Gas to hit a $1 per litre!

[Topspin]

As far as I'm concerned, the "supply and demand" concept does not apply when it comes to oil. It is a resource that everyone needs, so no matter what they charge (within some state of reasonableness) people will always buy. Supply isn't even a factor at this point, it's all about the demand...and the fact people will pay anything because our precious SUV's are just that....precious.

Oh come on....where did you figure that out.

Supply = 86 million barrels a day
Demand = 89 million barrels a day.

Since a couple of years a go, demand has exceeded supply & it looks like it's going to get worse.
Now I don't believe that it justifies the spike in the price of energy that we see right now. But there is no doubt that global crude oil supplies have peaked. We could barely keep up with 86 million Barrels per day. The new strain that China & India posses on the global supply is also what's driving speculators.

Now I know that the market has been a real roller coaster the past year & it's a really complicated situation, but don't discredit the principles of economics just because you see people in precious SUVs....
To be more accurate, the demand is at a five year low & GM is seriously starting to cut back on truck production.

Wouldn't it be more accurate to say demand has exceeded production? I don't believe for a second that peak oil has been reached with all the untapped fields out there.

[Four1oh]

how about peak 'cheap oil'?

[North Shore]

I don't believe for a second that peak oil has been reached with all the untapped fields out there.

Which untapped fields, where? Don't forget that (for argument's sake) Brazil only just found their new field - it now has to be exploited - that should take ~2 years or so, and maybe more, before things really start flowing quickly. What will be the depletion rate in the rest of the world between now and then? IIRC world oil production went down this year compared to last...

[THEICEMAN]

Brazil only just found their new field - it now has to be exploited - that should take ~2 years or so, and maybe more, before things really start flowing quickly. What will be the depletion rate in the rest of the world between now and then?

There's a problem with the coastal oil fields of Brazil. Most of it is extremely deep & very expensive to get to...Petronas estimated that it would cost somewhere around 200$ a barrel to extract. Even if it is exaggerated, it's not worth it.

I don't believe for a second that peak oil has been reached with all the untapped fields out there.

Sorry, I was referring to supply in terms of production. Unfortunately, there's no way that the Opec nations or even Canada will increase production dramatically in order to ease prices. I don't know about you, but I think they are most content with the current market conditions.

Like Four1oh said...the end of cheap oil.

[Topspin]

I don't believe for a second that peak oil has been reached with all the untapped fields out there.

Sorry, I was referring to supply in terms of production. Unfortunately, there's no way that the Opec nations or even Canada will increase production dramatically in order to ease prices. I don't know about you, but I think they are most content with the current market conditions.

Like Four1oh said...the end of cheap oil.

Based on the fact that oil was selling in the area of $20/bbl 7-8 years ago, do you really believe that oil consumption has gone up that much to accelerate the cost of it to this extent? $100/bbl? I say cost because in this realm price is a much different idea.

[squawk 7600]

WOW! It sure happened quicker than I expected. Gas is down to less than $.65 a barrel and still falling. This is not good news, as our dollar is also down, employment is down, the stock market is down, interest rates are down...

....THE WORLD IS IN A FREAKIN' MESS!

[THEICEMAN]

Based on the fact that oil was selling in the area of $20/bbl 7-8 years ago, do you really believe that oil consumption has gone up that much to accelerate the cost of it to this extent? $100/bbl? I say cost because in this realm price is a much different idea.

Because everything is priced at the margins. Given the fact that energy is a vital resource, & at the time it was scarce, the consumer was willing to pay the premiums just to have it. Remember that gas is an inelastic product & consumer response to prince change is marginal.

It's the basic of the law of supply/ demand curve...or think of it like an auction. If demand is higher then supply, then the consumer will bid higher & higher. Thus....in august we saw 147$/ barrel.

Now it's the exact opposite. World demand is down somewhere like 1-2 million barrels a day? The more the global economy seems to slump, the more the pice goes down.
I was shocked to see yesterday that, despite Opec announced a supply cut of 1.5 million barrels, the price still went down.

[pilotbzh]

paid 92.2 a liter today...you got to love the down turn of the economy

[complexintentions]

Crap! My gas prices here in DXB went up to the equivalent of 40 cents/litre from 38 cents CAD, with the drop in the CAD dollar!

On the plus side, my monthly wage has gone up $1800 due to the same drop so not all bad... Keep that CAD dollar and Lower Mainland house prices fallin', I may be able to buy my house in Kitsalano yet! God bless the economic meltdown...

[gasper]

Supply = 86 million barrels a day
Demand = 89 million barrels a day.

For what it's worth .....

Argueably, the Texas oilman, 'T-Bone Pickins' is the guy who knows the most about the oil sector & the supply v.s. demand equation, I heard him several weeks ago in an interview give the same amount of supply/demand figures that you have posted here. In a year or less, I would expect this equation to kick in big time and oil will be way up to $170 - 200/barrell.

We will again be in a situation when we will have the highest gasoline costs ever!