Predictions for oil crossing US$100 a barrel? What about the price of petrol (91octane/litre) which will eliminate congestion problems on Auckland roads. I pick October 2010, and $3.60.
You can’t predict, the USDOE (I think it was) comissioned a report which stated one of the key indicators of peak oil was price volatility (we have had price ranging from $40 US a barrel to $150 US a barrel over the last two years by the way, pretty volatile eh?) so anyone who says they know what it is going to be is dreaming – could be $300, could be $50…
I also think the GFC has delayed the peak a bit, we were in a plateau for three years and we are still in one, just at a lower level, I don’t know when the decline will start or even if we can increase production a bit beforehand…
The problem I see is that as soon as oil hits $150 a barrel we’re going to see global economic problems again, which will probably lead to another crash in the price. If that wasn’t the case I’d be investing like mad in long-range oil stocks.
You can invest in oil futures, but the pricing has already factored in the volatility. $2.22 for or the option of buying oil for $100 in Dec ’10. Five years ago the price would have been about 0.36c for this option.
Problem is the minute you mention “peak oil” its a real turn off for SJ as friends. Better to talk about “oil depletion” I think.
Also the bigger issue is that the number of countries with sufficient oil production to satisfy export demand as well as their internal demand is declining. On current form, even Saudi Arabia won’t have any oil available for export from 2025. One of their water desalination plants can consume a million barrels of oil a day. This “net export model” diminshes supply even further for oil consuming nations.
Jeremy, as long as energy prices are decided on the spot market, and fossil fuels haven’t got the ecological costs priced in, there is no way I would consider investing into sustainable energy as much safer than into fossil fuels. Their FINANCIAL sustainability is much too dependant on how high fossil fuel prices are, and whether government subisidies hold. So they too, can rise and fall along or against the track of fossil fuels – which we have just noted will remain very volatile, especially as they get rarer.
Price volatility will be short term until the financial markets accept the reality of the situation, at that point you will see the price of oil rise exponentially (and along with it all energy prices) but renewables will become viable economically without subsidy at which point they will grow as fast as market forces and government regulation allow and the payoff for money invested will be realised such as it is (all money will likely lose massive amounts of value so I’d also be very comfortable investing in gold)…
Cameron P: “One of their water desalination plants can consume a million barrels of oil a day”
Surely not! At $US80 a barrel, that’s $80million a day. Or $30billion a year. Why would they forsake so much oil income when a nuclear power plant would cost a fraction of that and would power a city as well as the desalination plant?
I’m not sure where Cam’s figures are from but higher oil prices do increase consumption due to the increase in trade balance in OPEC exporters, i.e. more available money to spend, I also know royal decree in Saudi Arabia sets the cost of oil for power generation in that country at 7c or 8c a litre…
It’s like saying why don’t we build a nuclear power plant instead of our hydro plants when fresh water is at such a world premium… We have it in abundance and the infrastructure to utilise it ourselves so don’t really care what it worth overseas…
Predictions for oil crossing US$100 a barrel? What about the price of petrol (91octane/litre) which will eliminate congestion problems on Auckland roads. I pick October 2010, and $3.60.
You can’t predict, the USDOE (I think it was) comissioned a report which stated one of the key indicators of peak oil was price volatility (we have had price ranging from $40 US a barrel to $150 US a barrel over the last two years by the way, pretty volatile eh?) so anyone who says they know what it is going to be is dreaming – could be $300, could be $50…
I also think the GFC has delayed the peak a bit, we were in a plateau for three years and we are still in one, just at a lower level, I don’t know when the decline will start or even if we can increase production a bit beforehand…
The problem I see is that as soon as oil hits $150 a barrel we’re going to see global economic problems again, which will probably lead to another crash in the price. If that wasn’t the case I’d be investing like mad in long-range oil stocks.
You can invest in oil futures, but the pricing has already factored in the volatility. $2.22 for or the option of buying oil for $100 in Dec ’10. Five years ago the price would have been about 0.36c for this option.
Problem is the minute you mention “peak oil” its a real turn off for SJ as friends. Better to talk about “oil depletion” I think.
Also the bigger issue is that the number of countries with sufficient oil production to satisfy export demand as well as their internal demand is declining. On current form, even Saudi Arabia won’t have any oil available for export from 2025. One of their water desalination plants can consume a million barrels of oil a day. This “net export model” diminshes supply even further for oil consuming nations.
About the only thing I’d be comfortable investing in is renewable energy companies…
Jeremy, as long as energy prices are decided on the spot market, and fossil fuels haven’t got the ecological costs priced in, there is no way I would consider investing into sustainable energy as much safer than into fossil fuels. Their FINANCIAL sustainability is much too dependant on how high fossil fuel prices are, and whether government subisidies hold. So they too, can rise and fall along or against the track of fossil fuels – which we have just noted will remain very volatile, especially as they get rarer.
Price volatility will be short term until the financial markets accept the reality of the situation, at that point you will see the price of oil rise exponentially (and along with it all energy prices) but renewables will become viable economically without subsidy at which point they will grow as fast as market forces and government regulation allow and the payoff for money invested will be realised such as it is (all money will likely lose massive amounts of value so I’d also be very comfortable investing in gold)…
Cameron P: “One of their water desalination plants can consume a million barrels of oil a day”
Surely not! At $US80 a barrel, that’s $80million a day. Or $30billion a year. Why would they forsake so much oil income when a nuclear power plant would cost a fraction of that and would power a city as well as the desalination plant?
I’m not sure where Cam’s figures are from but higher oil prices do increase consumption due to the increase in trade balance in OPEC exporters, i.e. more available money to spend, I also know royal decree in Saudi Arabia sets the cost of oil for power generation in that country at 7c or 8c a litre…
It’s like saying why don’t we build a nuclear power plant instead of our hydro plants when fresh water is at such a world premium… We have it in abundance and the infrastructure to utilise it ourselves so don’t really care what it worth overseas…