Scared shitless of $100 oil? Here's some HOPE

It's not so much oil prices rising... it's mostly due to the dollar dropping like a stone and oil producing countries still wanting to make money. For us europeans, the high oil prices isn't as noticeable because the currency conversion nearly compensates.

One of the NEGATIVE impacts of the rise of biofuels is its impact on farmland that's to be otherwised used for food. This is already happening in the USA where corn and grain prices are skyrocketing because more and more corn is being diverted for ethanol instead of food. Moreover, land that was normally used for other grains is being converted for ethanol-dedicated corn.

The article does address this--it argues that higher grain prices will lead to less agricultural subsidies and lead to more open markets for grain.

I think the solution lies in using NONFOOD organisms like bacteria to convert WASTE into biofuel. Although this is happening with biogas, it lacks scale and cost-effficiency. I'm thinking maybe fatty bacteria being fed sewage waste to produce gasoline. See http://www.technologyreview.com/Biztech/19128/

True $5 - there has been a push on corn etc and subsidies given to produce more, despite corn is not the most efficent raw product for this purpose and costs around a third more to process than eg sugar cane.

There are apparently a number of states in the US where sugar cane can be grown OK - tho not sure how much land can be devoted to this, but sure would be better (assuming there are no other obstacle courses).

switch grass is a solution for much of the ethanol/corn issue, from what i've read.

this is from forbes

oil at $100 a barrel? No way, says one defiant expert. Expect $60 crude--soon.

War in Iraq, destabilization from Turkey, unquenchable thirst for energy in Asia, millions of fuel-slurping SUVs still cruising American highways. No wonder oil prices have jumped above $90 a barrel on the new York Mercantile Exchange, on their way to $100.

Not so fast. According to some longtime observers, we will soon see $60 oil. Their argument is that the main driver of price spikes is something hardly mentioned these days: a miscalculation by the world's most important supplier, Saudi Arabia. And within the next two months that miscalculation will be corrected and oil prices will drop. "It's sure getting set up for a hard fall," says George Littell, partner at Groppe, Long & Littell, a Houston firm that advises oil drillers and investors on the outlook for crude prices since 1955.

Here's how Littell sees it. Last year Saudi petrocrats thought demand would slacken at the same time that oil production rose from sources outside the Organization of Petroleum Exporting Nations. They cut back Saudi production from 9.5 million barrels a day in March 2006 to 8.5 million a year later in order to keep supply and demand balanced and crude prices hovering around $60 per barrel.

The Saudis got one part of the equation right. The International Energy (otcbb: IENI.OB) Agency puts world demand at 85.9 million barrels a day, up only slightly from 2006. And among the 30 industrialized nations that make up the Organisation for Economic Co-operation & Development, demand has fallen by 100,000 barrels a day over that period.

But the Saudis overestimated non-opec production. While companies of many oil-producing nations are pumping cash into the declining oilfields of the North Sea, the Gulf of Mexico and elsewhere, those projects haven't contributed as much crude as analysts expected. "If demand is less, what's got to be driving the price of oil is lower opec production," Littell concludes. "It's a miscalculation on their part."

Check out the relationship between prices and production in the accompanying chart. The Saudis hold the key to long-term oil prices since they are one of the few exporters--Kuwait and Abu Dhabi are the others--with the ability to increase production significantly. Littell says the Saudis realized their mistake and began pumping more oil in May. At the most recent opec meeting on Sept. 11 members agreed to boost production by another 500,000 barrels a day starting Nov. 1. That increase included a bump in the Saudi quota to 8.9 million barrels a day.

How long before we get some relief? It takes at least a week for the Saudis to complete the paperwork necessary to ship oil to new customers, including arranging letters of credit and other financial details. Then the oil rides in a ship across the Atlantic for 30 days. Add them together and Littell expects the impact of all that additional oil to hit U.S. markets in a couple of months or so. The Saudis "didn't plan on $80 oil," he says. "They wanted to keep it around $60 and did the wrong thing."

Not everyone buys this argument. Certainly not the speculators who've been kicking up the price of oil on the nymex for more than a year. Leo Drollas, chief economist at the Centre for Global Energy (otcbb: GEYI.OB) Studies in London, believes that oil prices will fall eventually, but not until the middle of next year. Refiners are still trying to refill inventories that dropped to the lowest levels since 2003 after an unexpected cold snap in North America at the beginning of this year. The increase in opec quotas, Drollas calls "too little, too late." Besides, he says, "We're facing a winter with low [inventories], and the market's woken up to this." The mess in Iraq, which ships 1.5 million barrels a day through the Persian Gulf, and brinksmanship by Iran may keep prices from falling quickly.

Either way, the theory that China's galloping economy will lead to $100 oil is bunk. Forty percent of that country's oil is burned in so-called stationary uses like electric plants, Littell says, which will be shifted to less expensive fuels if oil prices stay high. Most industrialized countries made that shift decades ago.

Cheap natural gas can also drag down the price of oil--albeit with a lag, since it takes a while to bring gas wells online or to convert some petroleum consumption to gas consumption. At the moment, a million Btu of fuel oil costs $15.40, versus $7 for gas. Two years ago that $8.40 spread was zero. Today's spread will narrow.

Part of the recent increase Tony was really due to markets/investors using oil as an alternative to holding dollars - it's a kinda fake price when it can get distorted like this.

Not at all. The higher the cost of gas is = the less idiots driving on the street = less traffic and less smog. I say double the price of gas!

Im not that smart lol thats a article from forbes

Sound very similar to Charles Krauthammer's proposal for dealing with both the environmental and economic impact of oil dependency.

OK.. Let's put it this way In the last two weeks or so there has been hedging going on and this has had "some" effect on oil prices - little doubt of that. To what degree - hell, don't know.

There is a strong believe in markets that oil will reach $100 soon (it has less than $2 to reach that $100) despite what experts are saying - and this is being confirmed even more on a daily basis recently.

Here's a couple of quick quotes:

This stuff is moving at a fast rate, along with other small deviances creeping in to sway it one way or the other and something a forecaster/analyist could not anticipate. It can prob go either way - so really hard to say what may happen in a week, nevermind a month.

Still got a gutty feeling it will reach $100, maybe sooner, maybe later.

Man you and my dad say the same thing. lol

I can't wait for the day when we don't use any oil products and we can charge those mid east fuckers $100 for cup of wheat. Hard to grow anything in the desert. I hope every one of them is crying for food, and we just say eat your oil assholes.

What went wrong. Here is a page with mpg for cars in 1981 at the bottom of the page. Remember not one of them was a hybrid.
http://www.mpgomatic.com/2007/10/08/...ars-1978-1981/

We have all been sold a bill of goods by oil and car companies.

1981 dodge omni 30 mpg city 50 highway!!!

How does it compare to corn or sugar cane?

The ironic thing about all of these alternatives is that if it wasn't for sky high oil prices, nobody would be spending the $$ to research them and make them work.

Biofuel is a crime against humanity

And all for nothing.

switchgrass produces 1000 gallons of ethanol per acre, compared to 665 gallons for sugarcane and 400 gallons for corn

it also grows year round in harsh conditions.

HOWEVER, there is concern about the efficiency of converting (or whatever the term is) it to ethanol. but it's a matter of time until some very new efficient methods of changing plant cellulose to fuel are out.

i happen to believe the solution going forward will include a variety of vehicles that run on all different fuels. high-efficiency battery technology is way behind other technologies, for instance

save money ride a donkey!

Na the answer will come from Algae it's called Oilgae. My uncle is actually in a test program with the University of Florida. He's growing it on some of his property here in Florida.

It not only is the fastest growing of all the bio fuels but it also has some of the best burn rates. If they get it all worked out, it will likely be the magic bullet for bio fuels.

You just don't hear about it, because the govt is trying to push the corn fed bio fuels scam, because the farm lobbyist has the politicians pockets filled with cash.

Using corn for a bio fuel is a crime.. It's the biggest scam the govt is going to try and pull over our heads too. fuel from corn has a horriable burn rate way worse than gas. That and it will cost more than gas costs today.

It's nothing but a scam that we will pay for, all so the farm industry will get rich.

i wrote that it is A solution, not THE solution.

this is from forbes

oil at $100 a barrel? No way, says one defiant expert. Expect $60 crude--soon.


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However, what no one mentions here is peak oil. Prices might fall in the next couple of months.. but for how many years are the Saudi's going to keep 8.5+ up? And demand grows each and every year. Next year they might need 10, not 9.5... Theoretically the Saudi's can go higher - 12+ but not efficiently.. not without harming the long term total mmbbls produced. And even so.. how many years would that give us anyway?

Biofuels besides algae is a total furphy. Some countries like Brazil might be able to do it in the right climate and right population, but even then not without significant deforestation and other negative factors.

We need a serious "New Deal" on true alternative energy and massive changes in the way we use oil. But people aren't going to give up their hummers until the very second. Whatever. I'm buying up oil and energy stocks. ;)

Oil consumption has been skyrocketing lately. And analysing this situation some scientists doubt that we will have enough "grass" to switch to.

So basically, besides higher yield, it can grown on land that regular food crops or staple crops can't use? If so, it poses a better solution than corn or cane. However, another feasibility issue to look at is how much INPUTS does switch grass need (ie., fertilizer, labor, etc)?

Anyone seen the movie Blood Car? imdb.com/title/tt0780485/
Screw the sugar cane and corn, go with wheatgrass and human blood!

right.

- the conversion cost which is the entire cost of the plant+ process is *either* more expensive or less expensive than corn from what i currently know, 2 reports conflict. i just woke up, i'll wrap up emails and snoop around for more.

from a 2005 report:

* corn requires 29 percent more fossil energy than the fuel produced;
* switch grass requires 45 percent more fossil energy than the fuel produced; and
* wood biomass requires 57 percent more fossil energy than the fuel produced.


http://www.sciencedaily.com/releases...0705231841.htm

The Saudis no longer have the capacity to be a swing producer like that Forbes article suggests.

Thanks for that data. Maybe a genetically modified version or a hybrid version of switch grass that needs less processing can be cultivated so its production costs can be lowered...

Alternatively, maybe more attention could be paid to using BACTERIA that uses HUMAN WASTE/INDUSTRIAL WASTE/AGRICULTURAL WASTE as food can be modified to produce hydrocarbons that can then be cheaply refined to gasoline. I posted a link about that earlier. The first processing plant will be built later this year for bacteria-produced gasoline.

oh, i missed that link, i'll go read that, thx!

I thought President Bush is pushing for new technologies in the way of new fuels as to get away from depending on oil...

Later,

wow, never thought of that

Defiant expert at Forbes wrong. The price of Oil reached $100/barrel for the first time today...

Oil stocks are really propping up the portfolio!

Don't try and beat 'em. Join 'em.

why would $100 oil be 'scarier' than $95 oil? or $80 oil? There's nothing 'scary' about it. The economy is a system designed to absorb and react to every shock applied to it, with volatility flattening as time horizon increases.

lol