Saudi Arabia worried by high oil prices
- Thread starter Natoma
- Start date
Of course they should be worried. If the high oil prices are due to constrain somewhere along the supply chain, it means that someone else (not Saudis) is making money off it. Plus, the longer the oil prices remain high, the more feasible alternatives will seem. A year of $40/barrel oil prices may seem lucrative in the short term but can have huge long-term demand implications. Everyone likes to talk how dependent we are on Gulf oil, but let’s keep in mind that all these oil producers are as much, if not more, dependant on us (our capital) to run their welfare states.
I read an article where apparently opec is making barely more than a shows of implementing quotas. They havent been observed for a few years now supposedly because they arent necessary to maintain prices. China alone consumed 400 000 barrels a day more in 2003 over 2002 with consumption set to skyrocket. The illusion of opec quotas is to keep the west at bay about oil production issues as long as possible. To delay a switchover to alternative fuels as long as possible.
Big money is involved here so its not hard to believe...
This is only starting with virtually all countries experiencing oil production drops. Need to find that link tho...
Big money is involved here so its not hard to believe...
This is only starting with virtually all countries experiencing oil production drops. Need to find that link tho...
http://news.ft.com/servlet/ContentS...yFT&cid=1079419747350&p=1012571727088
Fucking beautiful. Atta go shell... speculative spike here we come...
Fucking beautiful. Atta go shell... speculative spike here we come...
China is probably the biggest reason that prices will keep increasing. Their new found wealth will translate to more cars on their roads. Meaning more gas will be needed (ontop of whatever else oil is required for) for that country alone.pax said:
I would be infavor of increasing mpg only if we lower the darn barriers to building safer nuclear power plants.
later
epic
epicstruggle said:China is probably the biggest reason that prices will keep increasing. Their new found wealth will translate to more cars on their roads. Meaning more gas will be needed (ontop of whatever else oil is required for) for that country alone.pax said:
I would be infavor of increasing mpg only if we lower the darn barriers to building safer nuclear power plants.
later
epic
don't forget India... which is OK for about 200 mill ppl, but better for their 800 million poor.
so that is about 2 bn people whose standard will go up and whose energy consumption will go up as well. That's probably as many people as in all of the developed world (so far) put together.
Natoma said:
I think increasing mpg is a technological issue, not a political issue. You can by high mpg vehicles today, they exist, e.g. Prius. Wasn't the US government that legislated their creation, and it won't be the US government that enforces their adoption.
They will be adopted en masse when oil prices go up. Just like compact cars after the first OPEC embargo.
Cept had they been mandated with proper management of foreseeable oil supplies millions of people wouldnt be stuck with worthless gas guzzling suvs they paid an arm and a leg for... An informed market is a healthier one.
This thing will be like electricity when it was deregulated. As soon as a small lack of production was had prices tripled... So we're missing 5% to satisfy demand? 50$ a barrel minimum Ill bet. At what point will that price per gallon of gas go before the public outcry asks for gov interventions... How much damage to the economy...
I thought this might happen only in 5-10 years but Im worried now I think this could happen in a year or 2.
The only benefit will be large food price increases that will force many people to eat less... thus denting the obesity epidemic somewhat.
This thing will be like electricity when it was deregulated. As soon as a small lack of production was had prices tripled... So we're missing 5% to satisfy demand? 50$ a barrel minimum Ill bet. At what point will that price per gallon of gas go before the public outcry asks for gov interventions... How much damage to the economy...
I thought this might happen only in 5-10 years but Im worried now I think this could happen in a year or 2.
The only benefit will be large food price increases that will force many people to eat less... thus denting the obesity epidemic somewhat.
Yeah, forgot about india. Those 2 countries will account for a major chunk of where oil goes too in the future. Does either country produce major quantities of oil??Druga Runda said:
later,
epic
epicstruggle said:
I have no idea, India is and importer and I just heard about some oil discovery there but I am sure if they are an importer now, I doubt that they can increase production substantially and not be relying heavily on imports. China even more so.
So now the government has to enforce people to buy future proof technology because they could be left with depreciating goods? Come on.
Maybe the gubmint should force everyone to wait for the R600 and NV60 and Pentium 10Ghz, lest they be stuck with worthless old tech.
People who bought SUVs, but them for reasons beyond mileage. Hybrids won't make them useless, Americans frequently upgrade cars anyway, and if they're struck, they're stuck. That's the life of a consumer, and it's not the government's job to make us buy what technocrats think is "the most optimal product" to "save us" from a "bad" purchase.
Also, your analogy with electricity distribution is flawed. Because of the way the distribution network is wired, missing supply requires you to get power from farther away, where you face diminishing returns and it is even more costly, because electricity routing isn't packet-switched-point-to-point, so unless you want a major blackout.... Power networks don't work like shipping a barrel of oil from point A to point B. Imagine if you're short one barrel of oil from Saudi Arabia. In order to make up for this one barrel, you have to ship five barrels of oil from the moon. And if you don't do this, all engines that use oil will "blackout" Oil will not scale like electricity prices did. Yes, there will be shocks, but it will smooth out, just like every other declining commoditiy has.
As for large food price increases, doubt it. Transportation is not the largest input to the cost of food. I can buy fresh produce by driving to California farms for roughly the price I can get it in the local market. Cost to ship 3 tonnes, of say oranges, 1000 miles in a truck is about $200 of fuel (go spec it yourself, a truck that can haul 6000 lbs, will get 10mpg on highway) But I can sell 6000 pounds of oranges for about $8000-$12,000.
Look at it this way. I can buy grapes from *CHILE* for $2/lb. If transportation from Chile somehow became prohibitive, I'll buy them from Napa.
Yes, transportation problems will drive the cost of virtually everything up. But that just means inflation, which also implies wage inflation. A shortage of oil isn't going to make a DENT into the amount of food the US produces for it's citizens. Even at 1/2 production, we easily make enough food to keep American's nice and fat, so there will be great diet or food shortage for Americans. Now, for the rest of the world who buys our food exports, it's a different story. And it will be bad for globalism and trade, making overseas products even more expensive.
The only thing that could truly make food more expensive for Americans (when indexed by inflation/cost of living/purchasing power) is a drop in supply for Americans. Frankly, I don't see it. I could see oil prices driving inflation up like it did in the 70s, but did it make Americans thinner, did it make food radically more expensive? Nope.
Maybe the gubmint should force everyone to wait for the R600 and NV60 and Pentium 10Ghz, lest they be stuck with worthless old tech.
People who bought SUVs, but them for reasons beyond mileage. Hybrids won't make them useless, Americans frequently upgrade cars anyway, and if they're struck, they're stuck. That's the life of a consumer, and it's not the government's job to make us buy what technocrats think is "the most optimal product" to "save us" from a "bad" purchase.
Also, your analogy with electricity distribution is flawed. Because of the way the distribution network is wired, missing supply requires you to get power from farther away, where you face diminishing returns and it is even more costly, because electricity routing isn't packet-switched-point-to-point, so unless you want a major blackout.... Power networks don't work like shipping a barrel of oil from point A to point B. Imagine if you're short one barrel of oil from Saudi Arabia. In order to make up for this one barrel, you have to ship five barrels of oil from the moon. And if you don't do this, all engines that use oil will "blackout" Oil will not scale like electricity prices did. Yes, there will be shocks, but it will smooth out, just like every other declining commoditiy has.
As for large food price increases, doubt it. Transportation is not the largest input to the cost of food. I can buy fresh produce by driving to California farms for roughly the price I can get it in the local market. Cost to ship 3 tonnes, of say oranges, 1000 miles in a truck is about $200 of fuel (go spec it yourself, a truck that can haul 6000 lbs, will get 10mpg on highway) But I can sell 6000 pounds of oranges for about $8000-$12,000.
Look at it this way. I can buy grapes from *CHILE* for $2/lb. If transportation from Chile somehow became prohibitive, I'll buy them from Napa.
Yes, transportation problems will drive the cost of virtually everything up. But that just means inflation, which also implies wage inflation. A shortage of oil isn't going to make a DENT into the amount of food the US produces for it's citizens. Even at 1/2 production, we easily make enough food to keep American's nice and fat, so there will be great diet or food shortage for Americans. Now, for the rest of the world who buys our food exports, it's a different story. And it will be bad for globalism and trade, making overseas products even more expensive.
The only thing that could truly make food more expensive for Americans (when indexed by inflation/cost of living/purchasing power) is a drop in supply for Americans. Frankly, I don't see it. I could see oil prices driving inflation up like it did in the 70s, but did it make Americans thinner, did it make food radically more expensive? Nope.
OT but kinda funny since China was mentioned. In the 70s Volvo had the chance to become the official 'state' car supplier for China, but since no one would ever drive cars in such an underdeveloped country, Volvo didn't care much about it. Would've been a pretty nice deal if you look at it now
according to cia.govDruga Runda said:
India:
Oil - production:
732,400 bbl/day (2001 est.)
Oil - consumption:
2.13 million bbl/day (2001 est.)
Oil - exports:
NA (2001)
Oil - imports:
NA (2001)
Oil - proved reserves:
4.33 billion bbl (37257)
China:
Oil - production:
3.3 million bbl/day (2001 est.)
Oil - consumption:
4.975 million bbl/day (2001 est.)
Oil - exports:
NA (2001)
Oil - imports:
NA (2001)
Oil - proved reserves:
26.75 billion bbl (37257)
later,
epic
Its about mandating informing the public demo not mandating hybrid cars. Inflation (including food) hit 24% a year at one point so yeah I think food costs will skyrocket again.
This time the psychological impact on the market will be worse because oil production will lower year after year no matter the price. And the US imports a lot more of its oil than it did back then...
Actual oil consumption might be more moderated than maybe electricity but its investor speculation im worried about and not actual market reaction to higher demand vs lower production. Even if speculative spikes only last a few months itll be more than enough to grind the economy to a halt.
This time the psychological impact on the market will be worse because oil production will lower year after year no matter the price. And the US imports a lot more of its oil than it did back then...
Actual oil consumption might be more moderated than maybe electricity but its investor speculation im worried about and not actual market reaction to higher demand vs lower production. Even if speculative spikes only last a few months itll be more than enough to grind the economy to a halt.
Joe DeFuria
Legend
pax said:
MPG ratings are andhave been mandated on new car sales as far as I can remember. I know the price of gas every time I fill up.
That's as informed as I need to be wrt cars and milage.
What exactly are you proposing the government should be mandated to "inform" the public on?
Keeping tabs on actual oil reserves and projecting cost increases based on consumption shouldve been a primary concern of gov. The gov shouldve warned the public years ago that energy costs could spike and or rise rapidly in a given time frame.
Its the #1 commodity. Almost everything is dependent on it. Youd think gov would at least keep an eye on it... A little public scientific effort here to study the commodity would have served us all and helped the market anticipate the coming changes.
Its the #1 commodity. Almost everything is dependent on it. Youd think gov would at least keep an eye on it... A little public scientific effort here to study the commodity would have served us all and helped the market anticipate the coming changes.
Post hoc ergo propter hoc.
A toyota corolla sold in 1975 got 25+mpg, which exceeded CAFE, try again. In fact, Honda and Volkswagon also sold cars in the US that exceeded 28mpg. What do you think inspired GM, Ford, et al more? Losing billions of dollars of sales to the Japanese and Europeans because Americans were suddenly incentivized to buy foreign compacts, or government regulations that they could stall on if they wanted (see SUVs, California MPG standards), and the threat of a few million in government fines? (even GM's website claims you have 3 years of noncompliance on CAFE, and even then, it's a slap on the wrist: $5 million in fines for 1 million vehicles sold per each mpg under the standard)
Americans didn't buy fuel efficient cars because of government law, they bought them because their wallets were hurting from fuel prices. At the time, the only alternative was import cars. EPA MPG data (available on website) by car model year shows most American manufacturers were still shipping gas guzzlers that didn't comply with CAFE by 1980. A few went over 20mpg, a few approached it, most cars manufactured by Detroit were still under.
It was the price of gas that drove American demand to MPG efficient cars, which drove the big three to get their act together. Otherwise, if gas prices were cheap, Americans would have just bought trucks, wagons, and SUVs in the 70s LIKE THEY DO TODAY, DESPITE CAFE.
As long as gas is cheap, performance and size matter more to Americans, and that demand is transmitted to the manufacturers, who will find a way, come hell or highwater, to get around government regulations to sell Americans *WHAT THEY WANT* If not SUVs, then loopholes in the law through lobbying, or court unjunctions against the law, etc. (as what happened to the ridiculous California law that required X% of vehicles to be electric/zero emission by 2000)
A toyota corolla sold in 1975 got 25+mpg, which exceeded CAFE, try again. In fact, Honda and Volkswagon also sold cars in the US that exceeded 28mpg. What do you think inspired GM, Ford, et al more? Losing billions of dollars of sales to the Japanese and Europeans because Americans were suddenly incentivized to buy foreign compacts, or government regulations that they could stall on if they wanted (see SUVs, California MPG standards), and the threat of a few million in government fines? (even GM's website claims you have 3 years of noncompliance on CAFE, and even then, it's a slap on the wrist: $5 million in fines for 1 million vehicles sold per each mpg under the standard)
Americans didn't buy fuel efficient cars because of government law, they bought them because their wallets were hurting from fuel prices. At the time, the only alternative was import cars. EPA MPG data (available on website) by car model year shows most American manufacturers were still shipping gas guzzlers that didn't comply with CAFE by 1980. A few went over 20mpg, a few approached it, most cars manufactured by Detroit were still under.
It was the price of gas that drove American demand to MPG efficient cars, which drove the big three to get their act together. Otherwise, if gas prices were cheap, Americans would have just bought trucks, wagons, and SUVs in the 70s LIKE THEY DO TODAY, DESPITE CAFE.
As long as gas is cheap, performance and size matter more to Americans, and that demand is transmitted to the manufacturers, who will find a way, come hell or highwater, to get around government regulations to sell Americans *WHAT THEY WANT* If not SUVs, then loopholes in the law through lobbying, or court unjunctions against the law, etc. (as what happened to the ridiculous California law that required X% of vehicles to be electric/zero emission by 2000)
DC, i was under the impression that the japanase got those huge sales increase because they made better car (didnt break down as often, et al). I wasnt here during that time period so i might be mistaken.
later,
epic
later,
epic
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