50 shades of black

Oil Price Could Fall To $30 If Global Deal Not Extended

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On 6/15/2019 at 11:20 AM, ronwagn said:

ICE Vehicles can vastly improve by adopting natural gas as their fuel. I think it is much more realistic for large vehicles than electricity. CNG and LNG infrastructure is growing rapidly around the world. It is serving trucks, cars, and ships.Natural gas costs at least a third less than gasoline or diesel. 

There are currently twice as many natural gas vehicles as there are electric vehicles.They have a lot of catching up to do.

America is not representative of natural gas use in vehicles around the world yet we have the best natural gas pipelines throughout all populated areas. Our supply is virtually unlimited for all practical purposes. 

Natural gas will supply most of the electricity for electric vehicles of all sizes. Why should it have to be turned into electricity first? Does that make sense? Think of how that would overburden our electrical system and require far more construction. How much more vulnerable is our electric system than our natural gas alternative?

 

Not to say your wrong but the problem is going to be once everyone go gas then the price will go up just like it did in the late 90's and then you will see people looking at some other way to save money and if I had to guess oil prices will be down by then and a few will be going back to oil and also the bigger trucks don't run as well with a load on the on NG I know I drove a few of them in my time.

 

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On 6/14/2019 at 1:07 AM, BenFranklin'sSpectacles said:

Short term clout, maybe.  The problem is that any rise in prices will reduce their long-term market share.  If we define "clout" to mean "ability to increase the sum total of future profits", then no, I don't think they have clout. 

We can lump Russia in with Saudi Arabia, but are we convinced that relationship will last?  How much tolerance will Russia have for lost market share? 

Admittedly, I don't know how traders operate.  My naive guess is that massive price spikes occurred because people believed there was no replacement for Middle Eastern oil.  There's some psychological inertia in that human beings will expect supply restrictions to have the same effect in the future as they did in the past.  However, traders should slowly realize that the Middle East is replaceable.  This will become blatantly obvious in the next 5 years.  Once that happens, there will be no reason to fear OPEC restrictions.  It will become routine for OPEC to attempt price manipulation, and the market to quickly replace that production.  At that point, how high could oil possibly spike?

Doesn't this assume that the 'shale oil miracle' actually has some legs on it and that it can keep up it's present level of productiom for at least a decade or so?

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35 minutes ago, Douglas Buckland said:

Doesn't this assume that the 'shale oil miracle' actually has some legs on it and that it can keep up it's present level of productiom for at least a decade or so?

I would suspect that Suncor will shortly figure out how to do solvent extraction of Canadian heavy oilsands oil in volume and that will be a nice replacement for the entire Middle East.  I also predict an absolute explosion in rail tankcar construction. That oil will get upgraded, partly refined, and shipped.  Pipeline or no pipeline.  Just watch.  

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5 hours ago, Stephenk said:

Not to say your wrong but the problem is going to be once everyone go gas then the price will go up just like it did in the late 90's and then you will see people looking at some other way to save money and if I had to guess oil prices will be down by then and a few will be going back to oil and also the bigger trucks don't run as well with a load on the on NG I know I drove a few of them in my time.

 

There have been many improvements with new engines designed for natural gas vehicles. Better tanks that allow CNG or LNG and even low compression natural gas. I can go into great detail if you desire. I have spent eight years studying the progress and boosting the technology as the best option. 

Regarding competition, you are right. Coal is the dirtiest fossil fuel. Marine bunker fuel is next, then diesel, which is worse than gasoline. Then natural gas which is so clean you can burn it on your stove inside your house. Hydrogen is cleaner yet but is not affordable and is usually made out of natural gas. Biogas is the best green choice because it helps get rid of waste products and turns it into fuel.

In South America they have three common choices for fuel all in the same vehicle. Ethanol, gasoline, or natural gas. The more different fuels that can be used the better. It allows competition and lower prices for the best fuel. 

https://duckduckgo.com/?q=ngvglobal.com

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An interesting article with an interesting perspective. Anyone has thoughts on fast charging EVs...

https://www.zerohedge.com/news/2019-06-23/inconvenient-truth-electric-cars

The New York Times reports L.A. to Vegas and Back by Electric Car: 8 Hours Driving; 5 More Plugged In.

The NYT author, Ivan Penn, drove a Chevrolet Bolt from LA to Las Vegas, a 540-mile round trip that many people make regularly.

Penn reports that in addition to eight hours on the road, he spent close to five and a half hours charging the car. That's about 41% charging time.

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If oil drops to 30 Hormuz will light off and bring it right back up

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On 6/16/2019 at 8:27 AM, BenFranklin'sSpectacles said:

AcK, I was being far too flippant the first time I responded, and I apologize.  That's what I get for posting while exhausted.  Let me try again.

I'm not quite following this comment. You would yet say what about commercial EVs within the PV category? 

EVs are still a small fraction of the market, but my point was that current sales matters less than what's coming down the 5-10 year R&D/capital investment pipelines.  Everything about these pipelines suggests that EV sales will compound rapidly.  There may be years of brief pauses in growth, but these pauses are statistical anomalies.  That's what happens when only a handful of products have reached the market.  As more automakers enter the EV space, the curve will smooth into an inexorable rise. 

Yes. 

1)  Municipal buses are being sold as we speak.  China is already adopting them en masse.  Europe and North America are in the trial stage where municipal operators buy a handful for testing prior to making significant purchases.  We'll see those significant purchases in the next few years. 
2)  Line-Haul trucks are in development.  Tesla Motors is working on a semi with two variants: 300 mile range and 500 mile range.  IIRC, 500 miles covers 70-80% of the trucking market.  Nikola Motors is building a long-haul truck by incorporating a hydrogen fuel cell range extender.  I think of this as a pseudo-electric truck.  As soon as Tesla & Nikola announced their products, Cummins followed suit.  There are probably more offerings, but I stopped reading when I realized the entire industry would follow Tesla & Nikola's lead.  The point is that Class 8 electric trucks are coming, likely within 2 years.

Effectively all of them.  The only exceptions are trivial cases, such as motorcycles/scooters (these will be electrified) and lawn equipment (these don't consume enough fuel to matter).  Aside from the trivial cases, the combination of LNG and CNG can do anything oil can do:
1)  Methane can be used as a chemical feedstock
2)  High-horsepower engines - tugs, ferries, generators, container ships, etc - are perfect use cases for LNG.  Not only are these being built new as NG vehicles; the old ones are being converted. 
3)  Municipal commercial vehicles, such as buses and delivery trucks, are already being purchased.  E.g. San Antonio is converting their entire fleet of municipal buses to CNG to reduce pollution. 
4)  LNG long-haul trucks are available.  These are esp. useful in areas with high diesel costs. 
5)  CNG variants of passenger vehicles exist.  I believe Italy has the highest market penetration

NG vehicles are nice because they require minimal infrastructure change.  You're still making ICEs in the same factories on the same equipment.  You can even retrofit some of your old engines at minimal cost.  This gives NG the potential to displace oil quickly in the event of price spikes. 

 

You can also build or convert ICE engines of any scale to dual fuel gasoline/CNG, diesel/cng, diesel/lng.  

 

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On 6/21/2019 at 9:42 PM, Douglas Buckland said:

Doesn't this assume that the 'shale oil miracle' actually has some legs on it and that it can keep up it's present level of productiom for at least a decade or so?

Maybe you can tell me what the decline rate of natural gas is in shale oilfields. What percentage of natural gas is left after the oil is extracted? 

I believe that the world will convert to natural gas to replace oil. This may only happen when diesel and gasoline become too expensive to compete with natural gas. Liquid fuel is very convenient and is hard to give up but natural gas is very cheap by comparison. 

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6 hours ago, ronwagn said:

Maybe you can tell me what the decline rate of natural gas is in shale oilfields. What percentage of natural gas is left after the oil is extracted? 

I believe that the world will convert to natural gas to replace oil. This may only happen when diesel and gasoline become too expensive to compete with natural gas. Liquid fuel is very convenient and is hard to give up but natural gas is very cheap by comparison. 

If oil and diesel become 'too expensive' and the world converts to natural gas, keeping in mind that natural gas production is generally a by-product of oil and gas exploration, what will be the financial 'reward' of exploring and reducing to possession gas only?

Oil and gas exploration is a very expensive business with high risk, I am guessing that exploring for gas only (what would you do with any oil found?) would not attract many players.

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19 hours ago, Douglas Buckland said:

If oil and diesel become 'too expensive' and the world converts to natural gas, keeping in mind that natural gas production is generally a by-product of oil and gas exploration, what will be the financial 'reward' of exploring and reducing to possession gas only?

Oil and gas exploration is a very expensive business with high risk, I am guessing that exploring for gas only (what would you do with any oil found?) would not attract many players.

Many very large natural gas finds have made big news in recent years. Israel, Australia, Egypt, East Africa, Cypress, etc. They are all offshore finds I believe. 

My question is more about American oil and gas fields that have already been found. How difficult is it to tap the remaining natural gas after the oil well is abandoned, or is the natural gas all gone by then. 

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All true Ron, but the service companies, rig owners, etc.... who provide the equipment and services would likely have to downsize if the international demand for high profit crude disappeared and their equipment and personnel were now being employed to find lower profit gas.

Exploration is a very capital intensive game, more-so offshore, and it would take much longer to pay off ( if that is the correct term) if the product is now natural gas instead of oil. I believe many firms would just get out of the game.

I believe that generally the gas produced in an oil well is due to the gas breaking out of the oil as it is brought to the surface and the hydrostatic head is reduced. If that is the case, and the volume of oil produced is no longer economically viable, then the volume of gas would be reduced proportionately.

Mike Shellman could probably give us a detailed 'tutorial' on this if he happens to read this.

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On 6/12/2019 at 9:19 AM, BenFranklin'sSpectacles said:

I feel like looking at this through an idealistic lens: 

When a nation adopts dangerous ideas, it's safer for the world to destroy that nation than to let the infection spread.  Thus, nations aren't being destabilized to prop up the price of oil.  They're being destabilized to prevent violent ideas (Iran) and economically unsound ideas (Venezuela) from infecting other nations.  This works partly because it strips dangerous nations of the resources they need to spread their ideas and partly because it makes an example of them. 

Most of the Middle East is an obvious example of dangerous ideas.  

I wonder why? Maybe it has something to do with imperialism of the U.S.

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On 6/13/2019 at 8:54 AM, AcK said:

The build after build is in the US - since weekly data is published. OECD EU/APac data is also published on monthly basis by IEA (although undergoes substantial revisions before stabilizing). The problem is OECD consumption is more or less flat (well 0.2-0.3% growth). What you need is inventory data for China/India/now SouthEast Asia (since Trump started his trade wars) - that is not available.

And this creates a lot of problems. See below - nobody had any idea for how long China has been preping for the trade war. They are sitting on 25-50% (various sources) more inventory than normal and refuse to buy US crude till Trump continues with his tirade.

https://orbitalinsight.com/crude-markets-remain-adequately-supplied/

Lol at buying US oil. The US is a net importer. 

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59 minutes ago, HermitMunster said:

I wonder why? Maybe it has something to do with imperialism of the U.S.

Didn’t WWII and Sharia Law action show the need for a little imperialism? 

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3 hours ago, Boat said:

Didn’t WWII and Sharia Law action show the need for a little imperialism? 

The sad fact is that the US was asked to 'step in' to help resolve international issues....once the issue was resolved it was viewed as imperialism. Not always the case, but often.

How many times in history has the US been criticized for being isolationists?

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14 hours ago, HermitMunster said:

I wonder why? Maybe it has something to do with imperialism of the U.S.

The Middle East has a history of religious extremism, violence, conquest, and human rights violations stretching back at least to the 600's AD.  That has nothing to do with the US. 

To wit: the US didn't even have a Navy until provoked by nations who happened to be followers of a certain Middle Eastern religion

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13 hours ago, Boat said:

Lol at buying US oil. The US is a net importer.  

The US is a net exporter of coal and natural gas.  Within a year or so, it will be a net exporter of oil as well. 

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On 6/25/2019 at 5:00 PM, HermitMunster said:

I wonder why? Maybe it has something to do with imperialism of the U.S.

More likely it has to do with Islam. 

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WTI Oil prices see downward movement again back to level $45--$40. There is huge supply and inventory base in the market from US, Russia, Saudi, Iran and other OPEC countries. It is due to global economical and geographical tensions, the supply side is getting hampered and demand is not getting catered properly. Once the trade truce ends, these inventories will flood in, leading WTI crude to see the bottom again.

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On 6/25/2019 at 6:00 PM, HermitMunster said:

I wonder why? Maybe it has something to do with imperialism of the U.S.

And:

5 hours ago, ronwagn said:

More likely it has to do with Islam. 

I would suggest a far different explanation.

The people (and rulers) of the Middle East live in a culture of shame.  These are peoples and societies that know that they have been left behind, that they are still living in the seventh century, while the rest of the world has moved on.  That realization has left he peoples embarrassed s their backwardness, deeply ashamed at their failures as people, and humiliated that they, and not some other society, is mired in a time warp of 1300 years ago. 

The accumulated shame and humiliation is exposed in outbursts of extreme violence and rage, with the rage directed also at "Westerners" and at "Jews," whom the more angry parts will then go capture and behead.  When the radicals do these beheadings, they have their faces fully covered; that covering is again an expression of humiliation and shame at being backward.  They know that they are being backward and their acts are the expressions of a backwards people, but they cannot help themselves. A proud people would not be hiding their faces. 

The collective humiliation and deep feelings of shame lead to bizarre results.  So you have these Arab sheikdoms building these cities mimicking the Western cities of New York and London, with gigantic skyscrapers of steel and glass, up 100 stories, even though they are parked on vast stretches of empty land that costs nothing.  Those skyscrapers will cost a fortune to cool, being huge heat sinks and totally inappropriate to the environment; yet they get built anyway, just to prove to the world that the Arabs, too, are part of the vanguard.  But of course they are not, they are still a peasant desert society mired in the seventh century. 

A more logical building would be one of no more than three stories, the exterior with face brick of mud or even imported wood planks, the better to shield from the immense solar heat. But because the west does not build that way, neither will the Arabs. Backward societies have no comfort in their backwardness; all they feel is humiliation. And that is what drives the Arabs to buy the most expensive of everything, including of course the A-380 Airbus fleets, because they are the biggest and the most expensive, thus demonstrating that the Arabs, too, really do belong.

The society where shame is the dominant ethos is Egypt, a nation that cannot shake off backwardness, even fifty years after the building of the stupendous Aswan Dam. It is a society that cannot provide even basic sanitation for its people.  And they feel great humiliation in this, which is what has led to the creation of the Muslim Brotherhood.  What I find fascinating is that the peoples of the West do not intuitively understand what is driving this radical-extremism reaction.  It is their feelings of shame.

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Oil prices increased 3% on Wednesday 26th June following the report by the EIA that US crude inventories dropped by nearly 12 million barrels. There is no rational explanation to account for what is more than 1 day of USA production.  What is the margin of error on these numbers since i would put odds on there being a massive build next week. 

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(edited)

8 hours ago, Jan van Eck said:

Those skyscrapers will cost a fortune to cool

One has to marvel at the engineering feat in cooling these towers 😎

Edited by Marc Savoie
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19 hours ago, Jan van Eck said:

And:

I would suggest a far different explanation.

The people (and rulers) of the Middle East live in a culture of shame.  These are peoples and societies that know that they have been left behind, that they are still living in the seventh century, while the rest of the world has moved on.  That realization has left he peoples embarrassed s their backwardness, deeply ashamed at their failures as people, and humiliated that they, and not some other society, is mired in a time warp of 1300 years ago. 

The accumulated shame and humiliation is exposed in outbursts of extreme violence and rage, with the rage directed also at "Westerners" and at "Jews," whom the more angry parts will then go capture and behead.  When the radicals do these beheadings, they have their faces fully covered; that covering is again an expression of humiliation and shame at being backward.  They know that they are being backward and their acts are the expressions of a backwards people, but they cannot help themselves. A proud people would not be hiding their faces. 

The collective humiliation and deep feelings of shame lead to bizarre results.  So you have these Arab sheikdoms building these cities mimicking the Western cities of New York and London, with gigantic skyscrapers of steel and glass, up 100 stories, even though they are parked on vast stretches of empty land that costs nothing.  Those skyscrapers will cost a fortune to cool, being huge heat sinks and totally inappropriate to the environment; yet they get built anyway, just to prove to the world that the Arabs, too, are part of the vanguard.  But of course they are not, they are still a peasant desert society mired in the seventh century. 

A more logical building would be one of no more than three stories, the exterior with face brick of mud or even imported wood planks, the better to shield from the immense solar heat. But because the west does not build that way, neither will the Arabs. Backward societies have no comfort in their backwardness; all they feel is humiliation. And that is what drives the Arabs to buy the most expensive of everything, including of course the A-380 Airbus fleets, because they are the biggest and the most expensive, thus demonstrating that the Arabs, too, really do belong.

The society where shame is the dominant ethos is Egypt, a nation that cannot shake off backwardness, even fifty years after the building of the stupendous Aswan Dam. It is a society that cannot provide even basic sanitation for its people.  And they feel great humiliation in this, which is what has led to the creation of the Muslim Brotherhood.  What I find fascinating is that the peoples of the West do not intuitively understand what is driving this radical-extremism reaction.  It is their feelings of shame.

Maybe but I believe that shariah law reinforces everything that leads to that shame. Shariah law is a form of totalitarianism that cannot be overcome without great difficulty. It happened in Turkey and great advances were made. Now Islam is back in control. 

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