Lord PercyPercy

$1.93 this morning in Land O Lakes.

The only thing I keep thinking is, when the prices rebound it's really going to hurt.

Pulaski

A report from Goldman Sachs today predicts that the oil glut is going to last fifteen years and could see oil selling at $20/barrel.

Lord PercyPercy

I still remember being told that there would be no oil past 2020 in school (I'm not suggesting btw that depletion of the worlds oil reserves is not happening - merely that their estimations seem a little off.)

Pulaski

Yeah, I remember that. I don't think anyone is prepared to predict when oil will run out now. The last I heard was that Venezuela has more oil reserves than Saudi Arabia, and there is probably more oil under Sussex than there was in the North Sea.

IIRC about 7-8 years ago an economist wrote that the end of the "oil age" would be marked not by scarcity and prices of $200+/barrel but by a collapse in the price of oil and oil fields not being economic to develop. It looks like he might be right.

Mr Weeze

Meh on all of that. 7-8 years ago unconventional oil didn't exist as a concept.

Owen778

Every year, analysts write that the oil price will go up, down or stay the same. Many of them tend to under-react to changes, then over-react to changes.

While no-one can truly predict what the oil price will do, it seems unlikely that oil will sit at $20/bbl for fifteen years. This is because unconventionals (mostly shale oil and gas) are both quicker to develop and quicker to decline than offshore conventionals. This means that the feedback between oil price and supply should be quicker now than in the past.

Mr Weeze

To be fair to Goldman they aren't predicting a prolonged period of $20, just raising the spectre of it. I wonder why, what do they gain.

Saudi are estimated to be burning through more that $12bn a month. Their cash balance was around $700bn. They can weather this for a while, but 95% of their economy is driven by oil revenues.

U.S. Production has started to turn now - people are focusing on balance sheet strength rather than production growth.

Oh, I've just seen the GS prediction has a <50% probability of $20 attached to it. Headline grabbing. Again, why?

Owen778

Oh, and to address this paragraph directly: Venezuelan heavy oil is only economic at very high oil prices. And, as far as I know, the potential unconventional oil under The Weald is still only hypothetical, plus a claim like that could only come as a high end possibility, from a company looking for investors. It is unlikely.

Neither of these comments are in any way consistent with the "end of oil" coming when the price is too low to develop anything. The only way that would happen is discovering a cheap method to create synthetic oil.

Owen778

Maybe Goldman just included 20% in their range, because they were caught out by the size of the big drop and how long it's lasted and now want to fully capture the volatility? And the headlines themselves come from the financial news sites picking up on that?

Bob

Finally, we had a drop in price.

Cheapest place is now $2.07G for the cheap stuff.

username.exe

$3.09 cash price near me.

My sister in law believes it's so cheap now she may as well fill up with premium octane .

scrubbedexpat091

It went back up to 1.11/liter for today, they simply cannot make up their mind. Up and down up and down.

Sheepdip

$1.77 today. Went and test rode an electric motorcycle and the economics of it don't make it look like a purchase at these prices.

Pulaski

I don't need to tell you what I paid today.

scrubbedexpat091

Lucky folks down there with such cheap gas....


2.25 to 2.69 along the border on the US side.