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OT: peak oil - a myth or a real threat?

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  • #61
    "Oil is what is needed, not natural gas." In the tar sands fields. I expected that to be understood. My mistake.
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    • #62
      Turns out all you need is a little air: http://www.popularmechanics.com/auto...s/4217016.html

      Another ridiculous attempt at denying (or not recognizing) where energy comes from. I wonder how much energy is wasted in heating up the electric motor, pump, air lines, and air tanks. And, as an aside, who is going to invest in the infrastructure to make this happen. At $2.00 for a recharge over a period of 5 minutes, I don't see a lot of room for profit. And what is going to happen to all the water compressed out of that air? It's going to be pretty cruddy stuff.

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      • #63
        Cam. You're right I was referring to cooling water. The good news is that there are processes out there that can take nearly all the oil out of the slop oil, or slop water if you prefer.

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        • #64
          So, what is the real assumed/computed years of oil left at projected usage???
          It's only ink and paper

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          • #65
            The fundamental concept of Peak Oil isn't that we've used up the world's oil reserves per se, it's that we're hitting the limits on how much crude we can pull up and process in a day.

            There are complicated economics associated with how expensive it is to extract the crude: i.e., you can extract more crude from a reserve that's drying up by injecting with steam, but then you have to factor in the added complexity of the process, and the oil you have to burn to generate the steam, the energy required to filter the effluent, etc...

            As oil prices skyrocket, reserves that were expensive to extract earlier suddenly become financially viable. That's where "unconventional sources" (heavy crude, tar sands, shale oil, etc) start becoming more of a factor.

            Then, like MickeyD mentioned earlier, there's the issues associated with converting the extracted crude into gasoline, diesel fuel, etc. Sweet crude is much easier to refine into gasoline than heavy sour crude, and tar sands and shale oil are even more complicated to refine.

            The bitumen extracted from tar sands is a thick semi-solid that looks like chunky oatmeal, and doesn't flow at normal oil pipeline temperatures. So a lot of the Canadian tar sands are refined on-site by specialized refineries into synthetic oil or directly into petroleum products. In that picture I posted in the tar sands thread, there's a giant yellow pyramid next to the processing plant -- that's the sulfur that's extracted during the filtering and refining process.
            "Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did."

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            • #66
              George Soros was on this morning, in front of a Senate committee
              investigating Oil Prices.
              Several things.
              Oil is purchased one third by consumers, One third by companies (distributors etc) and One third by speculators.
              George said the market is a 'bubble" and will burst.

              Seems one of the problems is that Buyers do not have to take delivery !!
              In other markets they do, (Like Gold)
              SO the specultors keep it all in limbo.
              They are talking about raising the margin to 50 % to force out the speculators
              Oil Industry folk have said a real price is from 40$ to 70 $ a bbl

              Rich

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              • #67
                And to add to the equation, whether the price is being manipulated or not, 1, the CFTC announced a 6 month old investigation, oil dropped near 5 bucks, that day, 2, today's paper says that Iraqi oil production is at its highest in 5 years.

                2.9 million BPD, about 2 million on the world market. That should have made up much of the "increased demand" that is thrown about.

                Forget who said that refineries are running "flat out". Exxon-Mobil says they are running at 84% and have no intention of raising that level. They refine to meet a profit goal, not to meet demand.

                Us producers not only refuse to build new refineries ( and it's not treehuggers stopping them, unless they hire the treehuggers to demonstrate against them ), they refuse to sell closed refineries to anybody who wants to buy and run them.

                If you can control the supply, ala DeBeers, for so many years, you ARE setting the price.

                Over on PM I have been trying to say this to Don, and keep getting my ass kicked.

                "Because they CAN." That is all there is to it.

                I really hate when all you guys say that, when you take inflation into consideration, oil is NOT any higher priced than it was in 1980.

                By God, it IS. In the 90s it was back down to 10 to 20 bucks a barrel. AND the refiners and producers made profits. NOT45 billion per quarter, but still profits.

                Only the Right Wing media, limbaugh and Honsberger and the like make the spiel that oil is just catching up to inflation. And there AIN'T no Left Wing Media.

                Noone will believe anything anyway, they have read all the propaganda, and believe that!

                "lazlo. It is the cost of compliance and the cost of labor. Union pipefitters make a hell of a lot of money. Steel gluers in other countries, not so much."

                Funny that all them foreign firms are coming here to build plants of many types. They all say that wages are so much lower here that any factory is a bargain to operate.

                I'd wager that any of the refineries built in Middle East countries cost at LEAST as much as in the US, they hire all their work done by Germans, Brits, French, Americans, whoever. Ex-pats don't work for peanuts.

                Everything has to be imported from industrialized nations. That, too, doesn't make anything cheaper.

                I think you are deluded if you think you are highly paid as far as other industrialized countries workers. Ask the Brits what their labor rates are. I don't know if it has been mentioned here, but a lot of the Forum also habituates PM, and we have been told that the Brit minimum wage is about 11.50 USD per hour. Others have mentioned 28 buck machinists.

                Those jobs are few and far between in the US and almost always in a Labor Union represented shop. Most of the industrialized world, with the exception of the US, IS Unionized.

                Here is a link from 6 years ago, when the Euro was worth less than a dollar, I think. Look at the pay scales in those countries at that exchange rate, and consider what they are with a buck 56 Euro and a near 2 buck pound.

                We would now be a 3rd world country, in a Depression, did we not have so much credit worthiness that all the world will accept our IOUs, about 4 trillion of them since the present admin came into power.

                Rich,

                "Governments want higher prices, because the tax rate rolls in more Revenue ! (taxes.) without legislative action !"

                States, some of them, PA, mine own included, do place sales tax on gasoline sales. So they have tripled the State's sales tax take. I don't know how many states charge sales tax on oil products, at least those at the pump. If a state has a sales tax, I would bet you pay it when you buy a quart of oil at the auto parts or Wallymart.

                My State and Fed gasoline taxes have been the same over the last 5 years or so, posted on most pumps, so if gas is 1 buck or 10 bucks, the Gov does not get an automatic increase.

                If you recall, in the 2000 Presidential election, Al Gore was put down quite a bit because he had, in 95 or 96, proposed raising the federal Tax 5 cents per year, to a max of 50 cents, to try to curtail consumption.

                That did not fly, and the years since have proven that it would not have worked. (It might have worked with the rich, witness the billionaires who refused to buy new yachts when the Excise Tax on yachts was set at 10%.)

                I forget what gas was in 95-96, 85 cents? make it a buck 35 and cut consumption in half? Hell, 4 bucks is just starting to get people to get rid of 10 MPG vehicles.

                GM just announced they will shut down large vehicle lines, quit the Hummer, sell it if they can, quit production regardless.

                With the devalued dollar, 60 bucks a barrel is about the sweet spot. Still too high, but the oil companies will still make their 40 billion per year profit.

                Cheers,

                George

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                • #68
                  Originally posted by lazlo
                  I don't understand that aspect that -- why is it so hard for the oil companies to build new refineries in the US? Someone here posted that the Saudis are building a multi billion-dollar expansion on one of the (American?) refineries in the Gulf of Mexico.

                  With Exxon making $45 Billion profit each quarter, you'd think they'd be inclined to build another refinery with the spare change. If it's just EPA regulations, why isn't Exxon building refineries in other countries? Are the new Canadian refineries being built by American companies?
                  To build a refinery here a pile of paperwork and permits equal to the weight of the refinery is required before the first weld is made.This doesn't even begin the hurdles with the NIMBY's and parsite lawyers.

                  Chevron did just complete an expansion of their Pascagoula,Ms refinery boosting it to 600,000 barrels per day of capacity and several others are doing the same.Shell is more than doublingthe TexasCity,Tx refinery to 600,000bpd as well,but it won't be online until 2010.
                  I just need one more tool,just one!

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                  • #69
                    Rich,

                    Where do you come up with the idea that you have to take delivery of a gold contract? You bought or sold a 1,000 ounces of gold, near a million bucks, you don't have it dumped in your drive, just as you don't have a ton of pork bellies dumped in your drive.

                    All this stuff is kept where it is. You have control, you don't have possession unless you want it. Most people do not want to have a 1,000 ounces of gold at home, nor a ton of pork bellies, nor a 1,000 barrels of crude or gas or heating oil.

                    If you are a heating oil distributor, you may buy a bunch of contracts to assure your price should oil rise. You make profit from the price you bought at and the spot price plus the markup for delivery.

                    Oil delivery people in my area are, or were, signing people up to long term contracts for homeowners. 10,000 gallons at 2.89 per gallon, say. If the price rose, the distributor fulfilled the contract, he bought at a price to allow for profit at 2.89, and the oil is in the oil companie's tanks, all paid for.

                    By the same token, should the price of oil crash, the homeowner is locked into the contracted price. If your neighbor is getting oil for 89 cents, tough. You bet the wrong way. You either buy from a vendor who has a lower price, and reserve your contracted price till the cost goes over that or you keep paying through the nose.

                    Ain't no easy way out with monopolies, and all power companies are monopolies.

                    Cheers,

                    George

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                    • #70
                      Originally posted by gmatov
                      Rich,


                      ...
                      Oil delivery people in my area are, or were, signing people up to long term contracts for homeowners. 10,000 gallons at 2.89 per gallon, say. If the price rose, the distributor fulfilled the contract, he bought at a price to allow for profit at 2.89, and the oil is in the oil companie's tanks, all paid for.

                      ...
                      The oil is not neccessarily in tanks at all but marked down as the reserves the oil company owns or the oil futures contract it holds with the refiners.
                      To translate this to a simpler market model its the same as hoarding. In a simpler world the rumour would go round "there's a problem with the salt mines in Siberia" so everyone would start buying and hoarding salt, there is a salt shortage, The price goes through the roof. There was a problem in Siberia but it was fixed in a week and people panicing didnt even get their Salt from there.

                      The modern method does away with all the inefficiency of actually moving the stuff so we can actually buy and sell salt that is still in the ground and have faster and deeper panics (we dont have to wait for it to be mined, delivered or gold to be sent by armed guards on horseback to pay for it)and even higher prices before reality sets in again.

                      The market is supposed to be a control system that adjusts price and the supply to meet demand.

                      For those old enough to have played/worked with analogue control systems with proportional, integrating, and differential controls, we have at moment in oil have/had the integrating wound right down (investment in refining/extracting capacity) and the differential full on (investments in oil futures). Adjusting the integrating takes a long time to have effect, and if governments are unable or unwilling to adjust the differential control, they are left with only the proportional (increased production on existing plant/wells).

                      Days of fiddling/commissioning such things controlling electric arc furnace pressure, Refuse incinerator outlet temperature and large A/C plant, Tell me we are in for large control excursions. That means big big price fluctuations up and down. It will make the damage I could do seem like a speck of sand in a Universe of Stars, full of planets, full of beaches.

                      My damage would have been limited to collapsing the arc furnace roof or melting the electrostatic precipitators, or causing an entire car factory workforce walkout - all of which I was able to avoid.

                      It will not be like making millions starve.

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                      • #71
                        There is a very large physchological element to how the markets work. A number of such factors play a big part in many investors and traders strategy even though they may not realize it. A big one is the "bandwagon effect". If a big trader makes a move it will be noticed by automated systems at all the trading houses as well as by more sophisticated private day traders. Within minutes others will make the same moves hoping to catch the same advantage that the first trader seems to know about but the rest don't. This can swing the market a great deal in a short time.

                        On many days this will be seen as a good approximation of a sine wave with a decreasing frequency and amplitude that contimues through most of the day making three to four cycles in a trading day.

                        There are also strong effects produced by "round numbers" such as any number ending in zero and especially ending in two zeros, such as 100. These values are frequently associated with automatic buy as sell orders that have been set by traders and investors to take place when ever that particular value is reached. These orders are executed by computer when the threshold is crossed.

                        The effect is that the other computer programs watching the trading values can all be triggered at once as the trading values cross these round numbers causing a flood of buy or sell orders depending on the direction the market is moving.

                        Like a poorly damped control system it causes large excursions which is why the markets are so volatile in recent years.

                        Another major factor is that the traders and other players have virtually no memory. Only a very short time ago $70 oil was considered "too high" by the Saudi oil minister because of the damping effect on the world economy. Now however the $100 ceiling has become a new floor and $70 oil is long forgotten.

                        Probably the largest effect is the "self fulfilling phrophecy". If a major trader or analyst makes a pronouncement it is taken by many as gospel and they act accordingly. This will move the market further and faster than almost anything else other than large disasters.

                        Right now the market price of oil is extremely overvalued and a number of reliable indicators are showing that we are due for a possibly large collapse in the markets. One of the most reliable of these indicators is the Bandwagon effect. When the Bulls are in control and the Bears are quiet you see stories like "Get ready for $200 oil". Predictions that "you ain't seen nothing yet" abound and "the only way it can go is up" is heard. This is a sure sign that the market is in a bubble and ready to fall but is frequently ignored by many who are swept up in the frenzy.

                        I'm currently out of the market and will buy back in when it falls. The most often ignored investing advice is something a broker once told me. "You can make money on a rising market (Bulls) and you can make money on a falling market (Bears) but remember: Pigs get eaten."
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                        • #72
                          Originally posted by Evan
                          I'm currently out of the market and will buy back in when it falls. The most often ignored investing advice is something a broker once told me. "You can make money on a rising market (Bulls) and you can make money on a falling market (Bears) but remember: Pigs get eaten."


                          Im reminded of one of the 7 blunders that plaque's mankind; "wealth without work", at least for me - with the little examples that iv had in my life there is definitely some merit in those words, or at the very least its worth it for me to pay attention from where it came from..

                          That Gandhi dude was very insightful and pretty cool.

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                          • #73
                            Today in the news someone is going to spend 10 billion dollars to build a new refinery here in the USofA.

                            No one gave a total of what is left in the ground and I don't think anyone really knows. I believe it's all guess work as in Sophisticated Wild Ass Guess.

                            I have not heard of any one traveling underground to inspect the oil pools. I guess some one could contract Superman to do it for us.
                            It's only ink and paper

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                            • #74
                              George
                              You said
                              "Rich,
                              Where do you come up with the idea that you have to take delivery of a gold contract?

                              Testimony in the Senate Hearings on Tuesday Morning is where I heard it.
                              They really said "unlike other comodities"..oil is not delivered "
                              The recomendation to the Senate was to raise margins and force delivery

                              Rich

                              PS
                              If gold was a poor choice for a commodity, I appoligise
                              Last edited by Rich Carlstedt; 06-04-2008, 11:34 PM.

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                              • #75
                                George
                                You said
                                " US producers not only refuse to build new refineries ( and it's not treehuggers stopping them, unless they hire
                                the treehuggers to demonstrate against them ), they refuse to sell closed refineries to anybody who wants to buy and run them. "

                                Totally bogus George !
                                Please do some real research before making such rediculas, uninformed comments
                                Evan has made some very insightful postings, please listen to him and not political hacks
                                Rich

                                FYI. There are two refineries sold in this news article alone
                                and there are others if you look

                                http://www.bizjournals.com/dallas/st...5/daily40.html


                                To get a new refinery after 30 YEARS.
                                It takes a "Vote" in South Dakota
                                Please see

                                http://www.siouxcityjournal.com/arti...5e00110beb.txt
                                Last edited by Rich Carlstedt; 06-04-2008, 11:36 PM.

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