figure out it isn't going anywhere but down!

If the price had gone up $10.00 since last week, gas would have gone up two or three times by now, yet in my area, not one station has gone down since prices dropped. On the 4th of July weekend we were paying $3.05 for regular, and diesel had been at $2.69 for months, but a week before the 4th it went up to $2.88, and has gone down this week to $2.85! There is no reason for these higher prices when there is so much surplus of oil out there. It's all "GREED" by speculators like Goldman Sachs who are trying to gain back money they lost on the housing bubble when it burst, and they don't care what they are doing to the economy, nor do they care if some people who have lost their jobs can't afford to do anything because their budgets don't allow them to buy more gas than they need to get back and forth looking for work! Congress could put a stop to this kind of speculating and they could regulate the way energy is purchased to prevent the greedy from making a killing at the expense of others, but they aren't doing it. They tried last year to get something through congress, Patty Murray, my senator from Washington put a bill on the floor, but it didn't make it. I wrote her a letter last month asking why something wasn't being done, and she said that if her bill is put back on the floor she would vote for it, but that was it! Why can't congress stop working for the big oil companies, and investment companies, and start working for the people who voted them into office?

I don't know about you, but I am really getting tired of those I help put in office, not giving a damn about the average people of this country who put them in office!

[Terry in Austin]

2. *Sigh* It's the old supertankers-storing-the-glut story

Last year, Iran had 13 tankers parked with 28 million barrels of high-sulfur crude that they couldn't sell to anybody. Earlier this year, Frontline Ltd., the world's biggest owner of supertankers, said 80 million barrels of crude oil are being stored in tankers.

So the story takes on a life of its own, and now somebody is "estimating" 67 tankers holding 134 million barrels of oil. They don't say who.

Still, relative to our 85-million-barrel-a-day habit, it wouldn't be an understatement to say that these are piddling amounts.

Demand is certainly down at the moment, no disputing that. It just doesn't do a lot of good to obsess about secondary indicators like ups and downs in demand, or even ups and downs in prices. Likewise, jumping to conclusions about peak oil overall, based on this kind of stuff, doesn't help much, either.

When oil production stops growing, there's bound to be a lot of volatility in prices and usage, just as we've been seeing recently. There's also bound to be plenty of fat opportunities for profiting off of the end-game. Who profits shouldn't matter as much as the fact that it is indeed an end-game.

There's a kind of desperate tone to these stories, and it doesn't take a great deal of insight to understand why.

The real peak oil story is about longer-term decline in world production, and the repercussions resulting from chronic shortfalls in the stuff that runs industrial society.

[pscot]

5. The lead was a (supposedly) ironic commentary

on the vagaries of the oil markets. I know better. Irony must be labeled. I just can't help it. Of course peak oil is still with us. Despite the current glut, we're still pumping 83-million barrels a day. But right now the world's economies and the oil markets are locked in a vicious cycle. Economies improve, oil goes up, dragging economies down, which drags oil prices down. We're in for a bumpy ride, but we're still haded toward the cliff.

[Terry in Austin]

7. Bumpy ride

Sounds like you've got a solid grasp of the situation, which is still a pretty lonesome place these days, I gotta say.

The media uses every denial gimmick in the book to keep enabling our addiction -- including over-interpreting every little upward bump. Then everybody figures the worst is over and goes back to feeding their jones. More than a little cause for irony there!

[pscot]

8. I've had a solid grasp of the situation

since the mid-seventies, when I read Catton's bombshell, OVERSHOOT. In the kingdom of the blind,a one-eyed man is invisible. Now that the sandpile is shifting under our feet, a lot of folks are finally paying attention. If there had been this level of concern during the '80s, we might have avoided catastrophe. I'm afraid now it may be too late.

[Life Long Dem]

3. I think the biggest issue we have is to depend on oil from a foreign country

We would be crippled if the oil was shut off. Before that would happen we'd make Iraq's war look like kids playing with matches. It wouldn't look good. And we didn't even talk about Iran yet. But then again some war profiteers eyes just opened wide over this one.

[hunter]

4. During the Second World War the big oil was on our turf.

Not now.

If we fight an end game war for oil we will have our burnt radioactive asses handed to us on a plate.

We ate the kryptonite when we accepted George W. Bush as President. Our superpowers are gone.

[depakid]

6. Short term fluctuations in demand have nothing to do with geophysical limits

The supply curve IS WHAT IT IS.