By Jeff Poor Business & Media Institute 5/21/2008 3:38:13 PM
It may be the mother of all doom and gloom gas price predictions: $12 for a gallon of gas is “inevitable.
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Robert Hirsch, Management Information Services Senior Energy Advisor, gave a dire warning about the potential future of gas prices on CNBC’s May 20 “Squawk Box”. He told host Becky Quick there was no single thing that would solve the problem, due to the enormity of the problem.
“[T]he prices that we’re paying at the pump today are, I think, going to be ‘the good old days,’ because others who watch this very closely forecast that we’re going to be hitting $12 and $15 per gallon,” Hirsch said. “And then, after that, when oil – world oil production goes into decline, we’re going to talk about rationing. In other words, not only are we going to be paying high prices and have considerable economic problems, but in addition to that, we’re not going to be able to get the fuel when we want it.
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Hirsch told the Business & Media Institute the $12-$15 a gallon wasn’t his prediction, but that he was citing Charles T. Maxwell, described as the “Dean of Oil Analysts” and the senior energy analyst at Weeden & Co. Still, Hirsch admitted the high price was inevitable in his view.
“I don’t attempt to predict oil prices because it’s been impossible in the past,” Hirsch said in an e-mail. “We’re into a new era now, and over the next roughly five years the trend will be up significantly. However, there may be dips and bumps that no one can forecast; I wouldn’t be at all surprised. To me the multi-year upswing is inevitable.
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Maxwell’s original $12-15-a-gallon prediction came in a February 5 interview with Energytechstocks. com, a Web site run by two former Wall Street Journal staffers.
“[Maxwell] expects an oil-induced financial crisis to start somewhere in the 2010 to 2015 timeframe,” Energytechstocks. com reported. “He said that, unlike the recession the U.S. appears to be in today, ‘This will not be six months of hell and then we come out of it.’ Rather, Maxwell expects this financial crisis to last at least 10 or 12 years, as the world goes through a prolonged period of price-induced rationing (eg, oil up to $300 a barrel and U.S. pump prices up to $15 a gallon).
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According to associate of Maxwell at Weeden & Co., Maxwell is out of the country and currently unavailable for comment.
Maxwell’s biography on the Weeden & Co. Web site said he “has been ranked by the U.S. financial institutions as the No. 1 oil analyst for the years 1972, 1974, 1977 and 1981-1986,” according to polls taken by Institutional Investor magazine.
“In addition, for the last 17 years he has been an active member of an Oxford-based organization comprised of OPEC and other industry executives from 30 countries who meet twice a year to discuss trends within the energy industry.
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Although Maxwell’s prediction is for the long-term, not everyone supports high-end predictions, even in the short-term. CNBC contributor and the vice president of risk management for MF Global (NYSE:MF) John Kilduff said on “The Call” May 7that he expected gas prices to drop following the Chinese Olympics, as China’s economic boom slows down.
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so. Posts: 6949 | Registered: Apr 2004
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posted
I believe that it will go up but at $15 a gallon we might have a revolution on our hands
Posts: 6008 | From: phoenix az | Registered: Mar 2005
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posted
it would help some if China would re-value the Yuan to a more realistic level. IMO that's a part of what is going on.
Sinopec, PetroChina Shares Rise on Fuel-Price Talk (Update1)
By Winnie Zhu
May 21 (Bloomberg) -- China Petroleum & Petrochemical Corp. and PetroChina Co., the nation's two largest oil refiners, rose in Shanghai trading on speculation the government may relax curbs on fuel prices to boost gasoline and diesel supplies.
Sinopec, as China Petroleum is known, surged 10 percent, the daily limit, to 12.55 yuan at the market's 3 p.m. close. PetroChina, the nation's second-biggest refiner, advanced 6.6 percent to 17.86 yuan, the steepest gain since April 24.
Refiners can't pass on rising crude costs and have cut output to avoid wider losses, leading to shortages of diesel and gasoline. Supplies may tighten in parts of China as refiners divert shipments to southwestern areas struck by the nation's deadliest earthquake in 32 years last week.
posted
Everyone start storing ammunition its going to get ugly lol
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so. Posts: 6949 | Registered: Apr 2004
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quote:PM, question........... after you shoot yourself in the foot, do you limp
I don't know, it's never happened.
quote:still like Exxon? and their measly double in pps?
In their testimony this week, I believe that their profit margin was only 6.9%. Do I like Exxon as an investment? No, as I've pointed out many times before, they are not making a significant profit for their size. They have big dollar profits because they are a huge company, but they aren't nearly as profitable (from a percentage standpoint) as my silly little rental business.
Posts: 1577 | From: Ohio | Registered: Oct 2007
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The oil sands in Alberta have more oil than Saudi Arabia.
It costs more to get...but you know what...that "costs more" figure is around $60 a barrel as opposed to $20 a barrel for on-land drilling operations.
Currently oil is trading at $130+. This means that at current prices oil recovered from the most expensive process known to date would still turn a more that 100% profit.
We have time and prices will stabilize as these operations ramp up but we do still need to start getting serious about alternative 'earth friendly' energy sources.
-------------------- No longer eligible for government service due to lack of tax issues. Posts: 5178 | From: Up North | Registered: Dec 2005
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posted
Did anyone else see that short infomercial about the so-called world wide oil shortage and how we buy oil at $130/barrel and after processing it they(big oil)send it by tanker back to europe because they can make double or more in profit?
posted
I believe that their profit margin was only 6.9%
PM, i believe you use much less "sophisticated" accounting procedures to cacklack your margins....
before you begin squawking about why a publicly traded company would ever "cook" their books to look less profitable?
here's the best motive there is:
Note 1 -- On August 1, 2000, the Corporation announced its intention to resume purchases of shares of its common stock for the treasury both to offset shares issued in conjunction with the Company's benefit plans and programs and to gradually reduce the number of shares outstanding. The announcement did not specify an amount or expiration date. The Corporation has continued to purchase shares since this announcement and to report purchased volumes in its quarterly earnings releases. In its most recent earnings release dated May 1, 2008, the Corporation stated that share purchases to reduce shares outstanding were increased to $8.0 billion in the first quarter of 2008. Purchases may be made in both the open market and through negotiated transactions, and purchases may be increased, decreased or discontinued at any time without prior notice.
this statement indicates that they used about 85% of their NET income to buy back shares...
now? if you keep looking thru the 10Q? you'll find that they also had to use about 17% of their NET income to pay dividends...
85% plus 17% is 102% so lets go back and check the figure on the share buyback exaclty:
they purchased 109,574,196 shares at an average price of $86.63: that equals $9,501,075,599.
there were 5,283,694,459 shares paid $0.35 each that is: $1,849,293,061
those total out to 11.35 billion dollars which is more than their net income, yet the company reports an increase of total assets and and shareholder equity of about 16 billion over last years quarter...
are you beginning to get a glimmer of why some of US "socialistas" are so skeptikal?
I just heard two senators (didn't catch names) debate over energy policy. The Florida Republican's final point was
(paraphase) "You just heard my opponents plan, to wait until wind and solar kick in. Folk, it's $4 dollar gasoline and you need help now and that means drilling off the coast of Florida and in ANWAR."
Environmental Impact aside...Do you know how many years it will be to build meaningful infrastructure in ANWAR and in undeveloped areas off the Florida coast???
How many more shell games are GOP leaders going to continue to play before they understand that a ever growing portion of the population isn't buying it anymore!
Does anyone know where to find info on the amount of land leases the government has given to the big oil companies and how many have been developed?
The other senator said they haven't built out even a fraction of the land leases that they have already been given.
-------------------- No longer eligible for government service due to lack of tax issues. Posts: 5178 | From: Up North | Registered: Dec 2005
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posted
How many more shell games are GOP leaders going to continue to play before they understand that a ever growing portion of the population isn't buying it anymore!
The other senator said they haven't built out even a fraction of the land leases that they have already been given.
Ok putting on my tin-foil hat:
could it be possible that the big oil co's are refusing to spend the money really needed to develop more wells and refineries to intentionally keep the price of oil/gasoline/deisel running up to force people to allow them to drill wherever they want?
the US is one of the last places on earth where the oil co's can still own their own wells.. almost everywhere else? they are Govt owned... less profit.
the big 5 have cut way back on "exploration and development".
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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quote:Originally posted by The Bigfoot: This is not going to happen gentlemen.
It is bull.
The oil sands in Alberta have more oil than Saudi Arabia.
It costs more to get...but you know what...that "costs more" figure is around $60 a barrel as opposed to $20 a barrel for on-land drilling operations.
Currently oil is trading at $130+. This means that at current prices oil recovered from the most expensive process known to date would still turn a more that 100% profit.
We have time and prices will stabilize as these operations ramp up but we do still need to start getting serious about alternative 'earth friendly' energy sources.
Good post Bigfoot I agree.
There isn't much talk yet about oil sands, which might make for some good stock plays if you know of any companies that own oil sands properties...
Assuming we don't move towards alternative energy, (which we should IMO), doesn't buying oil from Canada make much more sense that buying it from the alternatives? Saudi Arabia, Venezuela, Iran, Russia, Nigeria... They are all what I would consider "unstable jurisdictions".
For something as important as our oil supply, surely we should place more care in where we attain it from. Because of greed and poor decisions, hard working people worldwide are being fleeced while despots like Chavez, Abdullah and Ahmadinejad get rich.
Personally, I think the development of the Canadian oil sands in inevitable, but the question is, will prices remain high enough for long enough for that time to be now, instead of 10-15 years down the line.
I also think that even though the price of oil may come down to where the Canadian oil-sands are not economical anymore it should be developed anyway, simply because it would be a STABLE oil supply. Look at how much we have spent trying to create stability in the middle-east to protect our precious oil supply there....
-------------------- One is never completely useless. One can always serve as a bad example. Posts: 2430 | From: CA | Registered: Jun 2005
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posted
You know...oil is getting a horrible rap/rep
Its not the product its the people who are controlling it right now. Oil isnt as bad environmentally as many think. Ive seen oil leases where the grass is actually greener where oil has spilled onto. Its from the earth...its almost like a fertilizer. It breaks down and is fine. The exxon valdez spill was bad because it covered animals in it and suffocated them. However over time the oil breaks down and goes back into the earth. Im not wrong on that so dont try to whack it! lol
Anyway, people are going around acting like we are going to slaughter polar bears if we drill in Alaska. Cmon people...it wont be that bad. Its the size of rhode island on alaska!!!!
Also we need to build some more refineries. yes..they arent the cleanest but you have to do what you have to do. you cant have your cake and eat it too. we need expansion in domestic production NOW, cut off the middle east...and why the HELL are we buying from venezuela? that guy is looney!! we are funding him in ways i dont like.
expand or create new refineries and use the tax dollars generated from the high tax rates the govt puts on gas for increased research on clean energy.
IT ISNT HARD SENATORS! man...these people are like kids over there on cap hill.
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so. Posts: 6949 | Registered: Apr 2004
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quote:Do you know how many years it will be to build meaningful infrastructure in ANWAR and in undeveloped areas off the Florida coast???
Funny, that's the same thing Bill Clinton said in 1995. Of course, if he had signed the bill to drill in ANWR back then, we'd be pumping that oil today. Better get started - we need that oil until we convert to something else and that could take decades.
Posts: 1577 | From: Ohio | Registered: Oct 2007
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Close to 5% of Minnesota's power generation is by Wind with a goal of 33% in the next 12 years. Iowa is over the 5% mark and has equal ambitions. South Dakota is lower at 2.8% currently but they also are making progress. There are plans in Texas to build out wind AND solar corridors.
Why am I talking grid energy when you are talking oil and gas? Hmmmmm....
-------------------- No longer eligible for government service due to lack of tax issues. Posts: 5178 | From: Up North | Registered: Dec 2005
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quote:Do you know how many years it will be to build meaningful infrastructure in ANWAR and in undeveloped areas off the Florida coast???
Funny, that's the same thing Bill Clinton said in 1995. Of course, if he had signed the bill to drill in ANWR back then, we'd be pumping that oil today. Better get started - we need that oil until we convert to something else and that could take decades.
have you studied anything beyond the simple "envirnomental impact" argument against drilling in ANWR?
the real problem is not saving polar bears. it's about the actual cost to build and maintain the project. plenty of people have done the math. it will be the most expensive oil ever obtained.
now, before you go pointing at the cost of oil today? and how it wold help "cut costs" (it won't) there's still a problem. the economy has this way of "leveling" everything. sure, oil is high today and will probably stay high but everything else will slowly catch up.... in other words? the costs to get the oil will go up as the price of oil permeates the economy, which we are seeing now...
if ANWR was really an answer? it would already be pumping.
people like to play with figures and say that ANWR at it's highest potential could provide the US 5% of its oil needs for 12 whole years.... that's the "glossiest" picture available... what they don't tell you is that we have no idea if that is what it will actually produce or not until we "tap" it...
you want a cheaper way to add 5%? be more economical....
the best way? of course would be to do both, but ten years ago, when Clinton vetoed the bill? (i do not like Clinton so i'm not apologising)- people were buying SUV's and "light trucks" to commute in and look good.... at 12 -14 MPG instead of cars that were mandated to get DOUBLE that mileage....
there's the REAL problem... doubling our "fuel economy" would double the availability of fuel... and that is much cheaper then drillin in ANWR..
the fact is that US society has refused to look at this problem head on.
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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quote:there's the REAL problem... doubling our "fuel economy" would double the availability of fuel... and that is much cheaper then drillin in ANWR..
the fact is that US society has refused to look at this problem head on.
The fact is that the vast majority of the population and the politicians have allowed a few idiot wacko environmentalists to dictate our energy policy in this country for many years. We are now paying the price for allowing these loud mouth wackos to set policy.
Posts: 1577 | From: Ohio | Registered: Oct 2007
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posted
Thee real problem are the politicians , our leaders and us. We have since 1970's - oil problem, but nothing done, and now a crisis - yet no leader has declared it crisis -
this war is worse than iraq, etc, ww2, this is a war on our nation - and no one acted and yet no one is saying critical -
this economy is oil based and war is on us - thank you islam - it is the back door war and can bend us to our knees and destroy us until we develp alternate fuel or nuke them --
this is war - crisis -
Posts: 864 | Registered: Jun 2004
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it's just not so... New wells are being drilled from the San Joaquin Valley to Long Beach, 2,750 wells in the last year alone. That's almost 20 percent more than five years ago, when the current run-up in crude oil prices began.
The same phenomenon is happening nationwide. A survey by World Oil Magazine forecast that 52,394 wells would be drilled across the country this year, up from 49,195 in 2007. According to federal government data, the amount of oil produced in the United States rose last year for the first time since 1991, albeit by less than 1 percent.
The activity isn't limited to Louisiana, Texas and other states known for oil. Fred Lawrence with the Independent Petroleum Association of America said Kansas, Montana and North Dakota have all seen a rise in the number of wells drilled.
"The increases are taking place in states that are off people's radar," said Lawrence, a vice president of the association, which represents small oil companies. The amount of oil recovered from any field depends largely on three things: access, technology and price. Even abandoned oil fields still have petroleum left in them, but their owners consider it too difficult and expensive to reach. Prices in the late 1980s were so low that oil companies had no incentive to pursue hard-to-get reserves.
the reality is that we tapped the last of the easy stuff out in the 80's..
updated 2:57 p.m. CT, Tues., June. 1, 2004
WASHINGTON - Nearly three-fourths of the 40 million acres of public land currently leased for oil and gas development in the continental United States outside Alaska isn’t producing any oil or gas, federal records show, even as the Bush administration pushes to open more environmentally sensitive public lands for oil and gas development.
An Associated Press computer analysis of Bureau of Land Management records found that 80 percent of federal lands leased for oil and gas production in Wyoming are producing no oil or gas. Neither are 83 percent of the leased acres in Montana, 77 percent in Utah, 71 percent in Colorado, 36 percent in New Mexico and 99 percent in Nevada. http://www.msnbc.msn.com/id/5111184/
still think ANWR was the only answer?
why do they take leases on the land to get control of it and then just sit on them and do nothing ?
what are they waiting for? 200$/barrel?
Morton said the leases, which companies can lock up for 10 years with annual rents of only $2 to $3 an acre, are an economic boon to some companies because they count as assets that can make debt refinancing easier while also attracting potential investors.
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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posted
"the back door war and can bend us to our knees"
Now that is quite the catchphrase!
-------------------- It is impossible to make anything foolproof because fools are so ingenious. Posts: 3311 | From: St. Louis | Registered: Feb 2005
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six companies — Tom Brown, Encana Oil and Gas, Anadarko, BP Amoco, Devon Energy and Marathon Oil — together controlled 3.9 million acres of federal oil and gas leases in March, according to BLM records. Just 1.2 million acres, or 30.8 percent of the total, is actually producing oil and gas.
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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posted
Its just the profit motive at work .Its not going back down unless the market forces it to.
Don't have to do anything but look at the oil companys bottom line and they ain't going to give that up.
Nomatter what kind of production or trading takes palce or what system as of now they can get Americans to pay four bucks a gallon plus.Maybe much more before we snap but they will take us there,rule number one what ever the market will bear
Posts: 6008 | From: phoenix az | Registered: Mar 2005
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No-one said that ANWR is the only answer. In fact, at 1,000,000 barrels per day, it's only a small part of the answer. But the KEY POINT is that it IS part of the answer and we're not using it.
Boone Pickens recently said that he believes the the world is past the point of peak oil production. He believes that worldwide demand is 87 million barrels per day and that production is at 85 million barrels per day, thus the supply and demand induced rise in prices. He says that all the new sources of oil will be needed just try to keep 85 million barrels per day, but that oil demand will keep rising due to China and India, etc.
The answer to this problem is multi-faceted. We need to drill in ANWR and off the continental shelf. We need wind, solar, nuclear, and alternative fuel vehicles (maybe hydrogen). We can't do ONE thing, we need to simultaneously do a LOT of things. Unfortunately, the wacko left environmentalists will fight us every step of the way.
Posts: 1577 | From: Ohio | Registered: Oct 2007
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posted
Simply this they just keep on going higher until either there is riots or they are forced to stop.That how they hit the top of the market.
Or consumption falls so low they have to lower prices to get us back to purchasing it.
I believe peak oil is one of the problems but also it may be a market ploy to manipulate price.
I still say bottom line is what drives the price and exxon can't get to 40 billion a year net,net,net. If we are paying .87 cents a gallon no way.
Posts: 6008 | From: phoenix az | Registered: Mar 2005
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