Andrei.Hicks wrote on Aug 30^th, 2010 at 9:34pm:


I agree that Oil is unique, because it has enabled so much of the increased Productivity over the last 100 years or so and a large part of the Global Economy is dependent on Oil.

I also agree there was no doubt some speculation in the price increase, but the basis of the increase was driven by speculation on whether Oil Production had Peaked.

It had Peaked & that was the major reason for the Price increase and a large part of the reason for the ensuing GFC, which subsequently resulted in a slowing Global Economy anf falling Oil Demand, which has brought oil Prices to a lower level of stability at present.

As the GFC resunes, I expect Demand will fall further, which will mask the fact that Production is slowing and as Demand slows, the pressure will resume for a lower, not higher price, FOR THE TIME BEING!  

Of course the wild card in this is the US$, which may de-value causing a spike in the Oil Price?

GFC resumes??

You aren't one of those crackpots predicting a double-dip recession are you?

In North America, we have been predicting and seeing a consistent increase in economic growth and also we're likely to see steady positive growth through at least the next 8 quarters.

Europe is seeing some volatility and slowdown in its growth but that is principally caused by the increase of the capital debt taken on to rescue Greece and Portugal which was a domestic structure issue.

The UK is undergoing some different issues.

On the whole though, the regulation has been tightened up on sub-prime lending, the banks have tightened up their exposture to multi-facet investment vehicles and there is a greater responsibility in capital lending.

I am confident we'll continue to see growth continue in North America.
Times are not bad, things on the whole are pretty good for a lot of us you know.

I think the price should go up.

Andrei.Hicks wrote on Aug 30^th, 2010 at 9:55pm:

I hope you haven't been out buying up heaps of shares, on the back of your confident expectations?

perceptions_now wrote on Aug 30^th, 2010 at 10:11pm:



And doesn't that tell you that the OPEC countries are NOT running out of oil??
And since the OPEC countries have REDUCED their production many times since the 80's instead of increasing it.....That means that the OPEC countries, at least, haven't hit 'Peak Production' levels yet....

gizmo_2655 wrote on Aug 30^th, 2010 at 10:19pm:


You are kidding, aren't you, Gizmo???

gizmo_2655 wrote on Aug 31^st, 2010 at 7:46am:


But, you were also serious about the Saudi Reserves, until told that the Saudi's & other OPEC members had arbitrarily increased their reserves in the mid 80's.

By way of further information on OPEC reserves -

The ME OPEC Reserves Anomalies
Based on published data, the ME OPEC countries contain more than 50% of the World's remaining producible oil reserves. Understanding the reliability of these reserves estimates is therefore vital to the future of the oil driven growth in the World Economy.

The anomalous nature of ME OPEC reserves, illustrated below for Kuwait (Figure 2), can be summarised as follows:

1. Reserves were uplifted by 38% in 1984. This does not relate to any verifiable new field discoveries. If Kuwait was the only country to have done this it might be excused as rectifying a past mistake. But in the period 1984 to 1987 all of the ME OPEC countries uplifted reserves by large amounts in this period (Figure 3). For example, the UAE increased their oil reserves by 295% in 1986. One view of these anomalous revisions is that they are related to OPEC quota negotiations and are not founded on geological or engineering data.

2. Following this arbitrary uplift, reserves have more or less remained unchanged. Most significantly, no deductions have been made for production for around 20 years.





The Big 5 ME OPEC producers all show a similar history to Kuwait, with large arbitrary uplift in reserves during the 1980s, followed by "flat line" reserves histories lacking evidence for depletion, though additions are evident in Iran and Iraq.




So much for Reserves, but suffice to say, the reserves quoted clearly are not there!

That said, you say that OPEC have reduced their 'barrels per day' production production a number of times over the last decade.

The reality is that there were two substantial Production declines, the first following the 9/11 attacks & the 2nd following the current GFC, both relate to declining Demand, due to the Economic slowdowns that followed both events.

However, whilst the period mid 2004 to mid 2008 was a relatively stable period, the Oil Price went thru the roof, but production remained stable.

It defies believe that whilst prices rise dramatically and Demand also rose during the 2004-2008 period (in line with Economic & Population Growth), that Oil Production (Supply) did not also rise in line with Growth during that period.

If both Demand & Price are rising, then Economics 101 would see Supply (Production) increase , to take advantage of that situation.

However, Supply (Production) did not rise in line with Growth during that period & it is still only just holding onto current Production.

Why, Because fields such as Ghawar (in Saudi Arabia) & Burgan (in Kuwait) are now in decline and that is why Production will not recover!