The End of Cheap Oil

I think you got the USSR confused with the USSA, actually its not the CEO's that set price, but your average Joe the investor, If oil were no longer a commodity the price would drop 60%

given that most people have no way of dropping their oil consumption by 60% , that is a moot point . isnt it OPEC that sets the price of oil ?

I should learn to read , got my 60% mixed up , but the point is few people or organisations are in a position to drop their oil consumption significantly . so its a sellers market .

DutchRailnut wrote:As for using electric appliaces and heat instead of oil, that is just moving point where fuel is used, most electric generating facilities run on oil, thanks to enviromentalist hammering away on coal and nuclear.
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Sorry but I believe you don't have your facts straight. If your talking about the USA most electricity comes from coal. About 50%.

DutchRailnut wrote:, most electric generating facilities run on oil, thanks to enviromentalist hammering away on coal and nuclear.
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Not so. For a couple of decades, only a tiny fraction of annual north American and US electric production is oil fueled and continues to decline. Coal, natural gas, nuclear and hydro are the only significant sources of electric energy. Oil is the proverbial drop in the bucket.

Interestingly, in the last couple of years a number of mainstream enviro organizations have reversed position and now support new nuclear. A subset support new integrated gasification combined cycle ("IGCC") coal generation if - a big if - the design includes carbon sequestration.

You are correct in overall USA picture.
http://en.wikipedia.org/wiki/Image:Sour ... A_2006.png

But now break it down to just the North East and it gets scary

David Benton wrote:given that most people have no way of dropping their oil consumption by 60% , that is a moot point . isnt it OPEC that sets the price of oil ?

I believe OPEC sets production numbers , its the market and investors setting the price.

DutchRailnut wrote:You are correct in overall USA picture.
http://en.wikipedia.org/wiki/Image:Sour ... A_2006.png

But now break it down to just the North East and it gets scary

David Benton wrote:given that most people have no way of dropping their oil consumption by 60% , that is a moot point . isnt it OPEC that sets the price of oil ?

I believe OPEC sets production numbers , its the market and investors setting the price.

So what do we have in the northeast? Where is an oil fired plant in the northeast?

scharnhorst wrote:The best way to get the price of oil down is to invite these big CEO's down to a meating line them up and tell them to lower the price of oil and to make sure of your intentions exacute one. If the price dose not lower with in 24 hours exacute anouther and keep going down the line you'll find that what ever CEO's are still alive will drop the price so fast that there would be a gas station on every city block.

1) NO ONE in the United States - except members of the Armed Services or prison inmates - is REQUIRED to do ANYTHING. A CEO of an oil company is no more obligated to deliver oil than are you or I.

If they choose to simply close down, that is a matter between them and their shareholders...investors. They have a legal obligation to the shareholders to represent their interests; but no compulsion under law to deliver ANYTHING.

Should there be price caps on oil to where there is no profit, there will be no oil delivered for sale. Should there be a "cap on profits" you will see exploration and research GRIND TO A HALT - why in the world should they spend investors' money when they won't recover it? When they can make nearly as much by just sitting on their duffs and delivering what they have, till it runs out?

2) Controlling prices; telling corporations (which are only groups of people working together for a common purpose) how much they can sell what they have to sell, interferes with the rights of private property ownership. What they have is their s until it's sold to someone else...and if THEY lose that protection, SO CAN YOU.

Would you like to see government limits on what price you can sell your house, your car, your work-time? Those shares of stock your Aunt Matilda gave you?

It can happen - if you let it happen to "corporations" it will happen to private citizens. A "corporation" is a "ficticious person" - a group given the legal standing of an individual in terms of property ownership rights and legal liability.

3) IF this were to come to be, oil stocks would become nearly worthless - because of severe limits on returns. Shareholders would be hit hard...and those shareholders include hundreds of thousands of Americans who're vested in pension plans and 401(k) programs.

You won't be punishing the "corporations" - you'll be punishing the owners of the corporations. If you have mutual funds or IRAs. that might well be yourself.



No, the answer here is COMPETITION. When PCs came out, IBM was charging $2500 for a machine that wouldn't do with my cell phone does today. What happened? Others came into the market with better machines, cheaper...now you can buy an eye-popping computer for under $400.

Why doesn't this happen with oil companies? First, supply THAT CAN BE USED NOW is limited - to OPEC nations.

Second, entry - because of environmental standards - is well nigh impossible, what with all the grades of gasoline; the legal roadblocks to opening new refineries; and government threats and challenges.

What new investor would want to go through all that? When he can make MORE per sale by selling bottled water or vitamin supplements?

Threatening people who are the ones who'll be needed to find new oil sources, is going to guarantee even more shortages and problems. Again, you need only look at the 1970s to see the truth to that.

slashmaster wrote:

DutchRailnut wrote:You are correct in overall USA picture.
http://en.wikipedia.org/wiki/Image:Sour ... A_2006.png

But now break it down to just the North East and it gets scary

David Benton wrote:given that most people have no way of dropping their oil consumption by 60% , that is a moot point . isnt it OPEC that sets the price of oil ?

I believe OPEC sets production numbers , its the market and investors setting the price.

So what do we have in the northeast? Where is an oil fired plant in the northeast?

Well, for starters, the original three Ravenswood plants (former ConEd) located in beautiful downtown Long Island City, Queens, still burn oil.

Bridgeport Ct burns oil and gas but mainly oil

Shaws Cove a coal plant was just shut down
Shorham Nuclear build never got activated
Yankee Nuclear was build but demolished soon after

Realize that the spike in fuel prices is a double-edged sword. It costs railroads far more to fuel locomotives but also is putting a big squeeze on the truckers.

If the blathering idiots would shut up and allow our oil companies to drill and produce the oil we have, it would go a long way to solving the problem. Long term it is a good thing to explore other technology and there is nothing wrong with making improvements and advances in solar, wind and other sources. But we can do that and still raise our oil production (and cut foreign imports) while those improvements are being made.

The above poster is absolutely correct - the free competition is what drives the oil companies to produce more and therefore lower the prices. His use of computers is a good example.

The illiterate rantings about executing CEO's is actually funny: it's so far out of reality it's got to be taken as a joke. It's a sad example of how ignorance totally distorts understanding of how things actually work. What's next - some railroad has poor service so we execute the CEO? Our cheeseburger is cold so we execute the manager at Burger King?

Bridgeport Ct. burns gas and oil and also coal.I would say the order in which they burn most is gas,then coal,then oil.The last remaining oil unit is the smallest.The jet fuel unit is basically for emergency and is relatively tiny.Bridgeport also has a garbage burning plant as well but quasi government owned.
I am typing this from the control room of a pretty large oil burning generating station in New Haven Ct.Sadly,due to the price of # 6 oil these days I have more time for railroad.net than ever before as we sit mostly on standby. So while we have a large capacity the price of electricity on the grid has to get pretty high before oil is consumed here,or Bridgeport Harbor unit # 2, for that matter.
Now if you want to get into oil consumed for home heating purposes,that it is where it gets very scary in the Northeast.
Ed

Aji-tater wrote: The illiterate rantings about executing CEO's is actually funny: it's so far out of reality it's got to be taken as a joke. It's a sad example of how ignorance totally distorts understanding of how things actually work. What's next - some railroad has poor service so we execute the CEO? Our cheeseburger is cold so we execute the manager at Burger King?

comeing from where I have lived such things were done to advance a once great nation to a world power in 5 years plans from the early 1920's up till the end of the cold war. I once thought Nuclear power to be the greatest thing in the world. But once Chernobyl exploded I lost everything in 36 hours when army personel told us to leave with 1 sute case.

Scharnhorst, I’d like to assure you the western nuclear power programs are nothing like what the Soviet Union undertook. However, please remember that the Chernobyl reactor four explosion occurred under a totalitarian regime where capitol punishment could be invoked for inattention to duty. When western physicists ask their Soviet counterparts what they would do in such an emergency the reply had been ‘that can’t happen here.’

Be that as it may, the world is a free market and oil is a commodity in this market. Every day the world consumes 82 million barrels of the stuff (70% for transportation). The US intake is 20.7 million bbl/day. China and India combined are about half that; but they are growing. Most of the world pays much more for their oil than the US. Ergo, as these appetites grow the oil will flow to where the money is. Contrary to what has been stated, there are drilling booms occurring all over the world as well as the US. I just came from east Texas and could not go two miles without passing a new drill site. The same thing is happening in North Dakota. Right now is a very good time to be an oil man. There are also numerous localities eager to accept a new refinery site. So far no one has made a serious attempt to build one. Have we reached the apex of Hubbert’s Peak? We really won’t know until we start down the other side. Until then I implore all my fellow Americans to accept that the days of cheap oil are over and it’s time to make other arrangements.

Brad Smith wrote:I don't know the article you're referring to, but I learned a lesson about the accuracy of all the Chicken Little prognosticators during the Y2K panic.

steam371 wrote:I did read the articles closely, and like I mentioned before paranoia.

Hopefully there arent too many more Americans that arent getting the message now. Now's a good time to be watching C-SPAN.