I think this sums it up:
From an AP article by John Wilen.
"We have a weaker U.S. dollar, and the buyers are out in force right now," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
Saudi Arabia, the world's largest oil producer, told U.N. chief Ban Ki-moon over the weekend that it would boost output by 200,000 barrels a day, or by 2 percent, from June to July. In May, the kingdom raised production by 300,000 barrels a day.
The latest promise of a production increase by the kingdom was largely ignored by traders Monday amid strong global demand and falling production elsewhere.
Cordier said Saudi Arabia has "to increase by north of 1 million barrels per day" to have an impact on prices, "and the market doesn't think they have it."
My emphasis added.
So we have a fire in the North Sea, and instead of calming the market the Saudis are farting around with small numbers and losing credibility by the day. Now we have a new trading record near $140.
Monday, June 16, 2008
Sunday, June 15, 2008
Lazy day
OK well there isn't a huge amount of news for the last week.
So I'm going to be lazy and give you my Short summary and some additional reading.
The EIA report (US government) that came out Wednesday was very similar to the previous week. Almost 5 million barrels of crude were consumed from Inventory by the refineries but not replaced by production or imports.
Oddly enough the market reaction was the exact opposite of the prior week.
In the week ending June 6th the market initially saw the increase in gasoline reserves as proof of demand destruction - the price of crude consequently fell.
This week, ending on June 13th, folks instead realized that with Morgan Stanleys news of falling tanker traffic and the dropping crude inventory that perhaps it was more prudent to consider CRUDE numbers instead of gasoline numbers.
Refineries are apparently over-producing relative to demand, their margins are now almost all gone and we should expect to see utilization drop a little. It has fallen slightly the last few weeks but if the trend continues we will see that drop further. They cant keep turning lemons into lemonade if no-one's buying their lemonade...
The media is of course still full of finger pointing, rage and denial. I don't bother with the articles asserting that oil should be $50/bbl or that its all the fault of Democrats who don't want to allow drilling in US territory. By the way search for McCains voting record on ANWR. Is he really a republican at all?
It looks like my prediction is dead as a do-do. Price seem to be relaxed in the 130-140 range, some analysts have called recent movements "range finding" since no significant news has occurred since the 6th. That was until today, Sunday the 14th - more on that further down.
So today I will post articles that offer some insight, or just seem to me to have found the needle of truth in the haystack of Bull Excrement that the mainstream media has to offer.
http://www.newsweek.com/id/141524/page/1
This might be my favorite article for a long time. Robert recognizes peak oil, he recognizes that we cant drill our way out - but that we might at least want to get started on the new wells anyway (since it takes so long to get to production). He also recognizes that while corn ethanol doesn't represent a final solution, that there is work to be done on cellulosic ethanol and Biodiesel from algae. This guy seems to have his thoughts together. I will look for further stories from him in the future.
Going back to cellulosic ethanol I eagerly await the ribbon cutting on the plant at Soperton in GA. That plant plans to use pine mulch to make ethanol using new process. The process is not a distillery type process, but requires heat and pressure to "gassify" the mulch. The gas is then treated to create ethanol. The process should be much more efficient than the distillation and dehydration process at a corn ethanol plant. I assume that the amount of energy produced is MORE than the amount needed to make it. The net return on Energy invested (EROI) is critical to a post peak world. If we need more natural gas, or electrical energy to make the ethanol then we will only end up in trouble with natural gas or coal - hardly a solution.
I wonder when the plant will start production? Hopefully soon. Here is their website:
http://www.rangefuels.com/our-first-plant
Back to more recent developments:
Saudi Aramco Chief, Al Naimi (remember that name - someday hes going to go down in History as one of the worlds greatest liars) has announced intentions to add about 200,000 barrels a day to Saudi output. I expect this will have some small limited effect on the oil market. We will need to wait until the market opens to find out what effect, but I'm guessing it will be near zero, maybe a few dollars. The reason for skepticism is because the world is slowly starting to realize that the Saudi propaganda machine is, well... A propaganda machine. Any real reduction in price would have to come after we see tanker traffic numbers. The 200,000bpd increase will probably simply offset decline in other fields or other OPEC countries, leaving output flat. That's not really going to help in a world that gets thirstier by the day. Each year the population grows by over 70 million people. And they all want to drive a car!
So I'm posting this article about Saudi Arabian oil information.
http://www.theoildrum.com/node/4153
OK, and here too is a newer presentation by Matt Simmons. (PDF reader needed)
http://www.simmonsco-intl.com/files/Island%20Institute.pdf
I cant help question Matt's credibility a little since he owns a company dedicated to investing in the oil industry. But having said that, if he is fleecing us (them?) with doom and gloom data, hes doing a really remarkable job of making it look real. The more time goes on the more real it looks. His 2004 book "Twilight in the desert" has certainly turned out to be quite the sensation with many of its key points standing the test of time.
One more item I want to address today is the onslaught of
"run your car on water" websites. Several people have approached me asking if this is something they should consider.
http://runyourcarwithwater.youbetterreadthis.com/
this is just one example of the scam. Others do exist - they all bear similarities:
So I'm going to be lazy and give you my Short summary and some additional reading.
The EIA report (US government) that came out Wednesday was very similar to the previous week. Almost 5 million barrels of crude were consumed from Inventory by the refineries but not replaced by production or imports.
Oddly enough the market reaction was the exact opposite of the prior week.
In the week ending June 6th the market initially saw the increase in gasoline reserves as proof of demand destruction - the price of crude consequently fell.
This week, ending on June 13th, folks instead realized that with Morgan Stanleys news of falling tanker traffic and the dropping crude inventory that perhaps it was more prudent to consider CRUDE numbers instead of gasoline numbers.
Refineries are apparently over-producing relative to demand, their margins are now almost all gone and we should expect to see utilization drop a little. It has fallen slightly the last few weeks but if the trend continues we will see that drop further. They cant keep turning lemons into lemonade if no-one's buying their lemonade...
The media is of course still full of finger pointing, rage and denial. I don't bother with the articles asserting that oil should be $50/bbl or that its all the fault of Democrats who don't want to allow drilling in US territory. By the way search for McCains voting record on ANWR. Is he really a republican at all?
It looks like my prediction is dead as a do-do. Price seem to be relaxed in the 130-140 range, some analysts have called recent movements "range finding" since no significant news has occurred since the 6th. That was until today, Sunday the 14th - more on that further down.
So today I will post articles that offer some insight, or just seem to me to have found the needle of truth in the haystack of Bull Excrement that the mainstream media has to offer.
http://www.newsweek.com/id/141524/page/1
This might be my favorite article for a long time. Robert recognizes peak oil, he recognizes that we cant drill our way out - but that we might at least want to get started on the new wells anyway (since it takes so long to get to production). He also recognizes that while corn ethanol doesn't represent a final solution, that there is work to be done on cellulosic ethanol and Biodiesel from algae. This guy seems to have his thoughts together. I will look for further stories from him in the future.
Going back to cellulosic ethanol I eagerly await the ribbon cutting on the plant at Soperton in GA. That plant plans to use pine mulch to make ethanol using new process. The process is not a distillery type process, but requires heat and pressure to "gassify" the mulch. The gas is then treated to create ethanol. The process should be much more efficient than the distillation and dehydration process at a corn ethanol plant. I assume that the amount of energy produced is MORE than the amount needed to make it. The net return on Energy invested (EROI) is critical to a post peak world. If we need more natural gas, or electrical energy to make the ethanol then we will only end up in trouble with natural gas or coal - hardly a solution.
I wonder when the plant will start production? Hopefully soon. Here is their website:
http://www.rangefuels.com/our-first-plant
Back to more recent developments:
Saudi Aramco Chief, Al Naimi (remember that name - someday hes going to go down in History as one of the worlds greatest liars) has announced intentions to add about 200,000 barrels a day to Saudi output. I expect this will have some small limited effect on the oil market. We will need to wait until the market opens to find out what effect, but I'm guessing it will be near zero, maybe a few dollars. The reason for skepticism is because the world is slowly starting to realize that the Saudi propaganda machine is, well... A propaganda machine. Any real reduction in price would have to come after we see tanker traffic numbers. The 200,000bpd increase will probably simply offset decline in other fields or other OPEC countries, leaving output flat. That's not really going to help in a world that gets thirstier by the day. Each year the population grows by over 70 million people. And they all want to drive a car!
So I'm posting this article about Saudi Arabian oil information.
http://www.theoildrum.com/node/4153
OK, and here too is a newer presentation by Matt Simmons. (PDF reader needed)
http://www.simmonsco-intl.com/files/Island%20Institute.pdf
I cant help question Matt's credibility a little since he owns a company dedicated to investing in the oil industry. But having said that, if he is fleecing us (them?) with doom and gloom data, hes doing a really remarkable job of making it look real. The more time goes on the more real it looks. His 2004 book "Twilight in the desert" has certainly turned out to be quite the sensation with many of its key points standing the test of time.
One more item I want to address today is the onslaught of
"run your car on water" websites. Several people have approached me asking if this is something they should consider.
http://runyourcarwithwater.youbetterreadthis.com/
this is just one example of the scam. Others do exist - they all bear similarities:
- Pretty lady talking to you about the product
- Fake testimonials that you cant verify independently
- Half truths - misrepresented - with credible sources talking about the technology
- Money back guarantee - to try to win your confidence.
The problem is that these kits amount to a perpetual motion machine. The amount of energy needed to split water into its component gasses is greater than the energy that can be converted into useful motive power by burning those gasses. And since the energy that splits the water using the old process of electrolysis comes from the battery (and thus the alternator and the engine itself) you are looking a perpetual motion type device.
Just remember that electrolysis is an old well known process - not new technology. The amount of gas recovered from the process is small - nowhere near enough to assist in the operation of an automobile engine. Heck even the mythbusters tried it and showed it to be a fraud.
If it sounds too good to be true it is. Ford, GM, Caterpillar, Cummins, Chrysler, BMW, PSA, Nissan, Honda, Toyota and more. All huge companies that stand to make massive amounts of money from such technology should it show real benefits. With all the engineers in all these companies - myself one of them, how could we have missed something so simple? We didn't. Its a very simple and successful scam, sell a junk product, and hide when the customers come for their money back guarantee. By the time folks figure it out the company owner will be tanning in Brazil or somewhere else that has no extradition treaty. Unfortunately for every garage inventor who makes a brilliant discovery, there are 100 scammers who weave half truths into fraudulent products. They all come out of the woodwork when gas prices rise and the public - laden with SUVs and trucks come looking for a free lunch.
So things to look for this week:
- Market response to Saudi oil production increase.
- EIA inventory report Wednesday - look for further drop in crude inventory and refinery utilization dropping further.
- Any news of supply disruption, depletion etc... bringing prices up
- Any news of demand destruction or faltering global economic news - bring prices down.
One more thing. Cubs still the best team in baseball this week. The Cubs Soriano is out with a Broken hand, but likewise the St Luois Cardinals Slugger Albert Pujols is also out with a bad calf strain.
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