Let's talk about oil as a strategic resource

[Roguish Lawyer]

Some topics:

1. To what extent are we dependent on oil from the Middle East?

2. If the Saudi government falls and SA goes the way of Iran, can we replace our imports of Saudi oil? How? At what cost?

3. Was the invasion of Iraq calculated to give us a long-term alternative to Saudi Arabia as a supplier of oil? Can it? Will it?

4. What about Venezuela? Mexico?

5. Is the Strategic Petroleum Reserve big enough to do anything for us? Should we be expanding it?

6. Anyone opposed to drilling in the ANWAR?

Or whatever else you want to discuss, of course . . .

:munchin

[brownapple]

Originally posted by Roguish Lawyer
Some topics:

1. To what extent are we dependent on oil from the Middle East?
We aren't. Other sources are available.
2. If the Saudi government falls and SA goes the way of Iran, can we replace our imports of Saudi oil? How? At what cost?Russia, SE Asia, Venezuala, Canada... there are other sources. Cost? Definitely some.3. Was the invasion of Iraq calculated to give us a long-term alternative to Saudi Arabia as a supplier of oil?No. Can it? Maybe Will it? Maybe4. What about Venezuela? Mexico? My understanding is that Venezuala is one of our largest suppliers currently. 5. Is the Strategic Petroleum Reserve big enough to do anything for us? It's enough for a few days of armor warfare.
Should we be expanding it?Yes.6. Anyone opposed to drilling in the ANWAR?Not me.

[Airbornelawyer]

Regarding question #1, who is "we"? Assuming the US, do you mean personally dependent? If so, so far for 2004, our top 10 sources of petroleum are:

Canada - 2.117 million barrels per day
Mexico - 1.6 million barrels per day
Venezuela - 1.543 million barrels per day
Saudi Arabia - 1.458 million barrels per day
Nigeria - 1.148 million barrels per day
Iraq - 614 thousand barrels per day
Algeria - 407 thousand barrels per day
United Kingdom - 343 thousand barrels per day
Angola - 300 thousand barrels per day
Norway - 260 thousand barrels per day

Of course, we are part of a global economy, so our dependence is tied to Europe and Asia's dependence as well.

And, of course, given the power of the cartel and the relative ease of extraction in certain Persian Gulf countries, the Arab-dominated OPEC has a great deal of power over the world market price of oil, even when the actual oil doesn't come from the region.

[Roguish Lawyer]

Is oil a strategic problem for the US? If so, how?

[Airbornelawyer]

I also echo all of GH's replies, except to note that the impact of the fall of Saudi Arabia wouldn't be on our actual sources of oil, but on the Kingdom's ability to set the world market price.

[Roguish Lawyer]

Is supply from Venezuela stable and reliable?

[Roguish Lawyer]

Originally posted by Airbornelawyer
Regarding question #1, who is "we"?

You lawyers . . . :D

[Jack Moroney (RIP)]

Originally posted by Roguish Lawyer
Is oil a strategic problem for the US? If so, how?

We have an oil based economy, it is a strategic requirement and fits into the area of a vital national interest. That means we will commit troops to protect/secure it. Saudi supply is but one of the problems. You really have to look at this on a world wide scale not only from the standpoint of production but reserve, demands, and supply. One critical area for oil flow is the Straits of Malacca thru which a great deal of the worlds shipping and a lot of SWA oil flows and is subjected to piracy. These routes also pass by the Spratley Islands which not only have oil but are contested by, if my memory serves me, Vietnam, China, Brunai, Phillipeans, Malaysia to name the principles. China is now sucking down a great deal of oil and is looking for other sources and from what I seem to recall , are trying to get a pipeline up and running to draw oil from the area of the Caspian Sea. They are now, as are the other emerging industrializing countries, serious competitors with us for oil. You can also draw similar senarios for other parts of globe but I am sure no one is interesting in following the ramblings of an aging warrior who is just pulling this off the top of his head. I realize that this is a gross oversimplification, but IMHO, the long and the short of it is that oil is a strategic requirement and only becomes a strategic problem if we let it become so.

Jack Moroney-heat with oil but also have two wood stoves and several cords of wood in strategic reserve:D

[Roguish Lawyer]

GH and AL:

Are you guys suggesting we don't need to worry about oil?

[brownapple]

Originally posted by Roguish Lawyer
GH and AL:

Are you guys suggesting we don't need to worry about oil?

If I thought we didn't have to worry about it, I wouldn't favor expanding the reserve, now would I?

Just don't see Saudi Arabia as as significant a player as they were during the Carter administration. Their significance is declining, no rising.

[Roguish Lawyer]

Maybe we need a new rule: AL and GH can't post until the rest of the class gets a chance to answer the question? LOL

Are we really done with this topic?

NDD: What is the risk that our supply of Venezuelan oil will be cut off?

[Radar Rider]

And the reality is...

We concern ourselves with the middle east so that we can drain ALL of their oil. Once that's gone, they have NO leverage and can go back to killing each other and trying to survive (which, quite frankly, I don't give a shit about). After that, we'll be supplied by the rest of the world. When that runs out, we'll finally tap into ANWAR (a natural strategic reserve, if you will). Once all of the dead dinosaurs (oil) are used up, we'll move on to other sources of energy/vehicle power. All of this might sound a bit callous, BUT, you can do that when you are the Superpower on the planet.

[Bill Harsey]

Ok, new question- How dependant is Saudi Arabia on the United States market to buy their oil? I realize China is changing this equation as we speak.

[QRQ 30]

Say what we want, but resources are limited on this planet -- period. Sooner or later we will run out. We could have done things 40-50- years ago to slow things down but "Nuclear Paranoia" was rampant. Nuclear power would have done a lot to slow the loss of resources. Forget about gasoline and other fuel. The vast majority of our world is dependent on plastics, synthetics or whatever you call them. They are made from oil.

[Bill Harsey]

Originally posted by QRQ 30
Say what we want, but resources are limited on this planet -- period. Sooner or later we will run out. We could have done things 40-50- years ago to slow things down but "Nuclear Paranoia" was rampant. Nuclear power would have done a lot to slow the loss of resources. Forget about gasoline and other fuel. The vast majority of our world is dependent on plastics, synthetics or whatever you call them. They are made from oil. For this reason, over the years, I've dedicated a number of tools in the shop to being able to make knives using no eletricity or purchased fuels. I can forge very well with Doug Fir bark, even weld steel in that fire. My 100 lb. treadle hammer is human powered so I have fantastic force available for forming steel. I can hot cut steel in the forge using no torch at all. I've forged steel to a cutting edge with no grinding or filing. It's not pretty but it can be done. All work would have to be done during daylight hours but at least the wall for the forge area rolls back for total daylight and fresh air. Not a survivalist, just prepared.

[hoot72]

Another area that is quite hot is the spartyl islands in the south china sea.

Vietnam, China, Malaysia, Philippines and Brunei are laying claim to the group of atolls out there...apparently alot of oil down there but the ASEAN council is looking into a solution to avoid a confrontation, as was the case in the past between Vietnamese and Chinese forces.

Lives were lost in those gun battles out at sea.

[Jack Moroney (RIP)]

Another area that is quite hot is the spartyl islands in the south china sea..

Oil is only part of the challenge with the Spratly Islands. Disruption of the SLOCs in that are would have a huge impact on the worlds shipping and freight movement and has been considered a critical choke point for many years.

http://www.ndu.edu/inss/strforum/SF_98/forum98.html

[incommin]

This isn't about oil....oil is energy. Light crude is cheap energy. Americans like cheap energy. THIS IS ABOUT ENERGY; CHEAP ENERGY.

When I was in high school..... (in 1961 or 2) the talk was that we would run out of oil in 30 to 50 years....... didn't happen. Last week I read a report that the latest analysis is there is 3X the oil reserve everyone thought was available a year ago. If and when we run out of light crude, there will be heavy crude to extract and oil shale from which to obtain ENERGY.

Nuclear power or energy is cheaper than fighting wars to insure supplies of light crude. When the pact was made with the Saudis (we will protect you for a lasting supply of light crude) the use of nuclear power wasn't available.

I think that what I am slowly getting to is that with a mixed supply of energy resources (light crude and shale oil from our own continental shelf, nuclear power, wind power, and solar power) supplies of crude from around the world becomes much less important and loses is strategic importance. And we could tell the rest of the world to go pound sand.


Jim

[Surf n Turf]

This isn't about oil....oil is energy. Light crude is cheap energy. Americans like cheap energy. THIS IS ABOUT ENERGY; CHEAP ENERGY.

I think that what I am slowly getting to is that with a mixed supply of energy resources (light crude and shale oil from our own continental shelf, nuclear power, wind power, and solar power) supplies of crude from around the world becomes much less important and loses is strategic importance. And we could tell the rest of the world to go pound sand.


Jim


incommin,

Agree that this is about ENERGY ---- But not the shortage of energy --it is about politics, money, politics, the environment, politics, power, --- and POLITICS.

The United States currently has about 250 years of coal reserves (High / Low Sulpher) --- Can't mine the coal --- can’t burn the coal – it would irritate the environmental movement.

The United States currently has a +/- billion barrel “identified” oil field reserves off of the coast of Florida, Gulf of Mexico, off the coast of California, and much of Alaska (beyond ANWAR) --- can’t drill them, even to find out just how big they are -- it would irritate the environmental movement.

(Note – China is drilling off the coast of Cuba, 50 miles from Key West)

The United States has the Nuclear Technology (starting in the 1970’s) to use “Breeder Reactors” that produce enough fuel to fuel new reactors – (sort of Perpetual motion on the fuel side) ---- Babcock & Wilcox, Combustion Engineering, Foster Wheeler, Deutsche Babcock, etc – went broke fighting to produce these Reactors – can’t build them --- Nuclear power is bad, and it would irritate the environmental movement.

So, until we get serious – or the public gets mad – We are going to buy Foreign (including ME) oil, and continue in a state of semi-blackmail.
SnT

[soldierdoc_2005]

incommin,

Agree that this is about ENERGY ---- But not the shortage of energy --it is about politics, money, politics, the environment, politics, power, --- and POLITICS.

The United States currently has about 250 years of coal reserves (High / Low Sulpher) --- Can't mine the coal --- can’t burn the coal – it would irritate the environmental movement.

The United States currently has a +/- billion barrel “identified” oil field reserves off of the coast of Florida, Gulf of Mexico, off the coast of California, and much of Alaska (beyond ANWAR) --- can’t drill them, even to find out just how big they are -- it would irritate the environmental movement.

(Note – China is drilling off the coast of Cuba, 50 miles from Key West)

The United States has the Nuclear Technology (starting in the 1970’s) to use “Breeder Reactors” that produce enough fuel to fuel new reactors – (sort of Perpetual motion on the fuel side) ---- Babcock & Wilcox, Combustion Engineering, Foster Wheeler, Deutsche Babcock, etc – went broke fighting to produce these Reactors – can’t build them --- Nuclear power is bad, and it would irritate the environmental movement.

So, until we get serious – or the public gets mad – We are going to buy Foreign (including ME) oil, and continue in a state of semi-blackmail.
SnT

Well put!

It always drives me nuts to hear greenie-weenie LLib's rant on about "oil independence..."

My standard reply is, "Great! I agree. Now, let's start drilling in ANWAR and the Gulf tomorrow."

Usually, this is greeted with, "Oh no! That's bad for the environment!"

Pick your poison Green Peace, et al,...and singing "Cumbayah" around a camp fire ISN'T an option :-)

~Eric
:cool:

[tk27]

Well put!

It always drives me nuts to hear greenie-weenie LLib's rant on about "oil independence..."

My standard reply is, "Great! I agree. Now, let's start drilling in ANWAR and the Gulf tomorrow."

Usually, this is greeted with, "Oh no! That's bad for the environment!"

Pick your poison Green Peace, et al,...and singing "Cumbayah" around a camp fire ISN'T an option :-)

~Eric
:cool:
You ain't gotta be a tree-hugger to be against drilling in ANWR, the economics ain't there. There's a reason why BP, Conoco-Phillips and Chevron-Texaco have all pulled there lobbying efforts from ANWR.

Nor do you have to be a progressive-lib to call for energy independence, former DCI Woolsey (by no means a lib) and his wife both drive hybrids. And is on the board of The Set America Free Coalition (http://www.setamericafree.org/) with a number of prominent conservatives and liberals.

[x SF med]

You ain't gotta be a tree-hugger to be against drilling in ANWR, the economics ain't there. There's a reason why BP, Conoco-Phillips and Chevron-Texaco have all pulled there lobbying efforts from ANWR.

Nor do you have to be a progressive-lib to call for energy independence, former DCI Woolsey (by no means a lib) and his wife both drive hybrids. And is on the board of The Set America Free Coalition (http://www.setamericafree.org/) with a number of prominent conservatives and liberals.

tk-
Don't get me started on hybrids - long term they'll do more damage to the environment than straight fossil fuel vehicles - how are you going to dispose of the 8 batteries at a time without huge damage to the environment? Biofuels are a better answer - no sulfur, and fully renewable. I drive a diesel car and would love to have better availability of biodiesel. Plus it can be produced from rapeseed, soy, and a few other nuts and legumes. Hydrogen Technologies are another decent 'future' energy source, as are solar, wind and geothermal.

[tk27]

X-SF,
I don't disagree. I was trying to make a point that it is not just libs who are into energy independence. Fair enough?
Biofuels have great promise.
What do you think about methanols potential?

[x SF med]

for Methanol, engine technology has to change - it is destructive to current auto parts, and gums badly, plus the thermal efficiency is very low in octane based combustion, especially alcohol burn with extremely low flash points - cetane based (compression/combustion) fuels, esp. biofuels are more thermally efficient, a 90 hp/165 ftlb diesel engine is not uncommon - most diesel engines produce close to 2:1 torque/hp ratios, where gasoline/octane (spark/combustion) engines are more likely to produce about 1:1 torque/hp. You may buy hp - because it's sexy, but you drive torque 90% of the time. I am a diesel driver for a lot of reasons - thermal efficiency, lower emissions (in well designed engines - like mine, it got wanded and passed for a Tier II bin 1 vehicle - LEV levels - off the lot and 3 yrs old at the time - the guy could not believe it was a diesel), and ease of production of biofuels for them. Plus, at 80 mph, I still get 44 mpg turning about 2500 rpms - at 125 mph, I get about 35 mpg turning about 3800 rpm and can stay there all day, even uphill, with room to kick it up, and no speed loss uphill even up the mountains on I26 from Tn into NC). My range is about 700 miles/tank, and I could squeeze a little more out of it if I needed to.

***diesel rant over for now***

[incommin]

"There's a reason why BP, Conoco-Phillips and Chevron-Texaco have all pulled there lobbying efforts from ANWR."

What reasons????????

Got to agree with x_sf........diesel is the way to go. We can produce lots of bio-diesel. Save the crude for making plastic toys.....

Jim

[Karl.Masters]

Plus, at 80 mph, I still get 44 mpg turning about 2500 rpms - at 125 mph, I get about 35 mpg turning about 3800 rpm and can stay there all day, even uphill, with room to kick it up, and no speed loss uphill even up the mountains on I26 from Tn into NC). My range is about 700 miles/tank, and I could squeeze a little more out of it if I needed to.

***diesel rant over for now***

x_sf_med,

What kind of ride is this? Those numbers on 45 Cetane? Turbo or intercooler on this diesel? Proliferation of this kind of efficiency could change the demand numbers/economics....

Karl

[x SF med]

Karl-
Those numbers are on an average of about 41 cetane LSD/ULSD, genrous use of Diesel Kleen (4-6 oz /tank, more if It feels dirty) 4cyl, injected, VNT 17 turbo, intercooler, auto trany (could get 50+ w/ manual), fuel cooler for the recirc (maintains about 80*C). I've done better when I can get 45 cetane, but that's rare around here, I usually get it in VA when I travel through.

It's a 2002 VW Golf TDI, 1.9l - ALH engine, not the Pumpe-Duse or Common Rail, built on the Audi A4 frame, suspension is all Bilstein, handles like a dream on michelin MX4+ 165/90 R15 H82s @40#. Oh, yeah, I've been offered more than what I paid for it, ain't gonna happen. Oil/filter changes every 10K w/ 505.00 full syn 5-40, air filter every 35-40k, fuel filter every 20-30k. Easy to work on, and quiet. I go 0-60 pretty quickly, never timed it, but from a toll booth to the lane compression I'm usually at 60 or 70.

No shit about changing the demand numbers - look at Europe, 53% of all passenger vehicles sold are diesel - from the 2 or 3 cyl Skoda/Peugeot/VW/Audi/MB city cars (up to 85 mpg - not fast, not sexy, but good cars) all the way up to the V-10 VW Taureg (30+ mpg, 350 hp, 550 ftlb torque - full time awd), and everything in between. Audi has racing diesels that are smoking (pun intended) gassers on 1/4 mi and long distance racing.

What's killing diesels in the states is the old 70's idea of the American diesels - slow, smelly, noisy, no pickup, and CARB rules. CARB should be less of an issue with the new Urea catalytic scrubbers that decrease the NO and particulates.

Damn, brother, you got me started again on the diesel rant. Ask TS about my car, he's ridden in it - didn't get to do any AT-Eva driving, but he was surprised it was a diesel, very surprised.

***end diesel rant part deux***

[tk27]

What reasons????????
The money ain't there to be made. Chevron and BP had the only exploratory well drilled in the refuge from the '80's. The results from it is a closely held secret and was not even shared with the govt. Had the results been encouraging they would have continued political lobbying.
They could drill wells in Central Park for all I care, but I think the case of ANWR is more a political lightingrod than anything else. The greens concentrating all their political capital in one polarizing case and industry (Exxon-Mobil) fighting back for fear that successful opposition here will lead to successful opposition to other domestic exploration.


x_sf_med, feel free to share your diesel rants with me anytime. They are informative.

[vsvo]

I am also with x_, diesels are the way to go. Gasoline-electric hybrids are a fad. The technology is unproven, and if you run the numbers comparing the fuel savings against the price premium, economically they don't make sense. Besides, the simple fact that millionaire Hollywood actors love to haughtily drive their Toyata Priuses around is reason enough not to buy the damn things.

Ultra low sulfur diesel (ULSD) is here. Technology exists to make diesels 50 state legal, even under Tier II Bin 5. The EPA will soon release guidelines for urea injection, which the Euros are using in BlueTec. Honda has announced it will release within three years a clean diesel that will not depend on urea injection. Toyota just paid almost $400 million for an almost 6% stake in Isuzu, a pittance for a company generating billions in cash. Toyota figured it was better (faster) to buy diesel technology than further develop it itself - this from a leading manufacturer of hybrids.

I don't understand why folks aren't rushing to embrace modern diesels. Diesels will allow Americans to resume their love affair with large SUV's and pickup trucks without having to take a big hit to the wallet. Perhaps this is where the manufacturers need to push the technology to the consumer. I can easily find E85 in my area. I tried to use it often in my Tahoe, but the mileage penalty was crippling. I look forward to getting back into a diesel.

[tk27]

X-SF,
What do you think about biodiesel production from algae feedstock? I like the yields I'm looking at there.

[x SF med]

Broadsword-
My thought is that hydogen would be used for the coal/gas/oil fired electric generating plants - not autos. Solar the same way, I use a solar panel to keep the battery on my boat charged.

tk-
I've read a little about it - I've got a friend who's really into biodiesel, he probably knows a lot more - he actually is part of a biodiesel co-op, and they're making their own. I think they're using saponified WVO not distilling directly from rapeseed or soy.

[brownapple]

A few notes:

Vehicle fuel is not a particulary large problem. The infrastructure to support the replacement is.

Bio-fuel (bio-diesel) has some issues in temperate and cold climates. It crystalizes when it gets cold.

The two areas that the energy companies make the largest profits on are lubricants and synthetics. In both of those areas, there is no sign of a viable replacement for oil. The energy companies would like to be able to use other products to fulfil the fuel needs because it would increase their profits.

[pegasus]

First algae bio-diesel test : link (http://www.scoop.co.nz/stories/SC0612/S00039.htm)

[tk27]

First algae bio-diesel test : link (http://www.scoop.co.nz/stories/SC0612/S00039.htm)
Thanks, very cool. An unclassified JASON report (http://www.fas.org/irp/agency/dod/jason/micro.pdf) for the DoE just got made public, it said there is potential for using microorganisms to produce fuels. Also related to this thread a group called the Energy Security Leadership Council (http://www.secureenergy.org/reports.php) chaired by Fred Smith (CEO of FEDEX, former Marine aviator) and Gen. P. X. Kelley (former commandant of the Marines) have called on congress and the White House to reduce the importance of foreign oil this week.

[vsvo]

For better or worse, looks like BMW is putting some hydrogen-powered 7 Series (http://www.bmwusa.com/news/news.htm?article=306) on the street next year. Check out the refueling apparatus for that thing. Every time I see that, it reminds me of the picture of the Team Sergeant and his pet snake (http://www.professionalsoldiers.com/forums/showpost.php?p=91136&postcount=22).

[tk27]

Blow for beer as biofuels clean out barley, Financial Times, February 25 2007 (http://www.ft.com/cms/s/7f533724-c507-11db-b110-000b5df10621.html)
Secondary: We'll run out of beer before we run out of oil (http://europe.theoildrum.com/node/2318)
I feared this as an unintended consequence of ramping up ethanol.

Just saw this today:

T Boone Pickens (http://www.chron.com/disp/story.mpl/business/energy/4592240.html) said he believes we are at or near the worldwide daily production capacity peak of oil.
And found this graphic representation showing the awesomness of oil:
Joules, BTUs, Quads—Let's Call the Whole Thing Off, IEEE Spectrum, January 2007 (http://spectrum.ieee.org/jan07/4820/ncmo01)
Secondary: That cubic mile, The Oil Drum
(http://www.theoildrum.com/node/2320#more)

Also related to this thread: This is an interesting article about MEND (http://www.vanityfair.com/politics/features/2007/02/junger200702) in Nigeria by Sebastian Junger. As production capacity nears peak, security is becoming more and more important to the buisiness model. I saw where Triple Canopy has set up an office in Lagos.

[nmap]

1. To what extent are we dependent on oil from the Middle East?

We exist in a global marketplace for oil. Since the Middle East is presently a major exporter, and the U.S. a substantial importer - and since our economy is highly dependent upon abundant cheap energy - we are quite dependent.

2. If the Saudi government falls and SA goes the way of Iran, can we replace our imports of Saudi oil? How? At what cost?

If the new Saudi government were to choose not to sell oil, a lower supply of oil would be offered to the world. The price would increase such that enough demand was destroyed to bring supply and demand into balance. However, oil shows remarkably little elasticity of demand with respect to price. This implies a wrenching increase in price. It seems unlikely that the U.S. could avoid a deep recession along with real economic distress under this scenario.

That said, the KSA has a rapidly growing population, and the oil revenues must support that population to some degree. So an incoming government would need to get revenue somehow; I suspect that means they would keep selling into the global market. The price would be high, and might be denominated in Euros, implying negative economic consequences for the U.S.

3. Was the invasion of Iraq calculated to give us a long-term alternative to Saudi Arabia as a supplier of oil? Can it? Will it?

I don't know, of course. But my suspicion is that the U.S. perceived a need to stabilize the region. Whether that will come to pass is indeterminate; however, given the political trends and the apparent trend of public opinion, I must question whether stabilization will be accomplished.

4. What about Venezuela? Mexico?

Venezuela produces heavy, sour crude not suitable for most refineries. Worse, they are in decline. Still worse, the Chavez government will probably drive competent oil companies out. I would not count on substantially increased production from Venezuela.

As for Mexico...I think it is a tragedy in the making. Cantarell is in decline - rapid decline, actually. PEMEX doesn't have the technical skills needed to improve production, but the political situation precludes bringing in outside expertise. Add in that the government of Mexico gets about 36% of its revenue from PEMEX, and that revenue is down (and likely to continue lower) and one can perceive the possibility of a crises in the next few years.

A less stable Mexico has implications, social, political, and economic for the U.S. However, a massive migration of Mexican citizens northward may, likewise, be problematic.

5. Is the Strategic Petroleum Reserve big enough to do anything for us? Should we be expanding it?

One might ask whether it was worthwhile to have a couple weeks of food stored, just in case. The SPR might soften some shocks - it is not a solution for long term supply issues.

If one believes the world is likely to become more volatile, expansion of the SPR seems wise.

6. Anyone opposed to drilling in the ANWAR?

Drill it like a swiss cheese - but there isn't enough to long satisfy global demand. If we kept it all for the U.S. it would last longer - whether that would be diplomatically viable, I do not know. I suspect not.

Or whatever else you want to discuss, of course . . .

I found an interesting report from the Army Corps of Engineers. Pages 5-13 same to address the issue. The document is in PDF format.

LINK (http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=A440265&Location=U2&doc=GetTRDoc.pdf)

[incarcerated]

In a blog entry dated October 27, 2009
http://www.heatingoil.com/blog/could-crude-oil-prices-reach-100-102/
"....Energy industry analysts cited in the article say that oil’s recent climb above the $80 mark is unsustainable because it’s not supported by supply and demand. Demand has yet to pick up due to the ongoing recession and worldwide supplies of oils are at record levels. Inventories of crude oil are over 27 percent higher than they were a year ago. The Strategic Petroleum Reserve is larger than it has been at any time over the past 27 years. And OPEC says that an estimated 125 million barrels of oil are being stored in oil tankers around the world, a figure that is quite incredible since, in normal circumstances, this number is closer to zero...."

This is echoed here:
http://www.123jump.com/economy-story/September-Crude-Inventories-Rise/35042/
September Crude Inventories Rise
Last Update: 3:46 AM ET October 28 2009
"Crude oil inventories at the end of last week increased 0.8 million barrels to 339.9 million barrels. Motor Gasoline inventories increased 1.7 million barrels last week end and inventories of finished gasoline decreased and distillate inventories decreased by 2.1 million barrels."

In the past two weeks, the President has made two conciliatory gestures towards the somewhat politically hostile (insofar as it doesn't vote Democrat) American military, traveling to Dover AFB for an early morning photo op
http://www.daylife.com/photo/0glsg1c8BDddJ?q=dover+obama
http://www.daylife.com/photo/027E1Gu7ISh08?q=dover+obama
and granting honors to an 11th ACR Troop for action in Vietnam.
http://www.latimes.com/news/local/la-me-alpha-troop25-2009oct25,0,3522913.story
I'll be looking for more of these gestures. He strikes me as a man who wants something of the military and is priming them for it.


Yesterday, Sec State HRC told Iran that ""Patience does have finally its limits and it is time for Iran to fulfill its obligations and responsibilities to the international community...."
http://www.reuters.com/article/latestCrisis/idUSJER002074
(I can clearly remember President Carter telling them the same thing in January and February of 1980, prior to his rescue attempt).

In a story about Obama signing legislation to punish Iran, Forbes reports that the Strategic Petroleum Reserve will be topped off by January:
http://www.forbes.com/feeds/reuters/2009/10/28/2009-10-28T205221Z_01_N28317852_RTRIDST_0_OBAMA-IRAN-SANCTIONS.html

On one level, it's all saber rattling. When these noises stop, that's when I'll begin thinking that we are going to have a problem soon.

[GratefulCitizen]

China is going silent.
http://www.reuters.com/article/rbssOilGasExplorationProduction/idUSPEK16809420091103

Maybe they are trying to hide a faltering economy.
Maybe they are getting ready for some other move...



The Saudis seem to be tiring of the games played in US financial markets.
http://www.thepeninsulaqatar.com/Display_news.asp?section=Business_News&subsection=market+news&month=November2009&file=Business_News2009110383712.xml

A key point not often mentioned in the oil debate:

The refineries have also moved towards heavier crudes, which contributed to 75 percent of US oil imports last year, up from 60 percent in 1985.

If oil becomes less of a hedge against a weak dollar, what's next? Gold?

[nmap]

If oil becomes less of a hedge against a weak dollar, what's next? Gold?

Looks like gold is heading up a lot... :cool:

[The Reaper]

Looks like gold is heading up a lot... :cool:

That is the dollar coming down, and heavy buying by both nations and scared investors.

TR

[GratefulCitizen]

Hmmm...
A weak president, economic problems, etc.

I was pretty young during the late '70s.
Gold made quite a move then, too.
http://www.inflationdata.com/inflation/images/charts/Gold/Gold_inflation_chart.htm

What, exactly, is scaring investors? :munchin

[nmap]

That is the dollar coming down, and heavy buying by both nations and scared investors.
TR

Absolutely true...

What, exactly, is scaring investors? :munchin

Bondzilla.

Let's say that the dollar goes down just 5% per year. That means that one needs a return of 5% to stay even. And if we lose our reserve status, 5% might be modest.

Can the U.S. pay the interest on such debt? In just 10 years or so, given current projections, we'll owe about 20 trillion. So 5% means 1 trillion a year in debt service.

There is a risk that no one will want our bonds at a reasonable rate, whatever that might be. That means that we either cut our spending by about 50%, raise our taxes some large percentage, or print. Printing takes us down the same path as Zimbabwe. That's bondzilla.

By the way - quite aside from my favorite subject of peak oil - if the dollar declines, we could easily see $5 gasoline again. That should help the economic recovery.

Scared yet? I am.... :eek: