PeakTrader.com

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PeakTrader said...

Yes, it's time to get serious about U.S. oil, including drilling off the coast of California.

Otherwise, we may be setting ourselves up for a double dip, which we can't afford, although we're still in recession (according to Warren Buffett).

Bold action is needed. It's time to mobilize:

Only a recession stands in the way of $200 oil: Jeff Rubin
Mar. 3, 2011

Congratulations to Jeff Rubin, who predicted triple digit oil by the end of 2010 -- he's just a few weeks off (Rubin has a historically great track record in oil price predictions).

The former chief economist at CIBC says... oil is heading to $200 unless the oil spike throws the world into recession.

Wikileaks Reveals Imminent Saudi Oil Peak
02/16/2011
Jeff Rubin

Confidential cables from the U.S. embassy in Saudi Arabia released recently by Wikileaks confirm what others have long suspected: Saudi Arabia has little more to give.

Saudi production is never likely to get to Aramco’s 12.5 million barrel/day level target. Instead the country is struggling to produce even 10 million barrels/day.

Global economy...burns a record 87 million barrels a day.

Global oil industry will have to produce six million barrels/day more oil than last year to offset the four million barrels per day that is lost to depletion...and two million barrels per day of new crude demand. (Last year, Chinese oil demand alone increased by almost one million barrels/day).

There's over 720 million barrels of oil in the SPR (Strategic Petroleum Reserve), which is full.

That could be used to buy us time to ramp-up domestic production (e.g. 2 million barrels a day added to the 21 million barrels a day the U.S. consumes).

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morganovich said...

peak-

the purpose of the strategic reserve is not to smooth out prices but as a last line of defense against a "severe supply interruption".

do you really trust our politicians to use it wisely and well?

they'll just run it down to curry short term favor then wind up with a worse bust when it ends (as gray davis did to the california "rainy day fund".

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PeakTrader said...

Morganovich, if there's a double-dip recession or depression, the Strategic Petroleum Reserve won't matter.

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morganovich said...

peak-

"Morganovich, if there's a double-dip recession or depression, the Strategic Petroleum Reserve won't matter."

that's a ludicrous statement.

first off, you are essentially advocating government set prices, you do know that, right? you want the government to subsidize oil? did you not see what happened when California tried that with electricity?

second, the whole strategic reserve is just 724mn bbls. that's about 34 days of US use or about 1 year of being 10% of use.

if you think we could bring meaningful capacity online in a year, then you know nothing at all about oil and gas development.

so, you plan involves inviting the government to meddle in private markets to pursue a course than cannot possibly work.

you sure you've thought this through?

you sound like all the greedy clowns that raided the social security "trust fund" and left if full of IOU's. if you drain the strat reserve for short term short sighted political pandering, then what will you do if there really is a supply disruption? fill your tank with IOU's?

we have come out of recession and depression before without subsidizing energy. why do you think the world is going to end if we don't do it now?

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PeakTrader said...

Morganovich, if there's an oil shock, whether it's supply or demand driven, the result will be higher oil prices, which will slow economic growth, and perhaps tip the country into recession again.

Why take that chance when the economy is already weak with slow growth, high unemployment, and huge budget deficits?

I suggest we quickly expand domestic oil production, and use the SPR to offset higher oil prices, until more production is on-line.

If we do nothing, and there's a price spike, it'll be too late, and after the country falls into recession, oil prices will also fall (e.g. to $50).

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PeakTrader said...

Morganovich says "if you think we could bring meaningful capacity online in a year, then you know nothing at all about oil and gas development."

Perhaps, you didn't notice Dr Perry's chart ("North Dakota Oil Production").

I wonder how fast the U.S. oil industry can increase production without the government?

US oil production revives despite offshore disruption
March 2 2011

US oil production last year rose to its highest level in almost a decade.

The revival of US production has been made possible by a rush of small and mid-sized companies into onshore regions such as the Bakken shale in North Dakota, the Permian Basin in west Texas and the Eagle Ford shale in south Texas.

Domestic production of crude oil and related liquids rose 3 per cent last year...The rise enabled a 2 per cent drop in US oil imports...in spite of rising demand as the economy recovered.

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PeakTrader said...

The country is in a bigger mess than most people realize.

If the economy expands more quickly, oil may rise enough to slow economic growth, and perhaps cause a depression, while budget deficits balloon even more from unemployment.

If the economy continues to expand slowly, we'll continue to underproduce, tax revenues will be low, and budget deficits will remain high.

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PeakTrader said...

Rather than turning a potentially great female novelist into a mediocre mathematician or a potentially great male mathematician into a mediocre novelist to achieve equality, why don't we allow males and females equal access to education and allow them to choose?