Oil

 Chris, hi;

can you please comment on this:

BP Energy Outlook 2030

http://www.bp.com/sectiongenericarticle800.do?categoryId=9037134&contentId=7068677

thanks you.

As expected, Iran scoffed at sanctions and is now promoting their Oil for Gold program with India and China.  Any bets on when we first read about conflict in the straits of hormuz?

http://www.youtube.com/watch?v=3vD8Y1jLo...

 Considering that Oil will likely hit higher and higher prices, what could be a way to invest on it, while the price is still low?

Wednesday, January 11, 2012

Executive Summary

• Higher oil prices caused by an Iran conflict could very well be the trigger for the next major economic downturn
• Where oil prices will likely go, and how quickly, if a conflict erupts in the Persian Gulf 
• The prudent steps you should take now, in advance of a potential conflict
• How the financial markets will react, and likely safe havens
• Why a war with Iran will be much messier than the Iraq war

Part I: Iran: Oh, No; Not Again

If you have not yet read Part I, available free to all readers, please click here to read it first.

Part II: Are You Prepared for $200 Oil?

In Part I, we connected a few dots and made the point that Iran remains the last unconquered oil province within the last great deposit fields left on the planet. Perhaps it is coincidence that Iran now finds itself in the crosshairs, but that is unlikely. Instead, the oil treasures of the Middle East remain the last great prize, and Iran is unlucky enough to be standing in the way.

Once one understands where we are in the Peak Oil story, all of these maneuvers make sense and conform to a brutal but coherent logic: If oil supplies are dwindling as fast as the data suggests, then controlling the last, best supplies will be considered essential by every interested party.

While such speculation is interesting to engage in, there's really nothing you or I can do to alter these events. Instead, our job is to prepare as best we can.

The larger set of world events is grinding inexorably towards a lower standard of living, with the squabbling at present really being over who eats the first sets of losses. However, the next leg of the downturn will be precipitated by some event, and a war with Iran that spikes oil prices would be a perfect catalyst.

In each of the years 2008, 2009, and 2010, significant worries emerged that Western nations might attack Iran. Here again in 2012, similar concerns are once again at the surface.

Why revisit this topic again? Simply because if actions against Iran trigger a shutdown of the Strait of Hormuz, through which 40% of the world's daily sea-borne oil passes, oil prices will spike, the world's teetering economy will slump, and the arrival of the next financial emergency will be hastened. Even if the strait remains open but Iran is blocked from being an oil exporter for a period of time, it bears mentioning that Iran is the third largest exporter of oil in the world after Saudi Arabia and Russia.  read more »

 Petroplus had their assets frozen.

Their refineries are closing down as they cannot buy feed.  Ships carrying crude are cruising the ocean negotiating with refineries to off-load.  

Thoughts??

by Gregor Macdonald, contributing editor

Monday, December 19, 2011

Executive Summary

• Western economies are more sensitive to oil prices than the developing world.
• Global oil supply is extremely tight by historical measures.
• Oil prices will likely not go much higher in 2012, due to the failing global economy.
• The next oil-price induced recession (coming ASAP) will have predictable outcomes on the economy and its key sector.
• Understanding these predictable economic outcomes resulting from oil supply dynamics
• Prediction offers more value to the investor than simply betting on oil prices (which will likely be extremely volatile).

Part I: Why Oil Prices Are Killing The Economy

If you have not yet read Part I, available free to all readers, please click here to read it first.

Part II: Why Its Now Easier to Predict The Outcomes of the Coming Recession

The Oil-Sensitive West

Consumption of oil in the West started to flatten out as early as 2004. And, readers of my previous essays know that after the crisis started in ‘08, both Europe and the US shed even more oil demand. Let there be no doubt: oil demand in the OECD has been highly elastic (responsive) in the face of oil prices above $80. In the data, you can even see some early signatures of reduced demand coming in 2004, when oil prices rose above $40.

One of the paradoxes that repeatedly trips up analysts, because it’s so counter intuitive, is the fact that the wealthy Western countries are hurt more by high oil prices than the poorer, emerging market countries:

Your average Westerner is consuming quite a lot of oil, per capita. It's embedded in shipped goods, shipped foods, and also comes via high penetration of automobile ownership. Westerners drive lots of miles, comparatively. But people in emerging markets have only just begun to use oil. It hardly matters whether petrol is $4.00 per gallon or even $8.00 per gallon if you have just upgraded from a rural existence, and for the first time ever your family is consuming 4-6 gallons of petrol per month (enough to power a motorbike each day for a short distance). This is precisely what Bernanke is alluding to, when he allows we have no control over emerging market oil demand.

More vexing is that emerging market economies are primarily running on coal, so they are able to produce and align their consumption with the power grid, while being more discretionary about liquid fuel use for mobility. This is really perplexing, as I said, to Western analysts but I do want to point out that its empirically true (see Stuart Stanford’s post on the subject, Wow, Just Wow, from earlier this year).

"Oh, that was easy," says Man, and for an encore goes on to prove that black is white and gets himself killed on the next zebra crossing.” ― Douglas Adams, The Hitchhiker's Guide to the Galaxy

Have rising oil prices just put the final coffin nail in the entire 2009-2011 economic recovery?

Given the slowdown in China, the new recession in Europe, and the rocky bottom in the US economy, it certainly seems that way. 

Oil's Relentless March Higher

Oil prices emerged from their spider hole over two and half years ago. Having fallen from the towering heights of $148 a barrel in the summer of 2008, the early months of 2009 saw a return to prices in the $30s. Interestingly, during that great oil crash, the price of West Texas Intermediate Crude Oil (WTIC) spent only 20 trading sessions below $40. That is the exact price that most analysts only three years prior believed oil could never sustain as the world would pump “like crazy” should prices ever reach such “impossibly high levels.”

Given the enormous debt troubles the West is currently facing and the fact that oil has averaged over $100 during several months this year, it does seem reasonable to suggest that, once again, the economy has been pushed off a ledge by oil. Let’s take a look at oil prices over the past several years.  read more »

Recently, we crossed the seven billion threshold for humans on the planet. Most of these people are desperately trying to get up the living standard curve. And that requires resources.

Simple math tells us there is going to be increasing competition for a steadily dwindling -- in both quantity and quality -- global pool of high-grade resources. This 'scramble for stuff' is going to be one of the key defining trends of this century. And while it will have game-changing repercussions across societies, economies, and geopolitics -- we are at a moment in time where tremendous upside awaits investors who recognize today the true future value of key resources and secure meaningful exposure to them.

Rick Rule has made a successful and storied career as a resource investor, and has rarely seen as attractive an alignment for the space as he does today. What is there to be so optimistic about?

 read more »

 I love the work of Amory Lovins... 

It is a very hopeful view that we can transition out
of our "predicament"...
Last month, he released his latest Book,

 REINVENTING FIRE, Bold Business Solutions for the New Energy Era