$100 A Barrel Oil is on the Way

[g8terh8ter_eric]

You know, if we could get rid of the damn environmental whackos and drill into the Gulf of Mexico for more oil than we are currently drilling for, we would have 40-60 dollar a barrel pricing. That is of course, if we build better refineries than we have. Its our own dumb fault for not expanding our capacity production the past 30 years.

[volinbham]

Originally Posted by TennTradition

I'm guessing that he was referring to the CEO of Shell...whose major raw material is oil....and product is oil. They drill their own oil don't they...and sell it to refineries?

Here's a company description of Shell (at least the US subsidiary).

Co., including its equity companies, is engaged, principally in the United States, in the exploration for, and development, production, purchase, transportation and marketing of, crude oil and natural gas, and the purchase, manufacture, transportation and marketing of oil and chemical products. In addition, Co. is engaged in the exploration for, and production of, crude oil and natural gas outside the United States.

They are a producer/extractor but much of the revenues come from what they do with oil.

IIRC, Big Oil (as in Exxon etc.) control only about 10% of worldwide production. In short, they don't set oil prices and likely buy much more than they produce. Accordingly, alternative sources of supply (shale) become attractive to them as a buyer when traditional sources hit certain price levels

The fact that gas prices haven't reacted (yet) shows that oil is one factor, refining capacity (supply of gas) is one factor and demand for gas (peak summer driving season over) is yet another.

It also shows that prices (gas) are more controlled by market forces than by individual companies (Exxon).

[volinbham]

The current run-up in oil prices is classic market reaction to perceived supply threats and the decline of the dollar.

One issue is potentially temporary (supply threats from concerns over Turkish/Iraqi tensions) and the other is a bit longer term (dollar issues).

Interestingly, neither represents a real supply/demand issue and if these prices have any staying power, OPEC will increase production. The $70ish range is the sweet spot that discourages large increases in new oil exploration and/or alternative sources.

[TennTradition]

I suppose that if they can control the technology that allows for the profitable recovery of oil shale or other "hard to get" oil resources, then it isn't quite as important that they control the actual resources themselves. They certainly seem to be pretty interested in developing the technology.

[volinbham]

Originally Posted by TennTradition

I suppose that if they can control the technology that allows for the profitable recovery of oil shale or other "hard to get" oil resources, then it isn't quite as important that they control the actual resources themselves. They certainly seem to be pretty interested in developing the technology.

It's a classic make vs. buy situation. If you can buy it cheaper that's the way you go. This is why OPEC and other producers will increase supply to keep the price low enough to discourage serious switching to alternatives either via exploration, other forms of extraction or worse yet (for them) alternative energy sources altogether.

If the technology allows 40-60 equivalents, then they will go that way.

[volinbham]

Pretty good article on oil prices -

BBC NEWS | Business | What is driving oil prices so high?

Yes. The biggest catalyst for oil's seemingly remorseless rise has been the simplest economic driver there is: the balance between demand and supply.

Couple this with concerns of supply interruptions (e.g. Northern Iraq, Nigeria, etc.) and speculators push the price up.

[myrobbins7]

Turkey's parliament approved a motion today to allow troops to cross into northern Iraq to crush Krudish rebels. Thats not good...

[volinbham]

Originally Posted by myrobbins7

Turkey's parliament approved a motion today to allow troops to cross into northern Iraq to crush Krudish rebels. Thats not good...

Nope - not good.

I also saw a news story indicating our diplomatic efforts are strained with Turkey due to a recent resolution from Congress that condemns some actions dating back to the Ottoman Empire. Evidently, Turkey views it as a slap in the face.

[allvol123]

Interesting times we live in. How's that meeting with the Dalai Lama going?

[volinbham]

Originally Posted by allvol123

Interesting times we live in.

It's always something
- Rosanne Rosannadanna

[myrobbins7]

Originally Posted by volinbham

Nope - not good.

I also saw a news story indicating our diplomatic efforts are strained with Turkey due to a recent resolution from Congress that condemns some actions dating back to the Ottoman Empire. Evidently, Turkey views it as a slap in the face.

Yes, that is true.

[allvol123]

Congress was all about repairing relationships. Remember?

[myrobbins7]

Originally Posted by allvol123

Congress was all about repairing relationships. Remember?

Yeah.. I do recall that..

[myrobbins7]

hrmm. Oil is almost to $90 today and Nat. Gas is up big today to. Gold up $6.8 today all this while all the stockpiles for the week are up and the Dollar index falls to a record low.

[VolinArizona]

Here we go sugar cane, here we go!