Triple-digit oil prices to become norm: analyst

[RedEarth]

Source: MarketWatch

NEW YORK (MarketWatch) -- Oil prices of at least $100 a barrel are expected to become the norm as early as next year, as conventional supplies continue to decline and consumption in the developing world rises, CIBC chief economist Jeff Rubin said Tuesday.

"We're in a world of triple-digit oil prices for the foreseeable future," Rubin said at the CIBC 2nd Annual Industrials Conference. "Whether it's $100 or $140 a barrel ... is up to debate, but the bottom line is we're in the bottom of the ninth inning of the hydrocarbon age."

......

Six of the largest oil suppliers to the U.S. are poised to cut their global exports by nearly 2 million barrels a day by 2012, Rubin said. The projected cut -- amounting to 7% -- by Mexico, Saudi Arabia, Venezuela, Nigeria, Algeria and Russia, "reflect the growing struggle in these countries to grow production and manage their own soaring rates of oil consumption," Rubin said.

Canada's oil sands production is expected to increase to 2.3 million barrels a day by 2015, up from about 1.1 million barrels a day in 2005, according to the U.S. Energy Information Administration. Rubin's remarks come as big oil companies such as Exxon Mobil (XOMexxon mobil corp com


Read more: http://www.marketwatch.com/news/story/cibc-economist-predicts-triple-digit/story.aspx?guid=%7b2D5D7DA1-1C71-4FB3-AAE6-F4B66CDE7F63%7d&print=true&dist=printTop

[MikeNearMcChord]

1. And Jimmy Carter, mocked for his national energy plan in the '70's

Where would we be if America followed it? Thanks GOP!:mad:

[jackster]

2. My son in law is co owner of a small oil company

here in Massachusetts. When I asked him last week ifwe were likely to see $100 barrel oil soon he said no, because the government would step in first. No one could afford to pay $4.00 a gallon so they'd have to do something.

Sweet naive thing - he's a Democrat, more moderate than I or his wife, but no Bush fan. I asked him, do you actually think Bush cares? Although it will bankrupt our economy, I would bet my bottom dollar all he'll do is of offer more tax cuts for the wealthy!

[rayofreason]

4. Back when gas was $1.50/gallon...

...what would people have said to $3.00/gallon gasoline? Probably "Nobody can pay that!" But here we are. And large parts of the industrialized world pays $4.00/gallon now.

At 25 mi/gallon and average commute of 30 minutes in city traffic (20 mi/hr, ave) is 10 miles, back and forth burns .8 gallons x 5 days/wk x 49 wks = 196 gallons. Increase by 50% to account for non-work driving and you get about 300 gallons. Increase the price by $1/gallon and that is an increase of $300/yr, or $25/month. For some folks $25/month would be difficult, but for many it means not buying an extra book or something else discretionary. Or maybe it means carpooling.

Lots of things go up more than $300/yr. Ask anyone with a kid in college.

[Demeter]

5. And We Can't Pay It, Not on a Sustained Basis

People are hurting and praying their credit outlasts the crisis--but it won't. You know it won't. And in Michigan, we are in our 7th YEAR of crisis, with no let up in sight, and absolutely NO Federal interest in our plight.

[rayofreason]

3. Glad to hear it.

High oil prices drive efficiency and conservation, innovation in fuel production, and the development of non-oil sources of energy. But if prices rise too fast too quickly, then the economy cannot adapt in time and problems result.

[Psephos]

22. Aptly said

Short-term dislocation catalyzes the development of long-term economic solutions. My guess is the economy's next Black Swan will be an alternative-energy juggernaut, similar to the explosive growth we saw in the '80s with biotech, and the '90s with networks. There's potential for another golden era of expansion because of it, despite the Cassandric prophecies of the naysayers.

Meanwhile, the author of this article seems ignorant that oil is priced on the margin. A 10% drop in demand (say, due to a combination of recession and conservation) could soon lead to oil priced at a half or third of current levels.

[rayofreason]

27. I agree about the next bubble...

...it will be "alternative energy" - solar, biofuels, wind. I am looking around for likely prospects, getting ready to invest about 6-8 months from now in some of these companies, then get out in 18-24 months.

The thing about bubbles is that, while bad at the time, they build infrastructure that, after the bubble bursts, becomes cheap, leading to the next round of sustainable expansion and innovation. A lot of cable was laid in the 90's, and it is now used on the cheap by the likes of Google. It will likely be that way with these minor sources of energy. By 2020 they will be much more important with the groundwork laid in the boom/bust of 2008-2012.

[Skink]

6. The inflation brought on by the weaker dollar will be a problem.

[TexasLawyer]

23. Yes-- much of the sustained price increase

is related to the diminishing value of the dollar.

Vicious cycle: Rising oil prices, falling dollar

The phenomenon is likely to continue for a while,
so here's what it could mean for you -- and how you
can protect yourself from some of the effects.

By Jim Jubak

This year's dramatic increase in oil prices and the decline in the dollar arent two unfolding crises for the U.S. economy but two sides of a single blockbuster problem.

And unless you understand the vicious cycle of higher oil prices leading to higher trade deficits leading to a weaker dollar leading to higher oil prices, you wont see the changes coming in your everyday life until they hit you like a truck doing 60.

Let me try to explain the cycle and its consequences for the everyday economy where we live our lives.

<snip>

http://moneycentral.msn.com/content/P100650.asp

[Javaman]

7. when it goes over 100 bucks and a gallon goes to 4 bucks

very interesting things will happen.

For the few of the population that wish to continue their sleep walk into the future, they will pay the increase whether or not the can afford it because taking the bus is either not an option (living out in the sticks or no bus service) or choose not to believe that our current way of live is basically akin to sucking the last half of a cola out of the half empty glass.

For yet another segment, they will bitch and complain, saying it's all price gouging and nothing but money being made by the populations stupidity and that there is still plenty of oil out there to be had. Yet, they will still fill up their over grown tonker toy SUV's and give birth to a new form of road rage.

third there will be those who feel the need to continue driving, even though they have ridden the bus once or twice, they don't care for it, because you know, it's just not convenient to them. Driving is our god given right!

the 4th group, well that's a huge portion of us, will be left with few options. Pretty much as I am doing now, I ride the bus during the week and only use my car for errands on the weekends. I plan my trips to use the least amount of gas possible and when I can ride my bike to the local stores. Carpooling, bus riding will become more of the norm.

Lastly, the poor. the Majority of people on the bus ride it because it's their only means of transportation. They only use a car when they have enough money for gas or it's on a weekend and the bus that they require doesn't run then.

At the end of this year, Austin is increasing rates by double. I can swing that, but many of the people I ride with won't be able to.

Why are they raising the price? Gas increase.

Yeah, there is a trickle down theory in this country. It's called the screwing anyone that isn't wealthy (not rich mind you).

The pain trickles down.

P.S. only when gas gets above 4 bucks will the nation as a whole begin to demand mass transit. funny how that works.

[aquart]

8. Just putting it out there: Would it help to hang a few oil barons?

Doesn't have to be many.

[rayofreason]

10. "Pour encourager les autres"

Sorry, Napoleonic tendencies will not reverse the law of supply and demand.

[knight_of_the_star]

17. No, but they might discourage greed

When you factor in disproportionate greed into supply and demand you get what we have going on now.

[GliderGuider]

19. Greed has nothing whatsoever to do with what's happening right now.

This is what it's all about:

[lovuian]

9. I know here in Texas people are giving up their pickups

and driving in smaller cars to work
the pickups are being used for recreation

I never thought I see the day Texans would get rid of their pickups but its looking like its happening

Americans will conserve and good gas mileage cars will be a necessity

and when you see a hummer pass you by you know where they come from

[jaybeat]

12. But the rest of the world hasn't had to

Because, everywhere except North America, you can buy compact, four-door, 4-cylinder DIESEL powered pickups, that get awesome fuel economy and never break down.

Isuzu Fuel Economy Record

"...last July they averaged 52.01mpg for the 853-mile trip in a three-litre Rodeo Denver Max.

Now Roberts has completed the same journey - this time assisted by Sales Director Dave Noy - in the new 2.5-litre Denver Max, this time achieving 54.20mpg."

Not only Isuzu, of course, but Mitsubishi, Toyota, Nissan, Mazda, and Volkswagen all make smaller trucks (and SUVs, for that matter) with economical diesels. And, to meet stringent EU pollution requirements, they are all now low emission as well. (Even lower if you run biodiesel.)

Ha! Even Ford, GM and Chrysler are in on the act: often in identical or near-identical models to what they sell in the US (Ranger, Colorado, Dakota, etc.)

But in the US, a 4-cylinder diesel pickup has not been sold since the late 1980's. And all pickups sold in the US keep getting bigger and bigger. And the ads on TV tell us we need our trucks to be tougher and tougher. And who cares how much gas it burns, 'cause this is America, where buying stupid is our birthright!

[happyslug]

24. I once did 25 mpg in a 1982 GMC 3/4 ton Pickup with a 350ci V8 engine

I did it late at night by going 25mph in my highest gear (it was a standard) on a flat area of the Interstate. Going 60mph I generally did 10 mpg. Yes you can triple your mileage by being careful HOW you drive and by going slow (I was just wanted to see what my mileage would be at that speed, I was in a mood). Thus I can see this pickup doing 52 mpg, but at low speed at at its highest gear ratio (and it is a good bit lighter then my old 1982 GMC Pickup which I had fully loaded at the time for I was moving).

On the other hand, going to a SMALLER CAR will go even better. VW once did 235 mpg in a 2 seater car which it took on the German autobahn (The driver was asked did it get up to speed, he said yes, but refused ot say how long it took him). The Vehicle was design to see HOW light and fuel efficient you could make a car. VW did it.

The problem with all of this is thee high fuel efficient car may extend what oil we do have, we will still run out of oil. Basic Changes will have to occur in our LIFESTYLES, for example giving up driving to work, giving up driving to shop. At the same time our work places must also adjust to having workers get to work other than by car AND where we shop will have to adjust to our changing shopping habits. I did a paper a few years ago about how we went from a Streetcar centered society to an automotive centered society. We will have to do the reverse and it will Not be as nice.

My paper on the growth of Suburbs 1900-2000:
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=266&topic_id=203

[jaybeat]

25. Streetcar-enabled development was very cool

I have learned a lot about it simply by being into the land-use history of my city (Portland, Oregon). One of the most profound realizations I had was when I compared a map of the current Tri-Met bus system to a map of the city's streetcar routes at the system's peak (around 1923). Almost all of the current bus routes in parts of the city that were served by steetcar routes 80+ years ago are almost completely the same as the streetcar routes. I found this fascinating and very telling: Anti-rail/anti-transit people are always arguing that rail makes no sense because it isn't "flexible"--you can't move the tracks. Well, it looks like you don't need to.

Then, living in a streetcar suburb, and learning where the lines were and where they went, it dawned on me. Of course you don't need to move the routes--because the houses and businesses they were build to serve don't grow legs and walk away!!! Our throw-away culture says we shouldn't invest in infrastructure with any permanence, because, uh, we might want to just walk away from all of this in 100 years. History has proven that false, besides being morally repugnant.

The saddest thing is that, in the 1920s, you could get anywhere in the city via public transit faster than you can now, despite the advances in speed and technology. If only we had preserved that infrastructure for the 50 or so years it took us to figure out that cars couldn't be our ONLY method of transportation. Now, we're slowly trying to build the infrastructure to go along with our 1900's cities, only at 2000's prices.

Oops.

'Course, don't get me started on the automakers/rubber/oil industry/government collusion to disinvest in rail and transit and funnel massive amounts of taxpayer dollars to roads and highways, and the even more massive costs to society and the environment that we are paying and will continue to pay as a result of those special interests overruling the public interest.

:grr:

I'm looking forward to reading your paper. It is a story that needs to be told and retold.

[happyslug]

26. "Flexibility" of Buses is overstated

For the simple reason people NEED to know when a bus (or Streetcar) will come and where. Thus any mass transit system MUST have stable lines. When the Streetcars In pittsburgh were replaced by buses, the lines changed number but the names even stayed the same (72 Highland became 72 A highland). The reason for this was simple, you needed stable routes that picked up a set set of passengers. You do NOT switch streets, you stay on the streets, if you switch streets people get confuse and wonder what happen to their ride.

My point is simple, Flexibility of buses is overstated, for the riders are NOT that Flexible and that being the case neither can the route (Be it Streetcar or Bus).

[hunter]

11. The human race was given one tank of gasoline.

We've burned up half of it on an aimless economic joyride.

Now that the tank is half empty, what next? Do we use it to build an economy that is sustainable or do we keep driving around aimlessly until the economic machine breaks down leaving us stranded in the desert?

[Gregorian]

15. We slow down.

We change. We decrease the population. We do what we should have done in 1970.

I am sorry that this will affect all of the wrong people. But anyone with two eyes should have seen this coming. I've suffered over this more than anyone can imagine. I now hate my own society for being so selfish. It's surprising how few people understand.

[Flagrante]

13. When Shrub took office gas was $1.47

-IMPEACH

[NickB79]

14. At the risk of sounding like a broken record: Peak Oil is here

Read up and prepare as best you can now for what's coming in the next few years, or you will be very, very sorry.

[GliderGuider]

16. The Oil Age is mighty short

That's us, sitting up there on the tip of the spike, with everything we do dependent on oil in one way or another. What the hell did we expect? All-you-can-drink at $25 a barrel until the sun went out? We weren't really that stupid, were we?

[Strelnikov_]

21. "We weren't really that stupid, were we?" Apparently we were

Seems we didn't learn much from the Greenland Vikings or the Mayans or the Anasazi or the . .

[knight_of_the_star]

18. And the worst part is

The big oil companies could have prepped for this and stayed on top by putting lots of money into renewable sources and R&D, but that would require long-term planning which they don't seem to have really.

[GliderGuider]

20. It wouldn't have helped.

There isn't a renewable energy source or a technology in the world that can replace oil. Big Oil figured that out early, and decided to stick to their knitting. In fact, a lot of them believed up until maybe five years ago that the party would go on forever.

[rayofreason]

28. Oil forever

Well, not quite. At least not in the form of easily extracted petroleum. But there are lots of sources for oil that have been too expensive until now. And if prices stay high and get higher (they will), these others sources will become economical. One is the Athabascan oil sands. Check out Suncor (the ticker symbol is SU). Wouldn't you liked to have bought that stock five years ago? Colorado oil shale is another source.

But coal beats them all, hands down. We have enough coal in the US to power our economy (and much of the world) well into the age of fusion power. So what if it costs $150-$200/barrel? What will that matter if our economy is double or triple the size it is now? Oil would be cheaper in relative terms than it is today. And our fuel effciency will just continue to increase as it has over the time.

I love oil>$100 barrel. It means that the day is coming when we are a net energy exporter again, as those high prices drive innovation and efficiency.

[NickB79]

29. Oil sands and oil shales are a joke, and coal is the dirtiest energy source we have

"One is the Athabascan oil sands. Check out Suncor (the ticker symbol is SU). Wouldn't you liked to have bought that stock five years ago? Colorado oil shale is another source."

Look through the postings on the Environment board here at DU, and you'll quickly realize how much of a boondoggle the Athabascan oil sands have become. They are consuming well over half of the Athabascan River itself to process the oil sands, leaving behind a moonscape of barren land and toxic lakes. Their operating costs are soaring now that natural gas supplies looking less stable (natural gas is required to "cook" the oil out of the sand, and Canada is predicting a decline in NG production over the next few years). The fish caught downstream of the mining operations smell like gasoline! Colorado oil shale is even more difficult to extract than oil sands, being an oil precursor (kerogen) instead of true oil. It requires just as much water, if not more, than Alberta oil sands, as well as as much if not more energy inputs from natural gas to cook it into oil. There has been serious debate about building billions of dollars worth of nuclear reactors on the ranges simply to cook out the oil from the sands.

To add to your list of "so what's?" regarding coal: So what if burning coal at an increasing rate will accelerate the rate of global warming and kill billions over the next few decades? So what if waves will be lapping at the North Pole by 2015 (instead of 2040 like previously believed)? So what that Australia's farms are already turning into dust bowls?