what if the price of oil declines significantly?

Replies to This Discussion

Permalink Reply by HOWARD JOHNSON on August 3, 2008 at 12:59pm

The cost of oil is understated by 30 dollars per barrel because by the accout of the cbo we spend 260 billion per year of our defense budget to procure the oil. how is that being paid for yes by taxpayer subsidy so we should impose a 30 dollar tariff on imported oil.this would not inclue canada or mexico since we spend no money procuring oil from those countries but it might make the middle east oil 50 instead of 30 dollars per barrel more expensive. even without this cost i do not see oil going back down

▶ Reply to This

Permalink Reply by Rexrino on August 3, 2008 at 1:39pm

It's like any other commodity and subject to the laws of supply and demand. I'm not sure what it would take to bring the cost down. I doubt it will fall much further than 100.00 per barrel. I anticipate it is a strategic move to test the waters during an election time, in so much as this election is of historical significance. Maybe, maybe not.
Many people have been mislead to believe the upheavel in Mexico is about drugs. It's not. It's about Oil, power and revolution.
Check this out:http: //www.counterpunch.org/ross07152008.html

New Hydrogen Technology:

If this breakthrough in hydrogen technology is the real deal, it will effect the price of, not only Oil, but NG as well.

http://earth2tech.com/2008/07/31/mit-solar-energy-storage-breakthro...

▶ Reply to This

Permalink Reply by Rexrino on August 12, 2008 at 9:37pm

I think it is becoming commonly accepted that hydrogen technology will be use primarily for fixed location electrical production, such as, homes and small business location. The technology for cars is, as you say, into the not so near future.

It may be possible to develop Hydrogen storage batteries along side of solar power generators and, parabolic sterling engine machines (which are being built in California), for the purpose of storing energy for nighttime distribution. That technology is probably going to come online within the next ten years, as a result of the recent breakthrough at MIT with the Norcera Group.

▶ Reply to This

Permalink Reply by Rexrino on August 12, 2008 at 9:42pm

I think the activities and lack of dramatic increase in oil production is slowly making the common person aware that this it true.

▶ Reply to This

Permalink Reply by Robert D. Jones on August 13, 2008 at 8:06am

This is actually addressed to the several folks posting over the past couple of days. I'm going to try to put this forum's focus back on the original subject.

Let me restate that my immediate and primary goal is to reduce and then eliminate our dependence on FOREIGN owned oil. All else is secondary to that purpose. If you want any proof of the need, just look at the situation between Russia and Georgia -- and the fact that Russia had confidence that no one would do much if they invaded a neighbor state because Europe and most of the rest of the world is dependent on Russian Oil and Gas.

We can easily find ourselves in a similar position in the middle-East. The immediate solution is to ease the US demand -- and here I support the PIckensPlan because using wind/solar can provide relatively swift release of a reasonable percentage of power generation resources for other applications. It is also critical that we develop our own internal petroleum resources. It is not true that we can not drill our way out of the strategic problem, we can. It is not that we force the Oil companies to sell only to internal buyers, but that we CAN buy oil from US companies, not potentially hostile foreign powers. At present, we don't have that option. It is also a significant fact that increasing US production (oil, gas, oil shale, coal) would add a number of jobs to the market.

Over and above -- we need to develop more refineries, nuclear power generation facilities (and change the rules to allow re-use of virtually all the spent fuel instead of mandating useful material be stored forever), and additional wind and solar facilities as rapidly as possible. To do less is simply inexcusably stupid from a national security perspective.

Howver, to count on these actions to significantly reduce the cost of power generation or personal transportation ignores reality. The cost of energy will continue to fluctuate around some mean figure with demand variances until there is a major scientific breakthrough in energy transfer and/or storage. For example, the single greatest event that would reduce the cost of energy (nationally and worldwide) would be the perfection of ambient temperature super-conductors. But, don't hold out much hope for that one for a couple of generations or so.

Back to reality. The really nice thing is that the by-product of almost all the above is that it also helps clean up the environment. It will also reduce the quantity of petroleum and petroleum products we use; it will not eliminate it. If you look around you right now -- most everything you see has a petroleum component. That need will continue for the forseeable future. All we are really trying to accomplish is:

1. Begin using proven resources within the US to reduce and then eliminate our dependence on foreign owned resources. First, to eliminate their ability to manipulate us based on withholding supplies. Second, to reduce the transfer of US wealth to people and nations that are hostile to our way of life. There are other strategic reasons, but those two are paramount.

2. Signal that we are going to begin developing proven resources inside the US. That will ease the anxiety regarding supplies that drives price of "oil futures". We have seen that happen already, to some extent.

I do note that the operating criteria of my initial question has happened. The price of oil has gone down and, guess what, much of the media (and public?) attention is focused on the fact that gasoline prices are going lower every week, not that our dependency has NOT been reduced.

3. Develop more and more viable alternative fuel sources (personally, I don't think using food to produce fuel makes much sense -- using waste vegetable product to make fuel is much smarter). That will drive down the demand for petroleum. Whether price follows in the present environment is a function of how much oil is produced by OPEC. But, developing our internal production reduces OPEC's ability to drive the boat, so to speak. That would be a good thing.

There are a number of other good reasons for continuing to push the various initiatives.

Hydrogen is an excellent fuel source -- but not for direct combustion. To generate electricity it will be great. I'm pretty sure that all of you recognize that the existing grid doesn't care where the electricity comes from. Therefore, the more we generate using all alternative methods, the better off we will be.

Ground transportation is another story. Electric power is probably the answer. The crunch is how we generate the power, how we store the power, etc. At present, best I know, battery technology is improving, but it is still a long way from being truly viable in the real US transportation environment. The us of CNG in the interim has much to recommend it -- and almost an equal amount of negatives. I, frankly, don't know if it is viable or not. Mr. Pickens seems to think it is. His track record is pretty good in this arena. But, I still need to see more data before I start converting my vehicles to CNG.

Comments?

Bob Jones

▶ Reply to This

Permalink Reply by Rexrino on August 13, 2008 at 9:55am

Good Points Bob.

The entire, "Oil for Now", argument rests on the premise that there will not be a grassroots surge towards using less petrochemical products and more organic, or less evasive chemicals by the general public.

However, the one thing that actually promotes such change in behavior, is the high price of food, gas, and other base commodities. These prices force people to find alternative to their use. I'm seeing a tremendous surge in the search for eco-friendly, alternative-solutions, taking hold of the public mind as they are successful in their search.

Most of this movement is propelled by the freely available information on the Internet. I, for instance, have switched entirely from high priced pharmaceuticals to herbal remedies, with much better results. I would never have found this information without the internet.

People are becoming savvy shoppers and the organics and eco-friendly industries are beginning to take advantage of these opportunities. I see older, wiser shoppers, who know full well that education of the young will assist in this effort, stopping and talking to young parents in the isles of our local food store, giving them helpful tips on, shopping and real food nutrition.

The one thing driving this movement is the high cost of fossil fuels. While the "Lets drill for oil now", rhetoric is garnishing attention, so far, it has not produced any results, and focuses blame squarlly on the shoulders of those in the legislature. However, now we have congress on Cable, Congress on the internet and the News media, using the internet and other modern communication mediums giving the public the real facts. Rhetoric, who's communitive power was developed in the 40's and post WWII era, is losing its power to persuade a more savvy, educated public. People are becoming smarter, not dumber, especially the younger people.

Because of the internet, the average high school drop out, knows more now, then the average person with a two year degree of 15 years ago. I know this because I challenge these youth often to see where their heads are at.

There are plenty of opportunities for Oil companies to explore for oil and show the world that there is, as they say, plenty to be found. The real truth is, they are completely focused on certain areas, that have not been fully explored, and remain protected by law and public opinion. We have no choice, but to search for other alternatives, and develop the public and private enterprise support, to build and implement new technologies.

I believe, from the tremendous efforts exhibited by grass roots support for goals, such as, putting a man on the moon within 10 years, increasing the density of food growth per acre, and spreading science outward into the deep regions of space that we can also develop a local alternative energy industry right here in our own backyard.

You say generations.

Look at the breath taking developments that have taken place within our own generation: We've gone from black and white TV to low power LCD television that can be taken anywhere on the surface of the earth. We've gone from the telephone to each individual being able to communicate anywhere on the planet with another individual or in space. We have developed machines that help sort and understand new information and data. We are transplanting organs and limbs from one body to another and breeding rabbits that glow in the dark.

I say we can do it within the next 10 years, we just need some leaders, cast in the mold of the Kennedy's, to move forward through the ranks and lead the people forward into the future. We cannot hang around, here, in the same old same old, and expect to move forward from where we presently reside.

It's time to move away from the below top average mentality and throw our lot in with the above average, leaders, which have served us well in the past. We tried letting the average man run the machine and discovered, that it "absolutely" requires an above average mind

▶ Reply to This

Permalink Reply by Charles Russell on August 13, 2008 at 12:22pm

Bob,

Your most recent posting is absolutely spot on. I wish there were more people who looked at this situation with the rock solid logic that you do. This issue has gotton so emotional that rational and objective analysis is almost nonexistant.
You rightly stated the goal as reducing and eventially eliminating our dependence on foreign sources. If we don't do this it is likely that we will end up in a major war in the near future. I am talking about the kind of war that we won't watch in the comfort of our lounge chair as we have become accustomed to. The United States is doing more to keep the supply of Oil low than OPEC ever has or ever will do. How? By not allowing our domestic resources to be tapped. Figure out who is responsible for this policy and be mad at them if you need to find a scapegoat. As you have stated those resources are not insignificant. There is no alternative source of energy that can replace oil quickly enough to avoid the need for more domestic oil. We can and will get off of oil. Its going to take 30 years to do it though. Pickens realizes all of this and has suggested a plan that will provide a bridge to new technologies. I don't think he is suggesting that most individuals will be converting their personal cars to NG. What he is suggesting is that fleets of vehicles used by government and industry could be converted to NG. Think about how feasible it would be to convert all of the delivery trucks in the US to NG. The only fueling station you need is at the base for the trucks. Pickens also says we need to drill in ANWR, offshore and anywhere else that we can to increase our domestic production. It is absolutely suicidal not to develop our own resources.

Now that those who are all about saving the planet and moving forward with alternative energy are so mad their hair is on fire from reading the above let me leave you with this. There has never been a time in our country when there has been such wide spread agrreement and enthusiasm about moving forward on alternative energy. You basicly have won that war. We are going to save the planet! We just have to be realistic about the time frame to get it done and do the things we must do in the mean time to survive.

▶ Reply to This

Permalink Reply by Dr Mark on August 13, 2008 at 12:46pm

You are right, the survival of the U.S. as a free and desirable place to live has to be priority one. Right now we are so weak economically that we would be forced to take military action (our only tool left) if our oil supply was cut off. So we have to avoid the possibility that these external forces will cut the world price of oil and defuse the pressure to change.

The classic way to protect your economy from predatory foreign trade (OPEC has operated a price-fixing cartel for 30 years, UNCHALLENGED) is to levy an import tariff. I say we should not make it a fixed % tariff, but make it 100% if the price slips below $80 and 0% if above (or slide from 100% to 0% between $70 and $100. That way there is no additional economic pain to consumers when prices are already high enough to continue to motivate these changes.

▶ Reply to This

Permalink Reply by Rexrino on August 13, 2008 at 1:06pm

Drilling of domestic oil might be a good idea, if we can get rid of the trade treaties that force us to share with other countries. Then we can use that domestic oil domestically.

But, we know that will never happen. We will be forced via trade treaties to sell our oil to other countries, and the prices will just remain high. The real problem is that current production in the world is not keeping pace with growth. Even if we added additional supplies, growth would soon eat it away in a few years. If we are going to have to deal with high prices anyway, we might as well limit exploration and drilling and keep the pretty country side.

Who knows, we may need that oil for ourselves one day, after the world has settled down and we only have to deal with problems abounding on our side of the planet.

I don't think the rest of the planet wants to kill us off, just keep on our side of the planet and let them exploit the oil on their side for their populations, which profoundly outnumber us and have dire needs to power and feed their people.

In light of the current geopolitical situation, what right do we have to insist on having our SUV's while the rest of the growing world languishes away trying to support their own growth and food production only to have it eaten away by the our economic growth.

The only way to get control of our energy situation is to conserve, change our lifestyle, and set in for the long haul, "Keep the course" so to speak. Middle-Eastern Oil is a commodity that is available to be purchased by the highest bidder. We have not need to be over there treating it like it is paramount to our security concerns, as if it belonged to us.

The proper path, is to take responsibility for our wastfull ways, and change our behavior. After a few generations, we may be able to utilized our new energy sources to help the rest of the world to develop their own, after they have depleted their fossil fuel base. At that time, as after WWII, we would be in a position to reap much profit from our research and development.

Let's plan for a future that will help heal the earth and the people who live on it. I see no need to continue pumping oil and pouring it, literally, onto the surface of the earth.

I may be wrong, but from my understanding, Pickens has gone on record that peak oil has occurred and this includes the possibility of finding new pockets of undiscovered oil. This means we have a limited amount of time to get the alternative energy system in place. Why spend limited capital looking for oil when we can create an alternative infrastructure with the same money and over time free ourselves from foreign fossil fuels.

The problem is: use the money to find new oil or build alternative energy production systems. If we don't find enough oil, we have spent the money for nothing. Any real oil company will tell you, the proof is in the drilling, not in the speculation. It's still, with all our technology and science, only hit and miss.

▶ Reply to This

Permalink Reply by Charles Russell on August 13, 2008 at 2:36pm

You are correct if we just drill it won't solve the problem. Who said it would? If there is a technology that is ready to go big scale to replace oil then lets go for it. I would support it any way I could. The fact is there is not. When you talk about "we" spending money on oil exporation I am not sure who you are talking about. The government is not spending money on oil exporation. They simply agree not to confiscate as much of a companies money if they will explore. Do the same for algae oil, solar, hydrogen and let private money take care of it. I am desperately searching for an alternative energy company to invest in because I believe there will be huge profits to be made in this effort. I personally believe that algea oil is very promissing. I am scared to death to invest right now because there is so much sentiment in the country to have the government choose the winners and loosers.

Let me suggest another way to make oil drilling less objectionable. Since the areas of most promise for oil drilling are not privately owned why not do what most of the rest of the World does and put those leases out for bidding to the lowest bidder. Take ANWR for example, Lets say the production cost for producing in that field is $25 per barrel. Joe's oil drilling service says they will drill it for a 20% markup. So cost of oil coming from ANWR is $30 per barrel. That oil could then be sold to a refinery at market price. Currently that would give the government a profit of $80-$90 bucks a barrel. (This is exactly what Oil exporting countries do to get our money.) That money could then be used as seed money for algae production or whatever. Can we please drill now?

▶ Reply to This

Permalink Reply by Rexrino on August 13, 2008 at 3:52pm

Charles, you are correct there is no "big scale" solution right now. We need to reduce the need (scale), removing all waste, duplication, and incorporate some life style changes in the public area to shrink that "big scale" need. Big scale Items should go to necessary industries and the military for national security.

Anwar belongs to "us" the citizens of the United States, and more locally to the state of Alaska. Alaska has had it's fill of Oil's broken promises to clean up their messes. The most recent affair was the reduction in the amount of the lawsuit money. So, it is a matter of record that Big Oil has no intentions of cleaning up behind themselves.

Anwar is nothing but a resource to be pillaged to them. They have no national heart or interest in the needs or desires of their fellow citizens. I wouldn't let them build a porch on my house.

I don't want Alaskans telling my state where to dig holes or put my waste and I don't think the individual states have the right to dictate to the Alaskans, their still cleaning up after the Valdez incident.

It is not the Governments place to drill for Oil. That is the domain of the private sector (presently). The government is not equitable when it comes to offering incentives to the other alternative research or projects. You can confirm this by talking to MIT and finding out where they got their money for the research that recently made possible a breakthrough in producing hydrogen gas, cheaply.

As an investor, I'm sure your concerned with national security. Anwar is a large target, but nearly as large as the whole United States.

If we put all our eggs in one basket and we switched over and became dependent on those eggs, and someone knocked the basket out of our hands, we might find ourselves hungry around supper time. On the other hand, if we have our hens laying eggs in hen-houses all over the country, they couldn't do that so easily.

Am I right Charles?

If making money was all we had to worry about, as a nation, there probably wouldn't be a problem, but our illustrious President and his Vise president has informed us that terrorism abounds for at least the next 100 years, so I think it would be logistically prudent to create a much bigger target with our energy infrastructure.

In a century or two, when we have won the war on terrorism, and all is peaceful in the world, we can talk about drilling in Anwar. But at this time, it is strategic stupidity to put all our eggs in one basket. It's bad enough with mother nature flaring up in her fits of rage in the Gulf of Mexico.

What would it take to bring us to our knees? How about terrorists coming over the poles, supported by some powerful country at the same time as two or three Cat Five hurricanes are in the process of decimating our coastal oil regions.

The last I heard, the ice cap was melting, great place to put submarines don't you think? How far can we afford to spread our armed forces and navy to protect our economic infrastructure? Remember, our president has informed us we are urnistly under attack by people who hate our freedom. I for one don't doubt it for one instant.... I saw what they did in New York city and there are rumors that the president and his men have been protecting us from other such possible attacks for the last 8 years. A smart commander and chief, would realize the foolishness of creating a target out of our nations energy supply. I'm sure Bush is smart.

There are very important reasons not to drill in Anwar, more important to the nation than putting some gingle in your pocket Charles.

Think National interest and put your money in some chicken farms and localized farming developments. There is plenty of money to be made developing these areas and they don't require the huge amount of capital investment to get some real returns flowing your way. They are just as important as Energy.... If you don't eat, you can't drill holes, build cars, planes, boats, take the garbage to the waste dump, maint

▶ Reply to This

Permalink Reply by Rexrino on August 13, 2008 at 4:25pm

I don't think we should. I trust the Alaskans to make prudent decisions to their needs.


I think the real issue concerning Anwar is National Security. Our president has informed us that this war could go on for many years. This does, of course make Anwar a national security issue. If Hurricanes knock out the Gulf Oil rigs along with the Gulf situated Refineries, while terrorists knock out Anwar, where would that leave us if we had weaned off of foreign oil?

It would be kinda embarrassing if McCain or Obama had to go to the Saudis, as our president has done, to beg for more. And, God forbid, what if the Saudis agreed with the attacks made by the Terrorists? They might not want to help us out. They might be tired of us flooding the Oil market with our cheap oil, reducing the profits they are used to making.

Energy isn't everything. Living and having a country able to protect itself is paramount to the security of our economy. If we get taken over or destroyed, we don't get to enjoy all that oil coming from Anwar. We need to invest in an infrastructure that covers more ground.

• First
• Previous
• Next
• Last