The Arabs are Profiting 300% / barrel
01-02-2008, 11:34 AM
#1
Gets Weekends Off
Thread Starter
Joined APC: Jul 2006
Position: AMR Big one
Posts: 177
The Arabs are Profiting 300% / barrel
http://biz.yahoo.com/seekingalpha/07...2_id.html?.v=1
Seeking Alpha
Oil Price Predictions and Break-Even Prices
Tuesday December 25, 5:35 am ET
By Richard Shaw
Richard Shaw (QVM Group) submits: The US Department of Energy “Annual Energy Outlook, 2008″ predicts that oil prices will decline to $58 by 2106, measured in constant 2006 dollars, in their most likely scenario. They predict real prices will rise from 2016 through 2030 to $72 in constant 2006 dollars.
Today’s West Texas Intermediate crude prices are about $93.
The Dept. of Energy is therefore predicting an approximate 38% decline in oil prices over the next 8 years.
Their short term prediction for 2007 back in 2006 was for crude to be around $57 — way off the mark.
An interesting perspective is the $30 break-even price for Saudi Arabia, as reported by the National Bank of Kuwait in mid-2006. The table below shows the break-even oil price for the Gulf Cooperation Council countries, showing an overall break-even price of $38.
Canada’s oil sands are the second largest oil reserves in the world. The largest oil sands syncrude producer is Canadian Oil Sands Trust (Other OTC: COSWF.PK - News) which reports a current break-even cost of about $33 per barrel.
The table below shows the oil reserves of key countries. Note that the Canadian reserves are overwhelmingly oil sands.
Oil sands have not come into full productive capacity, but their cost is significant. Canadian Oil Sands Trust is a large, if not the largest, player in the oil sands / syncrude market. While their break-even costs are about $33, Kurt Wulf of McDep Associates recently reported that PetroCanada’s (NYSE: PCZ - News) new oil sands project will have a break-even cost over $50 per barrel up from $25 per barrel five years earlier.
Given these break-even figures and the willingness of producers to fund projects with $50 break-even costs, we should not expect to see much in the way of long-term supply below about $40 or $50, even in low price scenarios.
The GCC countries have undertaken substantial development of their non-hydrocarbon economies. They depend on profits from oil to fund much of that development. They cannot afford to sell oil near cost and still support their non-oil development programs. Don’t count on sacrifice plays from Saudi Arabia or other OPEC countries. Oil is way up and we think it will stay well above break-even costs for a long time.
There were periods in the past when oil was cheap, but then OPEC was non-existent or weak, and there was no global rise of emerging economies. With China and India alone needing ever more oil to grow their economies, and the possibility of peak oil being here or near, we don’t see any long-term scenario other than high oil prices.
Regardless of your view of whether we have hit “peak oil”, the fact of rising costs of production is clear.
With rising break-even costs and no clear evidence of near-term abatement of geopolitical risks and fears, we find the price predictions by the Department of Energy to be difficult to believe. We hope they are right, but doubt they are right.
This is probably bullish for oil commodity funds such as (AMEX: USO - News) and (NYSE: OIL - News) and for oil royalty trusts such as San Juan Royalty Trust (NYSE: SJT - News) and Canadian Oil Sands Trust.
On the other hand if the Department of Energy is correct about a slide to $58 per barrel through 2016, oil commodity owners will see significant losses.
We think the Department of Energy is too optimistic about prices coming down. They are energy experts and we are not. Nonetheless, we have to make our bet within our portfolio.
Seeking Alpha
Oil Price Predictions and Break-Even Prices
Tuesday December 25, 5:35 am ET
By Richard Shaw
Richard Shaw (QVM Group) submits: The US Department of Energy “Annual Energy Outlook, 2008″ predicts that oil prices will decline to $58 by 2106, measured in constant 2006 dollars, in their most likely scenario. They predict real prices will rise from 2016 through 2030 to $72 in constant 2006 dollars.
Today’s West Texas Intermediate crude prices are about $93.
The Dept. of Energy is therefore predicting an approximate 38% decline in oil prices over the next 8 years.
Their short term prediction for 2007 back in 2006 was for crude to be around $57 — way off the mark.
An interesting perspective is the $30 break-even price for Saudi Arabia, as reported by the National Bank of Kuwait in mid-2006. The table below shows the break-even oil price for the Gulf Cooperation Council countries, showing an overall break-even price of $38.
Canada’s oil sands are the second largest oil reserves in the world. The largest oil sands syncrude producer is Canadian Oil Sands Trust (Other OTC: COSWF.PK - News) which reports a current break-even cost of about $33 per barrel.
The table below shows the oil reserves of key countries. Note that the Canadian reserves are overwhelmingly oil sands.
Oil sands have not come into full productive capacity, but their cost is significant. Canadian Oil Sands Trust is a large, if not the largest, player in the oil sands / syncrude market. While their break-even costs are about $33, Kurt Wulf of McDep Associates recently reported that PetroCanada’s (NYSE: PCZ - News) new oil sands project will have a break-even cost over $50 per barrel up from $25 per barrel five years earlier.
Given these break-even figures and the willingness of producers to fund projects with $50 break-even costs, we should not expect to see much in the way of long-term supply below about $40 or $50, even in low price scenarios.
The GCC countries have undertaken substantial development of their non-hydrocarbon economies. They depend on profits from oil to fund much of that development. They cannot afford to sell oil near cost and still support their non-oil development programs. Don’t count on sacrifice plays from Saudi Arabia or other OPEC countries. Oil is way up and we think it will stay well above break-even costs for a long time.
There were periods in the past when oil was cheap, but then OPEC was non-existent or weak, and there was no global rise of emerging economies. With China and India alone needing ever more oil to grow their economies, and the possibility of peak oil being here or near, we don’t see any long-term scenario other than high oil prices.
Regardless of your view of whether we have hit “peak oil”, the fact of rising costs of production is clear.
With rising break-even costs and no clear evidence of near-term abatement of geopolitical risks and fears, we find the price predictions by the Department of Energy to be difficult to believe. We hope they are right, but doubt they are right.
This is probably bullish for oil commodity funds such as (AMEX: USO - News) and (NYSE: OIL - News) and for oil royalty trusts such as San Juan Royalty Trust (NYSE: SJT - News) and Canadian Oil Sands Trust.
On the other hand if the Department of Energy is correct about a slide to $58 per barrel through 2016, oil commodity owners will see significant losses.
We think the Department of Energy is too optimistic about prices coming down. They are energy experts and we are not. Nonetheless, we have to make our bet within our portfolio.
01-02-2008, 12:14 PM
#2
Gets Weekends Off
Joined APC: Mar 2007
Position: Sabre 60
Posts: 203
I have already decided that my presidential vote for 2008 is going to be based entirely on whoever has the strongest stance for getting our dependence off of oil.
And I am not just talking about our dependence on foreign oil, I am talking about our dependence on oil...PERIOD! The technology is almost there. We just need to implement it. Research money, Legislation to require a % of all energy used to be renewable/nuclear energy, massive tax credits for 100% electric cars, and for companies building them... Just do it already!
I am sick and tired of anytime someone picks up a gun in Nigeria, Saudi Arabia, Iraq, Iran, (insert oil producing country here) that the price of oil skyrockets. Heck, anytime we hear good news from the US economy (job growth, interest rate cuts, etc...), the price of oil skyrockets because that signals the demand for oil may increase, thus dragging the US economy back down. And if you are in the airplane industry, rising oil prices may be the single biggest reason why our industry is in termoil. (NPI) Oil prices are only going to go up and up and up.
I seriously believe that eliminating our dependence on oil will lead to more economic growth than any of the traditional methods (tax cuts, job growth, etc...)
And I am not just talking about our dependence on foreign oil, I am talking about our dependence on oil...PERIOD! The technology is almost there. We just need to implement it. Research money, Legislation to require a % of all energy used to be renewable/nuclear energy, massive tax credits for 100% electric cars, and for companies building them... Just do it already!
I am sick and tired of anytime someone picks up a gun in Nigeria, Saudi Arabia, Iraq, Iran, (insert oil producing country here) that the price of oil skyrockets. Heck, anytime we hear good news from the US economy (job growth, interest rate cuts, etc...), the price of oil skyrockets because that signals the demand for oil may increase, thus dragging the US economy back down. And if you are in the airplane industry, rising oil prices may be the single biggest reason why our industry is in termoil. (NPI) Oil prices are only going to go up and up and up.
I seriously believe that eliminating our dependence on oil will lead to more economic growth than any of the traditional methods (tax cuts, job growth, etc...)
01-02-2008, 12:50 PM
#3
Gets Weekends Off
Joined APC: Jan 2008
Posts: 174
it closed at 99.62 today on the first day of trading. lowest 1st day point drop of the dow in 25 years....ding. the captain has turned on the seatbelt sign.
01-02-2008, 02:02 PM
#4
Gets Weekends Off
Joined APC: Mar 2007
Position: Capt
Posts: 3,215
Hi!
The US has the #1 Wind and #1 Solar power potential of any country on earth.
Let's spend our money on energy technology research done in the US, our money on US-based plants that make energy production equipment, our money on installing the energy equipment here in the US, our money on the maintenance of the US-based energy equipment, and our money on energy distribution systems here in the US.
I don't want any more of my money going to Islamic extremists.
cliff
CDO
The US has the #1 Wind and #1 Solar power potential of any country on earth.
Let's spend our money on energy technology research done in the US, our money on US-based plants that make energy production equipment, our money on installing the energy equipment here in the US, our money on the maintenance of the US-based energy equipment, and our money on energy distribution systems here in the US.
I don't want any more of my money going to Islamic extremists.
cliff
CDO
01-02-2008, 02:06 PM
#5
Gets Weekends Off
Joined APC: Mar 2007
Position: Sabre 60
Posts: 203
Originally Posted by atpcliff
Hi!
The US has the #1 Wind and #1 Solar power potential of any country on earth.
Let's spend our money on energy technology research done in the US, our money on US-based plants that make energy production equipment, our money on installing the energy equipment here in the US, our money on the maintenance of the US-based energy equipment, and our money on energy distribution systems here in the US.
I don't want any more of my money going to Islamic extremists.
The US has the #1 Wind and #1 Solar power potential of any country on earth.
Let's spend our money on energy technology research done in the US, our money on US-based plants that make energy production equipment, our money on installing the energy equipment here in the US, our money on the maintenance of the US-based energy equipment, and our money on energy distribution systems here in the US.
I don't want any more of my money going to Islamic extremists.
01-02-2008, 02:08 PM
#6
Gets Weekends Off
Joined APC: Dec 2007
Position: A320 FO
Posts: 1,454
The increase of oil prices is nothing but a scam from the oil companies to make more money at the expense of the consumer. It seems that any kind of bad new will increase the price of oil but it never comes down. The supply of oil is the same, the demand is the same. Oil companies are very greedy. Stop the greed of the oil companies and do not blame it on the Arabs.
01-02-2008, 02:40 PM
#7
Gets Weekends Off
Joined APC: Feb 2007
Position: Right Seat
Posts: 1,458
I say let's just go and conquer all the arab countries and take their oil.
01-02-2008, 02:44 PM
#8
Gets Weekends Off
Joined APC: May 2005
Position: Recalled....
Posts: 218
The US has the #1 Wind power potential of any country on earth.
01-02-2008, 03:21 PM
#9
Gets Weekends Off
Joined APC: Dec 2007
Position: Airline #4
Posts: 450
Originally Posted by aerospacepilot
I have already decided that my presidential vote for 2008 is going to be based entirely on whoever has the strongest stance for getting our dependence off of oil.
And I am not just talking about our dependence on foreign oil, I am talking about our dependence on oil...PERIOD! The technology is almost there. We just need to implement it. Research money, Legislation to require a % of all energy used to be renewable/nuclear energy, massive tax credits for 100% electric cars, and for companies building them... Just do it already!
I am sick and tired of anytime someone picks up a gun in Nigeria, Saudi Arabia, Iraq, Iran, (insert oil producing country here) that the price of oil skyrockets. Heck, anytime we hear good news from the US economy (job growth, interest rate cuts, etc...), the price of oil skyrockets because that signals the demand for oil may increase, thus dragging the US economy back down. And if you are in the airplane industry, rising oil prices may be the single biggest reason why our industry is in termoil. (NPI) Oil prices are only going to go up and up and up.
I seriously believe that eliminating our dependence on oil will lead to more economic growth than any of the traditional methods (tax cuts, job growth, etc...)
And I am not just talking about our dependence on foreign oil, I am talking about our dependence on oil...PERIOD! The technology is almost there. We just need to implement it. Research money, Legislation to require a % of all energy used to be renewable/nuclear energy, massive tax credits for 100% electric cars, and for companies building them... Just do it already!
I am sick and tired of anytime someone picks up a gun in Nigeria, Saudi Arabia, Iraq, Iran, (insert oil producing country here) that the price of oil skyrockets. Heck, anytime we hear good news from the US economy (job growth, interest rate cuts, etc...), the price of oil skyrockets because that signals the demand for oil may increase, thus dragging the US economy back down. And if you are in the airplane industry, rising oil prices may be the single biggest reason why our industry is in termoil. (NPI) Oil prices are only going to go up and up and up.
I seriously believe that eliminating our dependence on oil will lead to more economic growth than any of the traditional methods (tax cuts, job growth, etc...)
01-02-2008, 03:27 PM
#10
Gets Weekends Off
Joined APC: Feb 2006
Position: DD->DH->RU/XE soon to be EV
Posts: 3,732
Originally Posted by atpcliff
Hi!
The US has the #1 Wind and #1 Solar power potential of any country on earth.
Let's spend our money on energy technology research done in the US, our money on US-based plants that make energy production equipment, our money on installing the energy equipment here in the US, our money on the maintenance of the US-based energy equipment, and our money on energy distribution systems here in the US.
I don't want any more of my money going to Islamic extremists.
cliff
CDO
The US has the #1 Wind and #1 Solar power potential of any country on earth.
Let's spend our money on energy technology research done in the US, our money on US-based plants that make energy production equipment, our money on installing the energy equipment here in the US, our money on the maintenance of the US-based energy equipment, and our money on energy distribution systems here in the US.
I don't want any more of my money going to Islamic extremists.
cliff
CDO
Remember when somebody wanted to build a large wind farm off the coast of Nantucket island? Kerry and Teddy K fought it. Can't have that precious view from your Nantucket retreat that you spend very little time in but still consumes energy being disrupted by some windmills out there in the ocean, know can you?
