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Old 08-26-2005, 01:23 PM   #16
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Join Date: Sep 2004
Location: On Lake Ontario on my sailboat
Posts: 1,017

Oil barrel at $100, $4.5 per gallon here is why.

Over lunch I found this from a writer who I think finally understands the
"oil" problem. Of course, if America did not consume 1 in 4 barrels
produced worldwide things could be a little better! Damn those Hummers.

Energy It's Only The Beginning
David Andelman, 08.25.05, 3:00 PM ET

There's a fun battle going on in the pages of The New York Times between
columnist John Tierney and Sunday Magazine writer Peter Maass. It's over
just how much oil we have left in the world--and therefore, it would
appear, how much time we have before we hit the wall of an oilless

Tierney thinks it's all bogus--that like we have many times before, we
will get past this momentary bubble in oil prices.(THE YERGIN VISION) The
Saudis or some other still to be identified oil power will simply stick a
few more straws in the ground and suck up some more oil, and all will be
right with the world.

Maass, however, believes there are simply no more straws to stick in the
ground in the Great Arabian Desert, and that we are on the cusp of seeing
the most oil we will ever find being sucked out of the ground today.(THE
SIMMONS VISION) Implicitly, of course, even if demand remained constant,
the price would have to begin soaring--indeed it already has.

The problem is that they're both wrong, though Maass has it closer to
correct. The fact is, they're arguing over the wrong question. They're
arguing how much supply is left. The elephant in the room that neither
appears willing to acknowledge, isn't how much oil is left, but how many
people there are consuming it. (INSIGHT!)

Thursday morning's news out of Beijing is the most ominous to date for
those who, correctly in my view, are arguing over not how much supply we
have left, but how quickly demand is overtaking and blowing past--way
past--the ability of any new supplies to keep up.

The Chinese government disclosed that its oil imports surged 15% in July
over the year-earlier level to 2.62 million barrels per day. That's a
stunning and, frankly, frightening increase in just one year. It's still
far short of U.S. imports of 10 million barrels a day, but at that rate of
growth in China, it won't be long before the two powers will be neck and

And it's only the beginning. The fact is, the Chinese are off trolling the
world for sources of supplies that haven't yet been locked up by Western
oil giants. Though they missed getting Unocal (nyse: UCL - news - people )
away from Chevron (nyse: CVX - news - people ), last week, they offered
some $4 billion for PetroKazakhstan (nyse: PKZ - news - people ). And
they've invested heavily in some of the crown jewel fields of Russian oil
giant Yukos after the Russian government came in and stole it from its
owners. Their goal is to become the destination of choice for any oil
neighboring Russia manages to coax out of the ground.

The Chinese are desperate because they, at least, see the locomotive at
the end of the tunnel headed straight for us. The fact is that China has
barely a third of its 1.3 billion people consuming any quantity of oil at
all right now. And yet, its consumption is exploding at the staggering
rate of 15% a year. When the rest of the Chinese head for the pump--look
out .

The reason the demographics are so frightening is that just 400 million or
so Chinese are in the developed regions along the coast from Shanghai down
through Hong Kong and in other big cities like Beijing. If China, as its
leaders suggest they'd like to do quickly, bring into the developed world
even a third of the 900 million in the primitive interior of the nation,
that would mean bringing another entire United States online in just a few
years. And just imagine all the oil they'll consume.

And of course this is ignoring completely hundreds of millions more in
India and Indonesia--the world's second and fourth most populous nations.
Eventually, they'll want their share too. India already imports 76% of its
2.57 million barrels per day consumption. And it's growing as well, though
at a fraction of China's pace.

Can the world and its oil supplies withstand that kind of strain? I think
the only question is how quickly all this will dawn on oil traders and how
fast we reach $100 a barrel. Which itself may be only the beginning
** **

Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.
Mark Twain
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Old 08-26-2005, 02:06 PM   #17
Deep 3.2TL
6th Gear Member
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Join Date: May 2004
Location: Milton
Posts: 3,235
Originally Posted by digiital
Not saying that it can't happen, but why press the nuke button when the storm is still 2-3 days away, once it does happen, sure hit the button. But why get all excited before they are 101% certain. Example the current one thats over Florida is one of the reasons why the price went up today/this week. Now the predicated path will not effect any of the platforms.

True True...

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