All about Oil: an overview

Max Sawicky observes
“The most important story that nobody is talking about is fifty-dollar-a-barrel oil. The potential harm to the U.S. and world economy is huge.”

Well, we here at the Big Picture have been pounding the table on Oil over the past 13 months . . .

Most recently, we observed Oil = $50 a Barrel, including a chart demonstrating why there is no “terror” premium. (these comments were picked up by The Wall Street Journal and Barrons.

Early on, we recognized that it was Chinese Oil Demand underlying the increase in cost. We also looked at Oil Demand versus Refining Capacity. We have examined Global Crude Oil Demand & Gasoline, we looked at Oil: Inflation adjusted.

We asked a lot of rhetorical questions about Oil: Why is it that Gasoline Prices seem to rise so quickly, but fall so slowly? here — Gasoline versus Crude Oil prices.

We wondered: Do Higher Oil Prices Lead to Recessions? Turns out the answer is yes.

We looked at whether Oil Jitters Gotten Overblown? That answer was no. We also observed that Large Hedge Funds have been ignoring our good advice — at their own loss.

Lastly, we addressed the false idea that Oil price rises are like a tax increase . Our sentiments were echoed by Caroline Baum of Bloomberg .

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  1. memer commented on Oct 3

    It’s a combination of things. Prodcution, capcity, consumption are the biggest long-term factors for sure — but there’s also, I contend, an “instability premium.” To what degree at any time one or another factor is responsible for oil pricing, that’s a tougher guess. But it does seem ludicrous not to acknowledge that when momentary spikes of fear (over regional stability) are included in the calculations, there is indeed some correlation.

    In the immediate aftermath of the 9-11 who was brave enough to link a major oil exporting country with terrorism? Not many. Price remained normal. When it seemed war on Iraq was all but inevitable, who really believed that there would be anything but a decisive victory for the U.S.? Not enough. Price remained normal.

    Iraqi handover? Hm, mebbe things settling down…price go down.
    New round of attacks? Price go up.

    And, boy, if we’re running out of oil, like all the hip peak oil theorists say, mebbe the oil mongers are getting a premium now, while they still can (before the Toyota Prius’ of the world help drop demand significantly in another 20 yrs).

  2. PoliBlog commented on Oct 3

    Texas Tea

    Barry Ritholtz of The Big Picture analyzes the current situation regarding oil demand–some very interesting stuff, including the rather important point that the main price pressure on oil prices is not problems in the Middle East, but rather massive d…

  3. Tech Policy commented on Oct 3

    All about Oil: an overview

    I have been reading the Big Picture for the past couple of weeks, and I recommend it. Here is a roundup of Oil related stories discussed on the Big Picture: All about Oil: an overview

  4. bLogicus commented on Oct 4

    Price of Gasoline – Bush’s Fault?

    One of the criticisms that has been leveled at Bush is that the price of gasoline has risen under his watch. In general, I don’t think any president is able to manipulate the global economy the way his detractors (and…

  5. Dale Steffes commented on Oct 4

    Enjoyed this story. Wanted to share my concepts, so I am forwarding this weeks Trend Discontinuity. In Texas I have been labeled as the Cassandra of Crude by Texas Monthly.

    Apparently this TD does not reform very well on this format, but maybe you can make out the intent.

    TD 24 – 39 For more information: Dale W. Steffes 281 497 2179 October 4, 2004

    Energy Model Doubles Oil Transparency

    The dictionary definition of transparency means you can see through something. Oil Transparency means that the data behind the oil transactions can be comprehended.

    This past weekend, the G7, (the financial ministers from the leading seven countries) meeting in Washington DC, called for greater oil market transparency. The are concerned that energy, and in particular, high oil prices are going to negatively affect the world economy.

    Last week, Standard & Poor’s (a financial rating organization) calls for more oil reserve data for each specific country by individual energy companies.

    This coming Tuesday, the Joint Oil Data Initiative meets in Bali, Indonesia to improve oil transparency. This is a group of energy officials from 80 countries that belong to the International Energy Forum. I am not sure what they can do but be more honest.

    A week ago, the World Bank issued their World Development Report prior to their annual meeting in Washington. Their main theme was to improve the investment climate in developing countries.

    A year ago the International Energy Agency issued their World Energy Investment Report, which forecast the world investment requirements between now and 2030.

    On October 26th, 2004, the International Energy Agency will issue their World Energy Outlook 2004. This is a biannual report forecasting the energy industry till 2030.

    To summarize: This outcry is for better understanding of the oil industry.

    A solution for better world oil transparency.

    Our Algorithmic Global Energy Market to 2010 report will be completed by the end of this year. This report will double world energy transparency. I guarantee that this report will be twice as accurate as the IEA World Energy Outlook 2004. Also, it will be twice as comprehendible.

    We judge today’s general energy information to have a confidence of plus or minus 20%. Using our Mirror Energy Model and forecasting processes improves this confidence to plus or minus 10%.

    Anyone really needing to know future energy volumes and prices should contact us for the study outline and prospectus. It will be the most valuable piece of energy management information you can acquire this year. But it is not cheap, it requires the acquirer’s time and thought.

    End of this Trend Discontinuity: The rest is boilerplate and accessibility.

    Anyone wanting to be removed from our email list, please contact us directly. Our plan is to disseminate selective TD’s weekly about energy via email. Also, let us know of anyone who should be added to our email list. Please feel free to distribute this TD on to your membership and peers.

    Energy media or energy strategists who want additional commentary or would like an in-depth story on any of our energy TD’s can contact us directly. Please feel free to reference this Trend Discontinuity. We would appreciate recognition in the credits. These TD’s are just parts related to the world energy scenario.

    Recently Published Trend Discontinuties

    2 9 04 TD24-5 Comparative Analysis of the Long Term Energy Price Forecasts
    2 16 04 TD24-6 Update on the Global Energy Market Study
    2 23 04 TD24-7 The Next New Energy Source
    3 1 04 TD24-8 The Geographical Influences of Energy
    3 8 04 TD24-9 Empowering the Residential Electric Customer
    3 15 04 TD24-10 Who are the Good Oil Finders
    3 22 04 TD24-11 Shaft Horsepower: It makes the world Work
    3 29 04 TD24-12 Calling the 1980’s Oil Bust
    4 5 04 TD24-13 DWS efforts to have the NESP adopted
    4 12 04 TD24-14 Is Strategic Planning for Energy an Oxymoron?
    4 19 04 TD24-15 Review of International Energy Outlook 2004
    4 26 04 TD24- 16 To survive requires a strategic energy plan
    5 3 04 TD24- 17 CITGO made out like a bandit
    5 10 04 TD24- 18 An Algorithmic Global Energy Model to 2010
    5 17 04 TD24- 19 9th Int’l Energy Forum: “Is This Anything”
    5 24 04 TD24- 20 Life Sequence of Energy Model
    6 1 04 TD24- 21 The Oil Enigma
    6 7 04 TD24-22 U.S. Oil Dependency: It didn’t have to be that high
    6 14 04 TD24-23 Watching Oil Inventories
    6 21 04 TD24-24 Letter to President Bush on U.S. energy policy
    6 28 04 TD24-25 A policy to limit U.S. energy imports.
    7 5 04 TD 24-26 Bush unveils a plan designed to reduce oil imports by 2010
    7 12 04 TD 24-27 A $25 trillion World Energy Bill for now till 2010
    7 19 04 TD 24-28 What is the Texas Energy Problem?
    7 26 04 TD 24-29 A Major Energy Price Trend Discontinuity
    8 3 04 TD 24-30 World Energy Dependency on the Middle East
    8 9 04 TD 24-31 A Plan for an Energy Plan
    8 16 04 TD 24-32 The difference between 1980’s high oil prices and today’s high oil prices
    8 23 04 TD 24-33 The new oil price paradigm
    8 30 04 TD 24-34 Teleology: The Study of Design in Nature
    9 7 04 TD 24-35 Basic Energy Understanding
    9 13 04 TD 24-36 Our Basic Tool, How Organizations function
    9 20 04 TD 24-37 The Energy Industry is in for Better Times
    9 28 04 TD 24- 38 Energy 101
    10 4 04 TD 24- 39 Energy Model Doubles Oil Transparency

    P&FC offers a one day energy seminar demonstrating and utilizing our forecasting and/or planning management processes. This seminar is for individuals, as well as organizational groups. Many companies are outsourcing some of their support services. These two functions would be better served if they were outsourced. This may sound heretical, but both of these are staff functions and can be done more efficiently and better by external personnel. (McKinsey, Booz Allen, et al, certainly agree with this concept.)

    Anyone needing a reliable energy forecast of the An Algorithmic Global Energy Market to 2010 should contact us. We invite you to join this multi participant effort, if you have something to contribute.

    We have recently assembled a booklet on twenty years of my published energy analysis, 1983 to 2003. It contains 28 energy articles by DWS over this time frame. Also, we have assembled a booklet of two dozen media articles recording DWS’ efforts over the same time frame. It is a journal record the media published. The price for either booklet is the same as your price forecast of the WTI oil price on the first trading day of 2010 or the current near month WTI oil price today.

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  6. The Glittering Eye commented on Oct 4

    What about China?

    In last Thursday’s first presidential debate of the 2004 campaign season, there were a number of glaring omissions. Iraq was discussed, of course. And the only real substance of the debate was in the discussion of North Korea. The minimal…

  7. The Glittering Eye commented on Oct 4

    What about China?

    In last Thursday’s first presidential debate of the 2004 campaign season, there were a number of glaring omissions. Iraq was discussed, of course. And the only real substance of the debate was in the discussion of North Korea. The minimal…

  8. Different Opinion commented on Oct 11

    Demand Driven Oil Squeeze

    I have … quite naturally very little to add. Except of course that the futures and swaps market for crude still points to only a slow decrease in prices, and the chart below that underlines what Barry says about the oil price increase being driven pr…

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