Article

2005-03-06 International-UN-NGOs

Oil Prices Could Hit $80 Per Barrel By 2007

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Posted by Fred 2005-03-06 00:00:00 AM|| || Front Page|| [11138 views since 2007-05-07] Top

#1 Fred, the extraction from Alberta sand and shale is already profitable at $30/B. In fact, the extraction cost is at about $15/B. The reserves in Alberta and NE BC are estimated to be 2.3 times of the total KSA reserves. There are other areas in Canada that haven't been taped yet for one reason or another, but in the case of necessity, they would be probably activated and can be factored in. Something to consider in the whole equation.

Posted by Sobiesky 2005-03-06 12:59:27 AM|| 2005-03-06 12:59:27 AM|| Front Page Top

#2 Oil will go to 80$/b this year.

The problem for Alberta oilsands and other high cost sources is price over the life of the project. The infrastructure costs billions and everyone in the industry remembers when oil went to 10$/b a few years ago. What is needed for large scale development of these sources is a gauranteed price for say 30 years. I am not a fan of government intervention, but in this case governments are the only ones who can take these big $ long term risks. I.e. the US government should offer to buy oil at a fixed price over a long contract period under the condition it comes from an unconventional source. In principle this is no different to issuing 30 year bonds.

Posted by phil_b 2005-03-06 2:47:46 AM|| 2005-03-06 2:47:46 AM|| Front Page Top

#3 #2
Maybe making Saudi oilfields slightly radioactive will help.

Posted by gromgorru 2005-03-06 3:47:21 AM|| 2005-03-06 3:47:21 AM|| Front Page Top

#4 Eddin said an increase in oil prices could be sparked by interruption of supplies from a producer nation. He said such an interruption could be as little as 1 million barrels per day.

Go ahead Mr. Eddin, give the Islamofascists a little assistance in picking targets. Not that terrorists haven't already considered attacking oil facilities, but now there's a known value with regard to quantity and effect.

Posted by Bomb-a-rama 2005-03-06 4:00:04 AM|| 2005-03-06 4:00:04 AM|| Front Page Top

#5 bar you are falling into the same trap as the MSM. Focusing on the specific event while ignoring the underlying dynamic that makes the event significant. Oil prices will rocket up when the next supply interuption occurs and it does matter what the cause is. That is, there will be a cause and there are may possibilities. It could be as simple as a tanker sinking in the Straits of Hormuz or the Singapore Straits. The problem is reliance on a critical economic resource from a fundamentally unreliable source.

Posted by phil_b 2005-03-06 4:09:10 AM|| 2005-03-06 4:09:10 AM|| Front Page Top

#6 Oil will hit $80 a bbl. So? China and India are growing and have increased demand. Supply and demand is a economic truth. Nothing is going to change that fact much. How will we as a nation respond to it? Will we innovate or stagnate? China is trying to secure as much supply as it can before it becomes a problem. They want to maintain a strategic supply of oil to keep their own economy fueled. There is no diabolical plot happening here. We need to do the same, plan and get our stuff together so it doesn't send our economy into the toilet. Sitting around on our asses and worrying is useless. Staying dependent on ME Oil and seeing China buying up Canadian oil companies and not acting ourselves is stupid.

Posted by Sock Puppet of Doom 2005-03-06 7:07:37 AM|| [http://www.slhess.com] 2005-03-06 7:07:37 AM|| Front Page Top

#7 Hybrid vehicles are still selling faster than they can be produced (12 month wait for a Toyota Prius, I'm told). And production keeps ramping up. How long before India and China start producing their own duel fuel vehicles to meet local demand? The consumption trend is not infinitely upward, no matter how much the Iranians and Saudis and gloomy prognosticators would like it to be.

Posted by trailing wife 2005-03-06 8:08:53 AM|| 2005-03-06 8:08:53 AM|| Front Page Top

#8 #2 We can take oil to $80 a barrel right now and make sure it stays up long enough to make Alberta pays off. Impose an oil import fee on all oil that enters the country from a source other than tar sands.

Use the revenue for Social Secuirty reform and reduce taxes.

Posted by Mrs. Davis 2005-03-06 8:14:02 AM|| 2005-03-06 8:14:02 AM|| Front Page Top

#9 Trailing wife, if you think the demand for oil at a constant price is not constantly upward till everyone in the world lives at an American standard of living (2 billion Chinese and Indians with two cars per family, think about that demand), please share the name of your drug dealer with us. I need some of that good stuff.

Posted by Mrs. Davis 2005-03-06 8:16:53 AM|| 2005-03-06 8:16:53 AM|| Front Page Top

#10 I wish, Mrs. D. As it is, I'm only good for two glasses of cola, or a glass of wine on the downward side, before I have to stop.

Seriously, and I hope some of our engineers will step in here with hard numbers, it only makes sense that market factors all around the world will respond to the need created by such high petroleum prices. How much of a cost upcharge is there to making a hybrid vehicle, especially if the baseline vehicle cost is on the order of a little Trabant, or those motorcycle powered trucks like those so popular in Italy just after WWII?

And, blue sky-ing a bit here, what about expanding the dual fuel concept to anything with, say, a turbine or any other moving parts that could power the battery part of a dual fuel set-up? Or would that run into the same problems as splitting water for hydrogen fuel -- costing more in energy to produce than would result when used as fuel?

Posted by trailing wife 2005-03-06 8:45:23 AM|| 2005-03-06 8:45:23 AM|| Front Page Top

#11 Trailing Wife, I get tired of telling people this, but hybrid cars make the energy supply problem a lot worse. Coverting energy to work as in driving a car or a turbine in a power station has a practical limit around 50%. So you can use oil to drive a car and get 50% of the oils energy to move you car. If you use the oil in a power station at 50% efficiency to create electricity which you then distribute, store and use to drive your hybrid car. You will at best get 20% of the oils energy to drive your car.

Congratulations, you have just consumed 150% more oil to drive your car. PT Barnum must be laughing his head off.

Posted by phil_b 2005-03-06 8:52:11 AM|| 2005-03-06 8:52:11 AM|| Front Page Top

#12 That's why government should not get in the business. It acts more irrationally. Just raise the price through import fees, price volatility will be reduced and everybody will do the right thing.

Posted by Mrs. Davis 2005-03-06 8:54:10 AM|| 2005-03-06 8:54:10 AM|| Front Page Top

#13 the US government should offer to buy oil at a fixed price over a long contract period under the condition it comes from an unconventional source. In principle this is no different to issuing 30 year bonds.

That's exactly what they did in California. It's the ultimate rip off scam. Have the government buy high and once all of the shysters have made billions - then let the people pick up the tab for an investment idea so bad that no real investor would have been foolish enough to touch.

As for me, I wouldn't be buying futures in shale oil, if I were you. If prices continue to climb - technolgy in 30 years will be waaaaay beyond what it's worth to extract shale oil.

Are you in something related to the oil buisness, phil. Lots of shale stocks, perhaps? Cause it sounds like you are wishful thinking to me.

Posted by 2b 2005-03-06 9:09:32 AM|| 2005-03-06 9:09:32 AM|| Front Page Top

#14 Phil_b, are you clear on what a hybrid car is? It has a gas engine, and uses that to charge its batteries. At low speeds/accelerations it runs on the batteries, then starts its engine when needed.

There certainly are losses involved, but none of them involve the power grid.

I know a couple of people with hybrids, and they report around 50mpg.

As for $80/bbl oil -- China and India will suffer much, much worse than the US. Likely their usage will collapse at some point before that, slowing the rise in prices.

Posted by Robert Crawford 2005-03-06 10:18:30 AM|| [http://www.kloognome.com/] 2005-03-06 10:18:30 AM|| Front Page Top

#15 2b, buying oil on long term contracts at $15/b may or may not turn out to be a high price. However my point was that the reason we do not have a bigger supply of 15$ oil is business is unwilling to take the risk in investing to produce it. A gauranteed price would remove that risk and we would as much oil as we want at a predictable price (below $20).

Posted by phil_b 2005-03-06 10:24:03 AM|| 2005-03-06 10:24:03 AM|| Front Page Top

#16 Phil_b, are you clear on what a hybrid car is? It has a gas engine, and uses that to charge its batteries. He screams you have just introduced at least a 50% inefficiency into the system. I.e. you have doubled energy consumption. With current technology its closer to tripled energy consumption.

Posted by phil_b 2005-03-06 10:31:59 AM|| 2005-03-06 10:31:59 AM|| Front Page Top

#17 and the reason that investors are unwilling to take the risk is because there's a snowball's chance in hell that it will be a good investment.

Posted by 2b 2005-03-06 10:46:34 AM|| 2005-03-06 10:46:34 AM|| Front Page Top

#18 I was going to apologize for my previous outburst but then I thought this is perpetual motion recycled. People used to come up with perpetual motion machines that anyone with a basic grasp of science realized were nonesense but they persisted amoungst the scientific illiterate. Hybrid cars are just perpetual motion recycled.

Posted by phil_b 2005-03-06 10:51:53 AM|| 2005-03-06 10:51:53 AM|| Front Page Top

#19 wouldn't perpetual motion recycled have..like....130% efficiency? :-)

Posted by Frank G 2005-03-06 10:54:25 AM|| 2005-03-06 10:54:25 AM|| Front Page Top

#20 Phil it's just heat recovery from would what should be braking, like a locomotive with dynamic brakes, essentially it forces/helps the driver to be efficient.

Posted by Shipman 2005-03-06 11:17:13 AM|| 2005-03-06 11:17:13 AM|| Front Page Top

#21 Ok, PhilB, so the hybrid technology that gives my girlfriend's car 50mpg (compared to 25-30 mpg for a similar sized non-hybrid) won't work on something static like a turbine, because the added drag of powering the battery will decrease the efficiency of the turbine more than commensurately. Got it -- essentially the same problem as splitting water to get hydrogen for the hydrogen-fueled vehicles that are supposed to be 10 years in the future -- perpetual motion machine problems. Thank you, you answered that part of my question.

So factories will have to find other sources of additional energy. Siphoning the heat off the gasses going up the chimney, burning waste paper/cardboard for fuel, maybe someone can finally render those massive piles of used tires into a usable fuel source (so that they have an additional function besides mosquito breeding ground and interminable smokey fires, and playground mulch), not to mention continuing the trend of reducing packaging materials and making more concentrated products so that more product can be shipped per truck, which reduces how much gasoline is used to get each unit of product from producer to market. And of course, increasing the percentage of petroleum products such as plastics that are recycled or used as another fuel source. Shoot, at first glance it appears that with some technology development our garbage dumps could be as rich a fuel source as those oil shales.

Ok, PhilB, your turn to introduce some more hard reality to this next round of thoughts. Reality is the part I'm weakest at. ;-)

Posted by trailing wife 2005-03-06 11:38:43 AM|| 2005-03-06 11:38:43 AM|| Front Page Top

#22 50%? That's a really rotten motor/generator. I don't know of any commercial ones that are that poor. The IC engine has varying efficiency itself at different loads and speeds. If you can keep it operating in the more efficient areas of its power curve, you more than make up for any losses.

Plus, things like regenerative braking (which don't need to be restricted to hybrids) make up a lot of energy that's otherwise dumped out as heat. All third-party tests show that hybrids do very well in stop-and-go type of operating conditions. Those are actual measurements. UPS trucks would be ideal hybrids.

But, of course, there is the huge extra costs of hybrids. Those costs are not (much) based on energy, so as energy gets more expensive, they become less important. If oil prices really do rise to $80/bbl, then those costs might be recoverable. They are not at $40/bbl.

Even so, a hybrid is merely going to halve fuel consumption in around-town situations and make essentially no difference for a long-haul (don't expect Kenworth to come out with a Hybrid).
The problem is that petroleum-based fuels are simply the best thing we have for cars and trucks. Nothing else comes remotely close to the ease of use and efficiency. It's probably easier to try to reduce any other use of oil first. Building scads of nuclear power plants (including in ships) would help some. Electrifying all the rail lines would help a bunch more. Switching from fuel oil to electric heat would also help. Each of those has massive investment costs, though.

Posted by jackal 2005-03-06 11:48:23 AM|| [http://home.earthlink.net/~sleepyjackal/index.html] 2005-03-06 11:48:23 AM|| Front Page Top

#23 A good informative book on this issue is
The End Of Oil : On the Edge of a Perilous New World by Paul Roberts

Posted by Crorong Gramble7118 2005-03-06 11:51:14 AM|| 2005-03-06 11:51:14 AM|| Front Page Top

#24 Each of those has massive investment costs, though.

If everything is going to have massive investment costs, doesn't it makes sense to direct the investment money and incentives to projects that show future promise?

The very fact that the this discussion has turned to alternative sources available - is the kiss of death for the oil sheiks. It's not like we can't get energy from other sources - it's just we aren't there yet.

Posted by 2b 2005-03-06 12:22:40 PM|| 2005-03-06 12:22:40 PM|| Front Page Top

#25 the alternate sources noted above
- tar sands
- oil shale
- heavy oil

all have similar problems
- many years to ramp up production
- uncertain environmental and related costs if production is high
- current technology is clunky and industry is hoping for improvements in the technology before investing huge amounts

Posted by mhw 2005-03-06 1:07:24 PM|| 2005-03-06 1:07:24 PM|| Front Page Top

#26 There's one way to get a reasonably quick payoff on the alt energy scheme (e.g., 10-15 years): build a number of nuclear-powered electrical generating plants, preferably using the newer pebble-type fuel systems. That would permit us to stop burning oil for electricity, releasing that oil back into our energy grid. Yes, yes, you can't use that oil to power a car (the gasoline was already refined off before the bunker oil was shipped to the utility company), but you can use it for other purposes. It puts some downward pressure on the oil market.

Posted by Steve White 2005-03-06 1:35:26 PM|| 2005-03-06 1:35:26 PM|| Front Page Top

#27 Steve the problem with your idea is the NIMBY thought process in the US, no one wants nuke plants built around them. As far as the pebble bed reactor goes, the big problem with them is creating an accurate way of mass producing the pebbles that are atomic grade quality (not something that anyone has even begun to do yet). This is the major action that China is doing currently in regards to wanting to put more nuclear reactors in operation in the mainland, they need this uranium pebble production started up first before they can really begin any large scale production of the reactors themselves.

Posted by Valentine 2005-03-06 2:31:11 PM|| 2005-03-06 2:31:11 PM|| Front Page Top

#28 I'm working on the hot-air-recovery-fuel-system.

Posted by 100%efficient 2005-03-06 2:54:47 PM|| 2005-03-06 2:54:47 PM|| Front Page Top

#29 The immediate way to drop oil prices is to reduce vastly reduce US comsumer imports. With current trends of China growing 9-10% percent a year and oil imports growing twice that (2004 Chinese oil imports +40%?), there is no way oil demand will lessen. The growth of much of the world's economy, and accompanying energy consumption, is funded by the $600 billion US trade deficit. The US-China trade deficit of $160+ billion is 11% of China's GDP (or about 80 million Chinese jobs). The Chinese reliance on US money is even more startling when you when you consider that money and jobs shipped overseas has a multiplier effect of 3-4 on economic activity. Same for trade with other countries like, especially like Germany where we import expensive low gas mileage cars.

At $45/barrel, the US is spending $200 billion on oil imports. But the real cost is double that due to military spending to secure the middle east militarily and politically and to secure trade routes. Without overseas commitments, the US can secure its borders for $100 billion and use the savings for development. Let the world fend for itself.

In the immediate term 0-5 years, drastically reduce US trade deficit to decrease energy intensive manufacturing and energy demand overseas, thereby dropping the price of oil. Americans will have to drive their imported cars a few extra years, fill up one less closet with cheap clothes and junk, and upgrade their electronics a little less often. The upside is to bring some of that industry back to the US and create higher paying US jobs. In addition, less money available to our adversaries means less pressure on our military.

In the medium term 0-10 years, open up all domestic fossil fuel sources for production.
Guarantee price floor, based on cost of production, for long term contracts for easily exploitable energy sources (coal gas, shale, Canadian tar sands). Reduce military spending by half. Take the $200 billion and build energy production and distribution infrastructure. Shift personal autos to electric and hydrogen (longer term) fuel.

In the long term, build nukes. A lot of nukes. Without an inexpensive primary energy source under US control, nothing will be solved. 600 1000MW size reactors are required to replace the raw energy in 12 million barrels of oil imports a day. Less will be required due to higher thermal efficiency (45-50%) of large plants vs. automobiles (25-30%) as well as the possiblity to boost the heat for use in hydrogen cracking or to use the waste heat for secondary generation (to 70%). Assuming $2 billion per mass produced reactor/generator combination, a freed up defense budget can pay for 100 such plants a year. In addition, a power plant generates follow on economic value while an aircraft carrier doesn't.

Some of these actions will be coercive (disallowing so many imports, new wells or fuel production, or building nuclear plants where required), but there comes a point where the survival or health of the nation is a stake. Eminent domain exists for a reason.

Posted by ed 2005-03-06 4:11:17 PM|| 2005-03-06 4:11:17 PM|| Front Page Top

#30 Predicting the price of oil in 2007 is about as useless as predicting the Dow Jones stock average in 2007. It's a great little game if you can use it to attract new investment and/or to increase brokerage commissions.

A major Arab oil problem (price or supply) will have the same effect that it did 30 years ago -- short-term conservation, alternatives will receive more attention, and then equipment efficiency will be increased. But in addition to that, we are in a far, far better position to detect and snuff out anyone who is deliberately trying to do us harm. Richard Nixon was preoccupied with Vietnam and Watergate. George Bush is focused on the Middle East.

Posted by Tom 2005-03-06 4:53:50 PM|| 2005-03-06 4:53:50 PM|| Front Page Top

#31 People realize that import dependence carries risks especially when it comes to energy from unreliable sources. They know it can only end badly. So they grasp at straws when it comes to solutions. Hybrid cars, hydrogen, fuel cells, windmills, solar, etc. etc. are at best incremental improvements that will slow down the increase in dependence. At worst they exacerbate the problem.

The reality is power plants are about 35% efficient in converting oil/gas/coal into electricty. Factor in losses in distribution and storage in any kind of battery, fuel cell etc. extra weight from the battery, and then inefficiences in the engine driven by the electricity and you are looking at perhaps 15% overall efficiency. The reality is that using mains electricity to power a car is horribly inefficient. Put another way its a great way to waste a lot of energy. Yet otherwise intelligent people delude themselves into thinking its a solution, because they want to believe there is a solution that doesn't involve radical changes.

BTW, the term hybrid car was originally used to mean powered by two sources, mains electricty and gas. It now seems to have mutated into meaning more fuel efficient by means of capturing motive energy otherwise lost as heat. Hybrid cars were originally developed as a solution to air pollution and are now being sold as energy saving. When powered solely by gas (oil) they may well be an improvement, but as soon as you plug into mains electricty you have just used a whole lot more energy.

Posted by phil_b 2005-03-06 5:32:49 PM|| 2005-03-06 5:32:49 PM|| Front Page Top

#32 "600 1000MW size reactors are required to replace the raw energy in 12 million barrels of oil imports a day."

Again the problem is...where do you build them? NIMBY has officially killed production of new nuclear power plants in the US unless someone can make a breakthrough in fusion. The actual best way to drop oil prices is open up the US oilfields and if necessary to dump a few subsidies in their production. You'll see oil prices plummet at that point if production were to pick up. Then again you still have the refinery capacity problem.

Posted by Valentine 2005-03-06 5:43:11 PM|| 2005-03-06 5:43:11 PM|| Front Page Top

#33 Phil_b,
http://www.uic.com.au/nip08.htm
The operating cost of a nuke plant is about 3-3.5 US cents / kilowatt hour. The fuel cost is 0.35 US cents /kilowatt hour. Total cost of ownership is 4-5 cents/kWh. These figures are with custom built plants. Once standardized and mass produced, the build cost drops a lot and the operating cost will also drop a bit. At that price, it is cheaper to generate electricity, transport it, and store it as chemical energy in batteries than it is to import oil, refine it, and transport it gas stations.

At the price of nuclear power generation, it is cheaper to have lower energy efficiency than to use imported oil. In addition to purchase cost, the cost to the US of protecting world oil supplies doubles the effective cost to the US of imported oil to about $100/barrel.

Posted by ed 2005-03-06 6:03:48 PM|| 2005-03-06 6:03:48 PM|| Front Page Top

#34 Unnoticed by most folks, the Bush Administration has taken major steps towards revitalizing the US nuclear power industry. IIRC all sites previously certified for plant construction will now remain certified rather than being forced through a complete re-certification process as has been the norm; plant operators can now apply for a combined construction/operating license rather than being forced to first obtain a license for construction and then after spending billions on construction being forced to go back for a separate (and always litigated by the greenie idiotarians) operating license; currently operating plants can now apply for an additional 20 year operating license renewal after 40 years of operation (previously plants were forced to stop operating by the federal bureaucracy after 40 years of operation); etc. All of those are great initial steps and the lengthening of the operating life is a big driver in the now-lower cost of generation.

Now if only we could rid ourselves of Jimmuh Carter's directive that the US not reprocess spent fuel we could address the waste issue and begin making a real dent in our foreign power dependence.

Posted by AzCat 2005-03-06 11:25:04 PM|| 2005-03-06 11:25:04 PM|| Front Page Top

11:34 Bulldog
11:34 Bulldog
11:33 Bulldog
11:33 Bulldog
11:29 Bulldog
11:29 Bulldog
00:00 trailing wife
23:54 Zhang Fei
23:52 Aris Katsaris
23:50 trailing wife
23:48 Phil Fraering
23:34 2b
23:26 2b
23:25 AzCat
23:21 Sobiesky
23:19 trailing wife
23:18 Robert Crawford
23:16 Robert Crawford
23:09 Alaska Paul
23:07 JosephMendiola
23:07 Alaska Paul
23:07 Silentbrick
23:04 JosephMendiola
23:04 Sock Puppet of Doom