I believe I made a statement in a post or comment a few months ago that we would never see gasoline below $3.00 per gallon ever again. Well, last week I saw gasoline advertised for $2.95 per gallon. Peak cheap oil must be a false storyline. Facts must no longer matter.
Read it here first.
I WAS WRONG
Make sure you take a screen shot. It might never happen again. I mean it might be the last time you ever see me admit that I was wrong, with the likes of SSS, Llpoh, and Stuck ready to pounce on any sign of weakness.
I failed to anticipate a drastic global economic slowdown and the lengths to which Obama and Saudi Arabia would go to try and destroy the Russian and Iranian economies. The energy independence crowd is crowing that the shale oil miracle has achieved nirvana for the American people. There is one law that works the majority of the time – supply and demand.
The reason prices have crashed is because worldwide consumption has stopped growing due to recession in Europe, stagnation in the U.S., and a slowdown in China. There has been no dramatic increase in supply. Adjusted for population growth, the number of miles being driven by vehicles in the U.S. are are at the same level they were in 1995, and down 9% from the 2005 peak. This is not due to engine efficiency. Gas guzzling pickups, SUVs and sports cars still acount for 75% of vehicle sales. The vehicle miles have declined because commerce has been reduced, requiring less trucking, and people without jobs don’t have to drive to work.
Normally, OPEC would cut production to maintain prices above $90 per barrel when demand softened. This time, backroom deals with the U.S. and EU, have kept Saudi Arabia pumping oil at high levels. The plan is to make Putin and Iran pay for their unwillingness to cooperate and bow down to the American Empire. The unintended consequences of this act of economic warfare could be considerable. In the short-term OPEC collusion with the American Empire can cause economic pain to Russia and Iran. One problem. The Russian and Iranian people are used to hardship. They’ll deal with it.
In the long-run Saudi Arabia and 90% of the oil producing countries need oil prices in excess of $90 per barrel or their people will get restless. And we all know what happens when Muslims get restless.
Obama’s master plan to crush Putin will fail. But he may succeed in derailing his shale oil boom. These wells already deplete at a rate of 90% after two years. In order for companies to invest the millions required to begin a new well, they need an oil price in excess of $80 to consider starting the well. This morning, oil dropped below $80. No investment in new wells = rapid decline in shale oil output. The miracle dies.
I may have been wrong about gasoline dropping below $3.00 per gallon, and I’m certainly enjoying the $15 per week in savings, but it won’t last long. Supply and demand will reassert itself in the near future.
It hit $2.74 in this area, clearly the worst is behind us and I should put all my money into JCP and Sears Holding company stocks.
In Northern California Reg is 3.39, High Test 3.49, Supreme 3.59, and Diesel 3.69.
Admin.,
Your wrong will be only temporary, as shale is too expesive at 80.00 a barrel. I read that the bottom has fallen out of Toyota Pruis sales, but big Pickups are selling briskly
Yes, Jim, you were “wrong.” 🙂
Gail the Actuary’s theory of interconnection between the economy, banking sector and oil production predicts declining prices as part of collapse, and JM Greer’s theory of catabolic collapse can also be read that way. Back in 2007-08 I thought we were in a “bam, pow, straight to the moon!” upward rise in oil prices, but obviously that was temporary. Oil hasn’t been nearly that expensive since, yet our economy has never come close to being as (superficially) good as it was in 2007. I have my fingers crossed for practical fusion power, but absent that, or a realization of the claims made for Thorium based reactors, we’re fucked.
Admin wrote: “I failed to anticipate a drastic global economic slowdown and the lengths to which Obama and Saudi Arabia would go to try and destroy the Russian and Iranian economies.”
Very few of us could have called that….however, it is very convenient that gasoline prices have come down right before the 3 major American holidays….Halloween…Thanksgiving and Christmas….more money for the Zombiefied Americans to spend during Slapsgiving and Baby Jesus’ birthday!
Gas prices going down – right before the election?
In a better world not run by “Damn Dirty Apes” the price of gas would be a rational indicator of the preferences of gas consumers throughout the world. In the actual world, the prices seem to be random and easily gamed by a few powerful men at the very top of a pyramid of violence for reasons of gamesmanship.
Here are the world prices of gas in liters per dollar. Divide the number by 0.264172 to get gallons per dollar.
Price of gas in Venezuela $0.04/gal, Saudi Arabia $0.61/gal, Ecuador $2.20/gal, USA $3.33/gal, India $4.39/gal, World Average $4.73/gal, UK $7.61/gal, and Norway $8.71/gal.
Are there gas price handicappers out there with a consistent record of success? If there were, wouldn’t they soon become rich beyond belief?
Don’t feel bad admin .Once you admitted you were wrong about me.All is forgiven. Besides oil will be back at 4 dollars + within a few months and you’ll be right again.
Yeah, who could have called this? If you would have said you predict gas would drop below $3.00 just before winter, then we would have called you crazy.
Do you see fewer cars on the roads today than you did in years past?
Do you believe the population growth will slow?
Do you believe in the general decline in quality of new discoveries?
A dip, buy the dip.
If we all held our breath until gas is over $3.00/gal,nobody will die. Enjoy it while you can.
You’re only wrong if one looks at the actual numbers, instead of their meaning, which tells an entirely different story.
When you made your prediction, the VALUE of $3 was greater than it is today. QE has seen to it that we all play with Monopoly money today, so gas dipping below that barrier has no real effect on the actual COST of that good. You can price oil at $5 a BARREL but it will still sit in the ground if no one can afford to buy it, regardless of how much the currency is degraded.
I think the real reason for the decline in gas prices is that Wall Street analysts read my “Peak Oil” article published right here just 12 days ago. Set off a sell panic in the futures market. Heh.
On a more serious note, I see where the General Accounting Office is questioning the size of our nation’s Strategic Petroleum Reserve program whereby about 4 months of oil is stored in our country in the event of a “major event” such as an interruption of flow of oil from the Middle East. The GAO questions why so much oil is stored and whether or not the sale of some of that oil could be used to fund some other “priority” government programs.
Are you shitting me? What the fuck is a higher priority than insuring our country has a few months of transportation oil stored away in its hip pocket? Four months? It should be a YEAR, minimum. And these government assholes suggest selling what little we have stored.
Dutchman hits the nail on the head in my humble opinion.
@DUTCHMAN Agreed, this is the”give the sheep a break” time before the election so the poor schmucks will think everything is on the straight and narrow again. Makes the DEMS look better in Joe six packs eyes as he goes to the poll to vote. Wait til he gets his Obamacare premium quote and gas and grocery prices go even higher after the next fake election. SUCKERSSSSSSSSS! They never learn.
Here are a few examples of where I have proved Admin to be wrong ……
—-95% of all the songs he posts
—-Muslim support for terrorism (blood all over, his)
—-SouthWest airlines
—-fracking
—-Sketchers sneakers vs. New Balance
—-Hamas vs. Hezbollah (a very recent victory)
The record is clear and convincing. Vote YES on SSS.
Commodities are in general in a tailspin. They were inflated over the last several years by monetary policy. Now we have QE ending and many countries around the world, the EU and Japan in particular, who are heading into deflation. Flight of the monies of those countries in dire straits will come to the US, bringing a rise to a dollar that doesn’t deserve it, but is the least stinky turd. For now anyway.
Oil, metals and softs are headed lower. And the dollar is going to rise. Perhaps a lot.
EF
SSS- I agree with the 12 month reserve, seems like a basic level of prudence, especially when considering our dependence.
I hear the ‘we are doings this to damage Russia’ meme regularly. Is it possible they are driving the price down to hurt us. My impression is that we are policing up our last bits, they are not. We have a debt bloated economy lubed with petroleum dollars without any petrol, they do not.
Will the strategy backfire on us, are we sure it’s our strategy? If it really is ours, we are in deep shit and our enemies need nothing more than the patience to watch us flame out spectacularly.
Let’s not get too damn excited. Wasn’t regular gas about $1.50 when the “W” cabal took power?
As for being wrong, Admin, I’m wrong at least 5 times a day, ask my wife!
@WESTCOASTER
Don’t know about when W came in but it was $1.69 US when O took over as cartel CEO.
ADMIN Rule number one… never say never.
Has anyone heard about this? Is there anyone here who may share more info? I’m not sure what to make of it. It would really be a breakthrough or maybe it’s just early April Fool’s.
http://www.extremetech.com/extreme/156393-cold-fusion-reactor-independently-verified-has-10000-times-the-energy-density-of-gas
Paid $2.79 today at Fry’s in the valley. Tough when you remember pulling up to the station and telling the attendant, “I’ll have a $3.00 dollars worth (.39 cents a gallon) and would you check the oil after you clean the windows?”
I thought this thread was where Admin was going to finally admit his prediction that OWS was going to be a defining moment in the overthrow of the .1% was off by several orders of magnitude.
I thought this thread was where Admin was finally going to admit his predictions about China were bullshit. I have booked 2 minutes at half-time of the next Super Bowl for the ass-kissing he promised me.
There’s another reason things look like 1995:
[img
?hires=1&type=image/jpeg&chart_type=line&recession_bars=on&log_scales=&bgcolor=%23e1e9f0&graph_bgcolor=%23ffffff&fo=verdana&ts=12&tts=12&txtcolor=%23444444&show_legend=yes&show_axis_titles=yes&drp=0&cosd=1984-01-01&coed=2013-01-01&width=335&height=222&stacking=&range=&mode=fred&id=MEHOINUSA672N&transformation=lin&nd=&ost=-99999&oet=99999&scale=left&line_color=%234572a7&line_style=solid&lw=2&mark_type=none&mw=1&mma=0&fml=a&fgst=lin&fq=Annual&fam=avg&vintage_date=&revision_date=[/img]
If the image doesn’t work: http://research.stlouisfed.org/fred2/series/MEHOINUSA672N
WP and FRED charts ES.
Does the price really matter. You have to fill up if you’re going to drive. But when you put all the things that have gone up in cost? Folks will vote republican thinking they will make life better or at least not as bad. I see a black swan event to take peoples mind off all the current problems we have.
EXCLUSIVE – Privately, Saudis tell oil market: get used to lower prices
By Ron Bousso and Joshua Schneyer
LONDON/NEW YORK Oct 12 (Reuters) – Saudi Arabia is quietly telling oil market participants that Riyadh is comfortable with markedly lower oil prices for an extended period, a sharp shift in policy that may be aimed at slowing the expansion of rival producers including those in the U.S. shale patch.
Some OPEC members including Venezuela are clamoring for urgent production cuts to push global oil prices back up above $100 a barrel. But Saudi officials have telegraphed a different message in private meetings with oil market investors and analysts recently: the kingdom, OPEC’s largest producer, is ready to accept oil prices below $90 per barrel, and perhaps down to $80, for as long as a year or two, according to people who have been briefed on the recent conversations.
The discussions, some of which took place in New York over the past week, offer the clearest sign yet that the kingdom is setting aside its longstanding de facto strategy of holding prices at around $100 a barrel for Brent crude in favor of retaining market share in years to come.
The Saudis now appear to be betting that a period of lower prices – which could strain the finances of some members of the Organization of the Petroleum Exporting Countries – will be necessary to pave the way for higher revenue in the medium term, by curbing new investment and further increases in supply from places like the U.S. shale patch or ultra-deepwater, according to the sources, who declined to be identified due to the private nature of the discussions.
Admin
The Saudis are definitely the 500-lb gorilla when it comes to OPEC. But IF the story you posted at 4:30 pm is 100% accurate, the Saudis are playing with fire vis a vis OPEC.
I am referring specifically to Nigeria and Venezuela, both of which cannot AFFORD, literally, long term low oil prices. Both countries are run by corrupt and incompetent governments whose very existence depends on more expensive global oil. And both are major OPEC players that produce over 2 million bbl/day.
If one or both bolts from OPEC, kiss that cartel goodbye. I’m guessing Nigeria will be first. And there is another significant wild card …… Angola.
OPEC Chief: Lower oil price to cut shale output
By Benoit Faucon
Published: Oct 29, 2014 8:16 a.m. ET
Falling oil prices could push half of U.S. tight-oil production out of the market, OPEC’s secretary-general said Wednesday, suggesting the group expects an end to a global oil glut that has driven oil prices down by 25% to about $85 a barrel in recent months.
Speaking at the Oil and Money conference in London, Abdalla Salem el-Badri, OPEC’s secretary-general, said, “At this [current] price, 50% of tight oil will be out of the market.”
He said tight-oil projects (oil extracted from dense rock formations) typically need $90 to $100 a barrel a day to break even. The assessment by OPEC is higher than most in the industry, including the International Energy Agency which says most tight oil production is sustainable at $80 a barrel.
If OPEC stops fixing prices what will happen then?