Tuesday, November 11, 2014

Where are all those peak oil assholes now?



Texas oil production in August topped 3M barrels/day for the fourth month, as the Lone Star State produced 37% of all US oil.

I have to admit - I've been fairly obsessed with oil the past few months. Not that I want to be. The recession has made me have to learn about a lot of things I never thought I'd need to. Like oil. My general feeling is that the price of oil has done only one thing for the whole time I've been on this planet. Go up. You have to try and figure out if this period of time is an anomaly, or something different. Until today - I thought it was probably closer to an anomaly. But it's always good to question your beliefs. The world changes.

The main issue is trying to figure out if the lower oil prices are due to more production or less demand. It's obvious it is some combination. Since both of these things are happening at the same time it's hard to figure out the ratio is. Everyone seems to acknowledge we are producing more, but how much more verses the decreased global demand? There are a ton of smart minds who seem to be just as unsure as I am. Otherwise I wouldn't have to learn this crap.

Just a week ago Mr S. got into this discussion about the Keystone pipeline. I thought the Republicans should abandon their push for it. Which made him fairly frustrated.

My perspective was - if we really are producing that much more oil (and that was a very skeptical if) why not continue just doing more of that instead of pulling this pipeline down from Canada over government land that needs to have all sorts of kickbacks to be approved. If we were just getting so much better at producing here - it just seemed less expensive to keep doing that. The push for this pipeline just seemed tired.

Well..... now I know how much more we are producing relative to history. And it's quite impressive considering the short time frame. I'm always sort of nervous about charts that head to the moon. What goes up must come down. But if we can double production in three years you have to wonder what we can do in another three years. Maybe that pipeline is effectively obsolete even before it gets started.

My general belief is that low energy prices started the industrial revolution. Low energy prices are only good for consumers. But.... President Money Bags ideology runs completely contrary to that belief. I mean, low energy prices completely screw his green agenda because it makes it not cost effective again. I'm pretty sure he wanted gas to be around 7 bucks a gallon. If oil really is going to stay low for a really long time there are a lot of sectors that are going to be in turmoil at taxpayer expense.

I'm starting to lean towards thinking oil could stay lower for a good amount of time. Nobody knows how long because you can't predict behaviour or the future. No matter how much people think they can.

5 comments:

Anonymous said...

The funny thing is that the price of cng hasn't moved down at all. Makes me wonder while natural gas doesn't seem to move in tandem with oil. All of a sudden $2.50 a gallon in concord doesn't feel like its as good of a deal. DF

she_said said...

Oh yeah. I can kinda see that if gas is so close to the CNG price. Is Concord the closest place you can fill up?

Anonymous said...

Concord is the most convenient, if we buy from the city of Ripon we can get it down to $2.05, but then you have to drive to Ripon and back. There are a few other stations sprinkled around town, but once you go CNG, they more or less have a monopoly on you. The only alternative for us is to drive the box truck and that gets terrible mileage.

she_said said...

Man, that sucks. I wonder if the price doesn't move with oil just because there are so few people using it. Less market force.

The thing is that if the gas price is high you are willing to hunt down a CNG station, but once those prices start coming closer and closer together the more you think it sucks to have to do that. Most people tolerate inconvenience if they think they are getting a deal.

I really don't know how this is going to go. Some are saying the strong dollar is going to take oil to 30 bucks a gallon. That is 10 dollars cheaper than during the beginning of the recession.

she_said said...

NormD has left a new comment on your post "Where are all those peak oil assholes now?":

The problem is that oil is not oil is not oil. We are producing light sweet crude, but most of our refineries are designed to process sour crude (we used to get lots from Venezuela). The Canadian Oil is sour and Keystone will bring it to the refineries in TX that are designed to process sour. Changing a refinery is evidently a major undertaking.

Ahhhh. Right. I forgot about the different blends. Isn't that oil the most expensive to refine though? I mean I don't really care where oil comes from. They could make a giant straw and suck it from the moon. If it was cost effective. It just seems like a hard sell right now when the oil price is collapsing almost every single day.

P.S. Not sure why this comment didn't show up on the blog. I got it in email. If you deleted the comment just let me know and I will take it back off.