NEWS: Oil Price Passes $64 a Barrel.

The price of US light sweet crude rose to over $64 a barrel and it's expected to rise further in the near future. This is almost 3 times the price only a few years ago and will continue to put inflationary pressure on the economies of developed nations.


The increased terrorist threat, increased demand, death of the Saudi King, the Hurricane season have all been cited as reasons for this high oil price.



Production can not be raised and oil is being sold to the highest bidder. A French government report entitled 'The Oil Industry 2004' reports a possible peak in world production as early as 2013.

With increased demand and diminishing resources the price is only ever going to go up from here. The liberation of Iraq and the freeing up of it's natural oil resources seems to have made little or no difference.

One can easily foresee a situation where each Hurricane season will herald in new price highs.

You may think this only effects you in so much as you'll pay a little more when putting fuel in your car but the effects will be far reaching.



[edit on 9-8-2005 by John bull 1]

[edit on 10-8-2005 by John bull 1]

This is a good reason to start carpooling if you don't already! I have myself been carpooling to work and it has saved me time and money.

The problem with oil is that it has only one direction to go, and that is up! Our dependence on oil may be our undoing as a country if alternatives are not implemented immediatly!

John Bull a very very important story, as wars are being fought over this commodity now and it controls and governs both regional and international politics around the world.

I think people must remember that this is the highest price for 20 years, however then it was a imposed price rise by the Arab nations, this is simply supply and demand and ability to provide it to the customers. This is only going in one direction, continuing up. Another winter in China and a harsh one in the States could push it over $75....Infact as I currently work in this area (finance) I will make a wager here. If Oil is not above $75 a barrel for US sweet crude by January 7th next year I will give the actual cost of a Barrel directly to the Mods, and maybe a vote could be undertaken for the most deserving Charity...anyone want to match it and let me choose my Favourite charity when im right?

I would only say this above if I was sure I was very very sure of success, I don’t gamble normally. The reason ive laid this challenge down is to help create some interest in this topic. It is the worlds most important resource at the moment and the change in its prices and lack of certainty of its supply and actual amounts left can only mean one thing. It is soo important for people to understand that as fuel rises, so does the cost of bread, milk, washing up liquid, many plastics, most heavy manufacturing and engineering. This has profound effects on all of our lives. Just think, if the richest and most respected country in the world was prepared to kill its own citizens in defence of this resource, to lie and misled the entire global community, to make China a new superpower equivalent to USA in 15 years, to destroy and environment and have officials in the US proved to be suppressing true information from the public.... all this for Black Gold.

I cannot stress enough it is the most important single thing in the world both in geo political importance and its potential effects on the earth, maybe except Nukes, but you cant build them without lots of Crude either.

These increases in prices, will lead to all things becoming more expensive in the shops, to include services as well as products. It will create more tension and problems in a already very unstable area. It will probably in time renew the War between Britain and Argentina as the massive reserves there are now becoming economically viable to extract. It will effect everything from the price of a Happy Meal at Mac D's (oil makes the packaging...and if your uneducated enough to eat them) to the ability of say the USA to fight a war, no oil no diesel or jet fuel and no ability to wage a military campaign... (remember the USA is dependant on its imports of oil to keep going).

People realise the real terror lies in Oil not in some psychopathically brainwashed religious fanatic. If the Arab states stopped exporting tomorrow the USA would collapse after the reserves run out (between 4-6 months) and the world would be a very very very different place, without a Shot being fired!

If though the price keeps rising (I think the first civilian / soldier shot for the label of 'freedom' whilst it was about Oil was price enough, but more dead today :-( ), and nothing else, with the USA trade deficits, the Financial mismanagement of the Bush Administration, personal debt levels, well rationing is a very very very realistic thing.

You see people as the supply drops and prices go up (the supply is dropping due to the emerging superpowers of China and India as well as most of the main fields have been exploited already, and also Peak oil, these things to include the terrorist threat, which may well be trigger of exponential inflation both in oil prices and within our economies, but not the cause... the seeds have been sown for 50 yrs plus.

So as oil rises in price, more people try and buy it and its supply does not meet demand for the normal day to day life of say USA then the government will step in straight away. At this time which may well be in the very near future the Government will have one priority and its true, to keep the military going wherever they are in action. To keep the government going to include all chauffeur cars etc.... but you will see maybe 8 hours a day of electricity supply in summer and 12 hours in winter, with rationing for Vehicle Fuel for civilians. At this time many things available in the shops now such as anything containing plastic, detergents, etc etc (1 in 3 non perishable items for sale in the world are manufactured using oil somwhere in the process (without transport...just to make it!). So these items will go up and up in cost(inflation as mentioned by John Bull in his post) and will soon not be available, due to lack of resources to make the item or its manufacturing cost being prohibitive to selling it at a profit. This will then mean that less money is circulating in the economy, more jobs lost and the knock on effects.

The worlds economies are based on moods and speculation, and also lots and lots of over lending. When (not if) the creditors need to call in there loans, mortgages, etc and the market traders realise that there is no magic fix this time, no USA bail out (though that is just a short term fix which makes things worse in the long run) no positive reports in the future, no new oil well when they start converting and liquidating their clients funds from oil based stocks and shares and investment to traditional things such as Gold, Palladium and speculate on the currency markets instead...well just see the effect within 1 year. Im not scaremongering but it will be such a different world I doubt if any of us will be able to recognise it. However I hope we can develop new technologies, educate the Americans on global warming and the dangers of boom and bust based economies, and by the time this happens in 15 years we will be ready. But if this continues... and I wont put dates or source this as it is confidential. I read a report yesterday shown to a board of a Major PLC in the world, it has been leaked and is circulating in the financial world... there worst case scenario for this event (i.e. less oil into USA than used and increases in prices) puts it at 3-5 years time by current trends, data and politics. This company in now funding some serious research into how they would survive and protect their assets if this happens now.

I really can not stress this enough, I work in Finance Oil
is massively important, we are at war over it, its price and availability is changing very very quickly, it could very realistically change the world we live in within 5 yrs. The feelings in the world of Finance is very very nervous about where this is going in the short term. It is much more likely than a Nuke being used in the USA by terrorists, or aliens sucking out your brain under license from the US government, Vendyl Jones and the Ark... all these 'theories' which scare people soo much and they really believe it....when all along the answer is right infront of out faces (or in our lungs).

(Hope I haven’t broken any rules etc, offering a charity bet above, but im certain and wouldn’t offer if wrong! all for charity and ATS development anyhow.)

People watch the price of Gold, Silver, palladium rise now in response to this...infact if I was looking for an investment over the next ten years, it would be these items or property.

MischeviouslyWatchingTicaTape

ps I am working at the moment so just wrote this quick,.... but I did read a communiqué a couple of days ago insinuating that the next King of Saudi Arabia now he has temporal and full rule, has requested the return of any investments made by Saudi Arabia abroad within the last 18 months. He wants the money returned to the kingdom (no doubt Saudi will buy most of the market free gold then!) within 6 months.... now me and a colleque had a quick look at this and we think its around the late $300 to $400 billion , that’s some serious money and they are only wanting it back for a reason, IE they believe the losses and administration costs of terminating these investments and redemption penalties for withdrawing early from original contracts, will actually still be worth more than leaving the money where it is. Well this is very very telling it means in essence that the New King of Saudi Arabia (though I know he ruled before) believes that after about 6 months time, most general investments abroad (therefore most companies) will be making huge huge losses. Trust me the Penalties and costs for pulling out of all of these investments is going to be MASSIVE. I don’t know if this has been reported in the press, been so busy for a couple of days, however its happening, so if anyone else has heard of it please provide a link, I cant because mine is a paper copy, and I wouldn’t and couldn’t host it anyhow as breaking client confidentiality.

MischeviouslyNotUsingSoap

(not soap you might think...dirty elf....but how many of you know that the main product in most soaps is OIL?) it really is everywhere.

Edit for PS

[edit on 9-8-2005 by MischeviousElf]

Cant wait for oil to run out, perhaps we can start to lead normal lives then. Instead of this fake fulled money, money world.

Adapt and enjoy!

MischeviousElf, yeah I heard that too about the withdrawing of $380 billion worth of foreign investments. Very telling like you say, I agree the world will be very different soon.

I've said it before here... we got a taste of this back in the 70's during the oil crisis --- rationing, short supplies, sky-rocketing prices (comparatively speaking of course). What the hell has the government and industry been doing for these past 30yrs? From my POV doesn't seem like they are at all concerned.

Renewable resources such as a methane and alcohol have been dismissed by this and that oil company study for years with the claim that these things are not cost effective. At some point renewable energy will become cost effective.

To all of the oil company apoligists on ATS I have these questions:

Are we there yet?

Or at what price point per barrel will that be?

Originally posted by mfourl
Cant wait for oil to run out, perhaps we can start to lead normal lives then. Instead of this fake fulled money, money world.

Adapt and enjoy!

I wouldn't count on running out of oil anytime soon. Extracting crude from the tar pits has become economically viable with current oil prices, and they can make vegtable based fuels as well.

As far as getting rid of the fake money world, even if we ran out of oil tomorrow I doubt it would change it since the oil co's could start selling hydrogen or electricity to charge our cars or whatever the next fuel source is.

why can production "not be raised", other than OPEC wanting to force prices higher?

There aren't any "diminising" resources, other than reserves being used. The same amount of oil fields are operating and more going online in nations where enviro concerns have been squashed by need and government.

Russia has unexploited reserves, and so do we- we just want to shoot ourselves in the foot and not exploit them.

I don't know the answers to the question but I will ask anyway. If production can't be raised couldn't it be because the refineries are operating at peak capacity, there is only so many workers, drilling rigs, tankers ?

My theory is that OPEC is creating their own supply and demand and that is why they won't produce anymore than they are. The Demand hasn't changed so take away the supply to raise the prices. IN the 1990's OPEC’s capacity was over 37 million barrels a day...or billion. Now they are doing 22million/billion. That is just outrageous. I hope they shot themselves in the foot doing this. They have always talked about producing 100million barrels a day...talk is as far as it will probably ever go.

One way we could solve this problem is just take the countries....Stick a flag in them and call the America(JUST A JOKE)

Up until recently OPEC have always been able to increase production . That is true.

But I did read a very interesting article about this which explained that if an oil field is over harvested too quickly it can make it impossible to harvest all th oil in the oil field.

If you pump the oil out too quickly it is inefficient, some oil reserves in that field which otherwise would have been harvested are left. So by increasing production to keep the price down now you are making it impossible to get all the oil later.

Just checked cnn.com and oil as of about 3pm eastern time was $64.85. $70 isn't that far off. I paid $2.63 a gallon for gas yesterday.

I would take mischevious elfs bet....except for the fact that I almost completely agree with everything he says....

How about this Mr. Elf....I will take your 75.00$ U.S bet, but I raise the timemline by one to two months. You claim by January prices will be 70-75, I predict by November or December orices will be that much.

Of course if this does not violate any ATS rules of course. Donated to a charity of the winners choice.

Care to take that bet?

MischeviousElf, thanks for a very informative post. I am definately interested in hearing more about the commo you are getting. Here is a message feed from 2002 about the Saudis withdrawing their money from the US due to the lawsuit brought against them by 900 9/11 surviving families. This thread has some great points in it, but the one that caught my eye was this comment:

www.pakdef.info...

As for the Saudi withdrawl of funds, the problem will only be measurable if the Saudi Government (like Mahathir had suggested) transfers liquid funds (Gold and metals) to the EU Bank. That would impact markets and would then make the impact of the commercial withdrawls even more painful.

...Would you agree with this assessment? I am very curious to know how this financial pullout will progress and what signs we can watch for. Your perspective is unique, so thanks for sharing the data.

Also, are the Saudis still fearing these lawsuits or have they been quashed already? Is this still part of the reason they want to pull their investments? To prevent freezing of those assets?

[edit on 10-8-2005 by smallpeeps]

Thanks for the interest in what I posted guys...Is late in the UK so smallpeeps and the U2U sent I will try and post tomorrow to that...and thanks for the info and perspective on economic theory..

phoenixhasrisin I agree with you about the price being that high probably sooner, However I learnt some important lessons nearly a decade ago about gambling soo leave it be now.. if anyone would like to take me up on the offer? thanks though.....

Just to clarify, I studied some of the science behind Oil in Uni and Now working in personal finance...I am not a broker or work in the 'city' but its all interlinked and as is known whispers travel fast when it affects you and your clients directly....mm soo just to show something which supports the information going around and that I can post here:

Not the Best Source - But No Smoke Without Fire!

This is not a new stance for the new King. He has been actively restructuring the Saudi economy for some time, looking to diversify Saudi Arabia from dependence on purely Oil and also in guiding Saudi Arabia to be create stronger alliances with other sympathetic Arab states and diminish US economic control of the reason. Always remember one thing, there is a marriage of convenience between Saudi and the US. But it is not a happy one, as mentioned above by another poster there are still bitter rivalries between the countries after the mugging of the Saudi economy by the US to pay for the first Gulf war. (it is said that when Colin Powell met the Saudi King and showed him satellite photographs of Iraqi tanks on their border and invading Kuwait, within two hours of that initial meeting full co-operation had been negotiated.... Colin Powell then to wrap up the meeting and finalise mentioned a cost/deal for the military operations.... the King waved his hand at Colin and as much as said bill us, walking away from him, that a discussion about money wasn’t right at that time...However the final bill was huge! and well OTT (don’t know if posted on tread linked by previous post apologies if so), So this recent sting between the relations, to Include the fact that as the Centre of the Islamic world they arnt very happy to say the least about the massive amounts of money and arms that the US gives Israel, whilst billing them and sucking all there oil and money out in investments abroad. The new king seems to want to change this situation and is prepared to pay the price, or as I said originally is making a move on the future of global investments.

Look below to what he was saying in 2002:

Those who would propagate the myth that Saudi Arabia's importance to the U.S. -- or any other trade partner, for that matter -- rests solely on its ability to supply oil overlook several other aspects of the Kingdom. Saudi Arabia plays a global role in a number of key ways. For one, Saudi Arabia is the cradle of Islam, the site of its two holiest cities and the focal point of faith for the world's 1.2 billion Muslims. Occupying most of the Arabian Peninsula, Saudi Arabia is one of the largest countries in the world – almost one-fourth the size of the U.S. and about half the size of Europe. The Arabian Peninsula has for thousands of years been an important culture and trading centre. Its geographic location has held a great strategic value for east-west trade and the military. Today, the Saudi market for goods and services is the largest in the Middle East. But Saudi Arabia is far more than all of this. The kingdom has followed a constructive policy since its establishment more than 70 years ago. It is a policy based on cooperation, respect, justice and understanding. Now, let me turn for a minute to a subject about which we in the Kingdom are quite excited, the restructuring of Saudi Arabia's economy. Today, Saudi Arabia is undertaking an ambitious plan to restructure its economy, a massive effort that will not only bring strong economic growth in the coming years but will also create excellent investment opportunities, including those from the United States.

and :

The northern line will permit Saudi Arabia to exploit phosphate deposits in the north, which are one of the world's largest. The railroad will be used to transport phosphates to the Arabian Gulf with plants, utilizing the Kingdom's natural gas resources, will produce fertilizer. This project will help us realize the goal of becoming a major producer and exporter of fertilizers.

Source Org

(when I say look what he’s saying, well it is a Kingdom any official just is a mouthpiece)

So these factors the current occupation of a country in the region and threatening words to others, may be bringing this Marriage of convenience to divorce or separation. There’s a potentially richer, in the medium term, partners in town like China and India.

Think we should send Bush and King Abdullah to Jerry Springer to sort it out! and then bush to Reality Rehab for a few weeks too. Seriously though of course what im trying to display does not take into account the personal Bush and Saudi connections very active when Jnr was still a drunk. Its not taking into account Al Queadi etc, buts IMHO its the main ingredients in the Cake.

In May 2003, George W. Bush set out his vision of a Middle East Free Trade Agreement (MEFTA). This was an idea born on the politically oriented basis of “those who trade together stay together” rather than from any US economic standpoint. Bush hopes that the MEFTA — perceived by some critics as a political tool in the “war on terror” or, alternatively, designed to further US global hegemony — will encompass some 20 regional countries, including Israel, and be fully consolidated by 2013.In the meantime, the US administration is pushing for bilateral Free Trade Agreements (FTAs) with various Arab states, including members of the Gulf Cooperation Council (GCC).This is causing concern throughout the region among those who are suspicious of the Bush administration’s motives. Why, they ask, is the US so keen to sign up to bilateral agreements when it could more easily negotiate an FTA with the GCC as a single entity, and “why are such FTAs being offered mainly to smaller countries”?Ahmad Humaid Al-Tayer, a former UAE minister of communications, recently expressed his own doubts concerning the divisive trend in the Gulf News: “Instead of walking the path toward becoming a heavyweight economic bloc on the international stage, the GCC may end up with fragmented and small satellite economies without any leverage against world giants...”

Source
.......................................................................................................................

Production you are right is flexible and this has been Saudi's Ace Card in the past 50 years, they have had the ability to raise production and still can and infact are doing so. However CHINA and INDIA now want the oil. That is the worlds Largest and Second Largest Populations all using more electricity, plastics (not just to export to the west now), buying cars, etc etc. Also some indications are that Oil may have peaked in Many wells. Also its not just a tap, it takes more and more engineering and investment to extract the oil, now and therefore time to do these things. Another thing no one has mentioned... the war in Iraq and Afghanistan are burning up Jet Fuel and diesel at alarming rates, further confounding the situation. Actually its quite funny in retrospect. The US invades Iraq to secure Oil, and ends up with higher prices and no complete control yet years later to the Iraqi Oil as the world knows why they went in.

Anyhow becoming a long post, However would like to mention something’s before I sign off. John Bull soo right.
You’ve probably all seen a TV clip of and Oil Well being first tapped, the oil is in the Porous rock under pressure with usually natural gas. They are both produced from the same organic process. Now depending on whether it is a Salt Plug over the reserve in an fairly open pocket, or if its just in a section of porous rock under a non permeable one the actual method of forced pumping, or raising the flow of oil from the well above that produced naturally from the pressure of Gas rising the Oil. Now for example in the North Sea Reserves off the UK they pump seawater down the well, this Increases pressure and forces the oil out more quickly. However the sea water then creates pressure pretty uniformly around the chamber, forcing some reserves that were working there way up to the well opening back. In addition this sea water also mixes with the oil making a polluted and unusable amount of the original Oil left in this solution. It is impractical and very expensive to try and get any remaining Oil from this solution...just look at what oil slicks do in water! From memory I believe an estimate I sourced years ago stated around 5-9% overall loss of a Field if this process is overused. Well Saudi Arabia has been using this on all their wells for years.

Infact From next year from a very independent, respected, and Non Biased expert in this field thinks that maybe from nest year the world supply will be 2-3% less every year, Peak Oil may arrive next year or be here now! And supports much of what I said:

The one thing that international bankers don't want to hear is that the second Great Depression may be round the corner. But last week, a group of ultra-conservative Swiss financiers asked a retired English petroleum geologist living in Ireland to tell them about the beginning of the end of the oil age. They called Colin Campbell, who helped to found the London-based Oil Depletion Analysis Centre because he is an industry man through and through, has no financial agenda and has spent most of a lifetime on the front line of oil exploration on three continents. He was chief geologist for Amoco, a vice-president of Fina, and has worked for BP, Texaco, Shell, ChevronTexaco and Exxon in a dozen different countries. "Don't worry about oil running out; it won't for very many years," the Oxford PhD told the bankers in a message that he will repeat to businessmen, academics and investment analysts at a conference in Edinburgh next week. "The issue is the long downward slope that opens on the other side of peak production. Oil and gas dominate our lives, and their decline will change the world in radical and unpredictable ways," he says. Campbell reckons global peak production of conventional oil - the kind associated with gushing oil wells - is approaching fast, perhaps even next year. His calculations are based on historical and present production data, published reserves and discoveries of companies and governments, estimates of reserves lodged with the US Securities and Exchange Commission, speeches by oil chiefs and a deep knowledge of how the industry works. "About 944bn barrels of oil has so far been extracted, some 764bn remains extractable in known fields, or reserves, and a further 142bn of reserves are classed as 'yet-to-find', meaning what oil is expected to be discovered. If this is so, then the overall oil peak arrives next year," he says. If he is correct, then global oil production can be expected to decline steadily at about 2-3% a year, the cost of everything from travel, heating, agriculture, trade, and anything made of plastic rises. And the scramble to control oil resources intensifies. As one US analyst said this week: "Just kiss your lifestyle goodbye."

The Gaurdian

BBC WRITTEN IN JUNE 2005 $40 a barrel then!

Soo to surmise more demand then supply, to exponentially extrapolate and compound year on year as China and India grow, and we produce less and less. The beginning of the manifestation of the new Saudi Model for their Economy, with strained relations behind the smiles. The worlds richest family believe that investments abroad are bad now, risky. Independent Experts believing Oil has Peaked or is about too. Bad management of Current reserves. Massive historical lack of investment in alternative energy sources developments and infrastructure... to be honest it looks not too good IMHO.
The real effects of this situation which really has long been coming to a Head has been offset so you may feel comforted by the rise in the dow recently…but it’s a hall of mirrors and propped up by the recent Housing Market Booms in both the UK and the US everyone has nearly refinanced their homes to the max, using the funds to keep the economy going by buying new cars etc. This has now peaked in the UK… however next year when the American real estate Prices peak too after summer/spring, oil is at ?? maybe $100 a barrel…. Everythings more expensive and scarce due to oil price and lack of. Well do you really believe that the raes will be as low as they have been in the US and the UK? Nope…they wont…in addition lenders may be forced to call in their loans if there is a Real Big Crash…read the smallprint on your Credit agreements and Mortgages Guys, oh and go for the lowest fix rate you can.
Anyhow Maybe all good news today about Siberia permafrost melting due to global warming...so the next 10 -20 years could force humanity to change, adapt and survive in new ways, but for us going through that much overdue and needed change and sacrifice, It wont be easy.
MischeviouslyOrderingSolarPanelsAndABike
Regards
A solar powered Elf!

Well.....

The price is over $66 now.

Still rising...

over $67 dollars at close of business today for American Sweet Crude just middle $66 for Brent Crude in the UK (not as good as sweet crude more fractioning needed (the process of breaking it up into petrol diesel etc in huge towers).

This is not good because all we need is an unexpected natural or man made event to push it into HyperInflation.

One real concern here and something else I talked about today the the actual process of knowing how much oil is actully left. You think we know? the Oil traders around the world have no hard actual numbers as Especially in relation to OPEC. Back in I believe the early 90's or late 80's OPEC placed limits or caps on the 'amount' in barrells a day they could pump as members.

That Actual amount was determined directly proporsional to their 'stated' oil reserves.... So in essence the more Oil you said you had the more you could pump. When this new OPEC ruling came into force Kuwait immediatley revised their Stated Reserves and added another 50% overnight! This nearly doubling their profits with that one act, as they could now pump twice as much!

In addition the actual reserves are never independantly verified, anywhere in the world.... so the actual true figures are unknown and lends more credence to a Peak OIl ituation or simply more demand than supply for the indefinate future. Bith are likely to have massive complications as other posts and mine in this thread have shown.

MischeviouslyWaitingForMYSolarPanel

Elf

Edit for spelling and layout (elfedit)

[edit on 12-8-2005 by MischeviousElf]