Long term OIL

[deisik]

Again, you're not talking about the same thing as me, or you're not understanding what I'm saying. When they make a projection on when oil will run out, it's based on usually three key pieces of information: proven oil reserves, rate of consumption, and expected change in consumption rate based on the current trend line. Then there are many lesser factors that might be considered, like speculation on finding new reserves or changes in technology that allow greater access to difficult to access oil. The projection is just a number based on the three main pierces of information that let us estimate how long our oil supply will last. If that number happens to be 100 years, they're not claiming to be projecting what the oil situation will be in 100 years, they're simply saying that oil will last 100 years if nothing changes.

Then it is not even a prediction, just idle talk at taxpayer's expense

1) it doesn't have to be taxpayer's expense. There are plenty of think tanks and public policy groups, not to mention corporations and university economics programs, all publishing these studies.
2) projections are not "idle talk."
3) you're still displaying a non-understanding of what a projection is by saying that "well-founded projections and calculated assumptions" are fine, but projections are "idle talk" at the same time. The methodology is largely the same for projections, so you're arguing both for and against it at the same time. Either you don't realize this, or you need to explain your point better so it's not a steady stream of contradictions.

Whatever you call it, it still doesn't make much sense (let alone reliable assessment) in respect to what might and will actually happen in the so distant future. It is the same assumption (aka "turkey's delusion") that you will live forever just for the fact that you have already lived on long enough (i.e. things don't change). I'm curious why this has ever become a point of debate...

You seem to have an idiosyncrasy of proving yourself right at any time at any cost, even if you're wrong, lol

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[tyz]

Depending on the results of the discussions in Doha this weekend, we will see a big price dump or price pump in the next days. I think, first holds. Saudi Arabia will announce to cut the production and the price goes up to $50+ again.

Possible double top for oil at $42? Wait and see.

[jaysabi]

Not a source of income, of course (though some may disagree on this, lol), but the KSA doesn't have debt either. There were rumors about privatization of Aramco if things would get from bad to worse, but nothing seem to have changed since then...

So they would certainly last longer if they decided to use all the means

The GCC nations have started selling treasury notes and bonds, to fund their growing treasury deficit. I agree that Saudi Arabia owns far more foreign debt, than it's own federal debt. But this situation will not last for more than a few years, if the crude oil prices remain in the $40-$50 range.

And I am quite skeptical about the Aramco stake sale. Right now, the market capitalization of Rosneft is around $50 billion. At the most, Aramco may be worth 10x this amount ($500 billion). A 5% stake sale will bring in around $25 billion, which will fail to cover an year of Saudi budget deficit.

One thing I'm fairly certain of is that a $500 billion valuation on Aramco is way too low. WSJ talks about a 6-10 trillion dollar valuation, but concedes that with so much secrecy surrounding the company, it's hard to know. But even with the uncertainty, you're not even playing in the same ballpark.

http://blogs.wsj.com/numbers/behind-the-numbers-saudi-aramco-valuation-2164/

[jaysabi]

Again, you're not talking about the same thing as me, or you're not understanding what I'm saying. When they make a projection on when oil will run out, it's based on usually three key pieces of information: proven oil reserves, rate of consumption, and expected change in consumption rate based on the current trend line. Then there are many lesser factors that might be considered, like speculation on finding new reserves or changes in technology that allow greater access to difficult to access oil. The projection is just a number based on the three main pierces of information that let us estimate how long our oil supply will last. If that number happens to be 100 years, they're not claiming to be projecting what the oil situation will be in 100 years, they're simply saying that oil will last 100 years if nothing changes.

Then it is not even a prediction, just idle talk at taxpayer's expense

1) it doesn't have to be taxpayer's expense. There are plenty of think tanks and public policy groups, not to mention corporations and university economics programs, all publishing these studies.
2) projections are not "idle talk."
3) you're still displaying a non-understanding of what a projection is by saying that "well-founded projections and calculated assumptions" are fine, but projections are "idle talk" at the same time. The methodology is largely the same for projections, so you're arguing both for and against it at the same time. Either you don't realize this, or you need to explain your point better so it's not a steady stream of contradictions.

Whatever you call it, it still doesn't make much sense (let alone reliable assessment) in respect to what might and will actually happen in the so distant future. It is the same assumption (aka "turkey's delusion") that you will live forever just for the fact that you have already lived on long enough (i.e. things don't change). I'm curious why this has ever become a point of debate...

You seem to have an idiosyncrasy of proving yourself right at any time at any cost, even if you're wrong, lol

I have an tendency of pointing out when you're not making sense or fundamentally misunderstanding something you're proclaiming expertise in, which just happens to be the majority of the time. You've flip flopped yet again. Projections are well-founded, they're just idle talk; back and forth, back and forth. Here's an idea: before you engage in debate, figure out what you believe first. Then write things that support what you believe.

Once again, and see if you can follow it this time, a projection is not a prediction of what will happen. It is an mathematical extrapolation of an event based on all of the known information we have. When the information we have changes, the projections change. A prediction, by comparison, would be that a projection is either incorrect or correct based on unproven hypotheses or ideas, but the projection is merely an exercise in mathematics.

[STT]

Underpriced how? If supply isn't decreasing and demand isn't increasing, the price shouldn't change.

The world is not inert, price will change for external factors also.   Oil is priced in dollars and obviously dollar can alter substantially as their debt vastly outranks that one nations GDP.   Oil and dollars are both a measure of global commerce, neither is required absolutely both have alternatives.  Price can double from here for no good reason outside of supply demand

[jaysabi]

The oil price rebounded from 28 to 38 in just a matter of 2/3 weeks. I do see that Russia and OPEC are increasing their production which means the price can go down again.
Therefore i am not buying atm.

The rebound happened because at $28 a barrel, the crude was too much under-priced. It was not a result of increase in demand or a reduction in supplies. And from where did you get the data regarding Russia and OPEC? According to February 2016 data, the Russian production is stable, and the data for March is not available yet.

Underpriced how? If supply isn't decreasing and demand isn't increasing, the price shouldn't change.

Under-priced in a sense that in most of the producing countries, the cost of production is higher than $28 per barrel. Check this chart:

[chart snip for size]

Countries such as Nigeria, Angola, Norway, United Kingdom, and Canada are considered to be major oil producers (and exporters). Right now, many of them are pumping out crude at a net loss.

The situation is a little bit complex, as the "cost per barrel" includes the capital expenses as well. This investment is already made. So right now, the oil companies have to spend only for the operational expenses + loan repayment for the capital expenses.

[chart snip for size]

Price is a function of where supply meets demand though. The market is agnostic when it comes to whether countries are pumping at a loss or a profit; it just doesn't care. It would take either a supply drop or demand increase for the price to rise. If countries pump less or continue to pump and then store it instead of sending it to market, this should have an effect on price because it reduces available supply, but not simply because they've been pumping at a loss. That's where I don't follow what you're trying to say.

[deisik]

I have an tendency of pointing out when you're not making sense or fundamentally misunderstanding something you're proclaiming expertise in, which just happens to be the majority of the time. You've flip flopped yet again. Projections are well-founded, they're just idle talk; back and forth, back and forth. Here's an idea: before you engage in debate, figure out what you believe first. Then write things that support what you believe

Long-term projections are idle talk. I'd rather say such an expression is oxymoronic per se (or just moronic, lol). Projections make sense if they are short term, when you can assume, to a degree, that things won't change much ("a mathematical extrapolation of an event"). Projections for 100 years are outright bullshit. At least, the ones you made reference to, but, in fact, anything related to humanity as of now, for that long a time span. There's nothing else to say. It is more interesting to see why you are so hell-bent on this nonsense, wow...

Why so much pain in the ass?

[STT]

Not sure I agree, a trend should be more discernable over time if its a general one.  Short term calls pinpoint volatile changes.   Over the very long term we can presume greater demand for energy, just it may not be oil based energy; this comes from population growth which is exponential where as oil is a fixed asset.  
 However oil and technology to get it can vary considerably, I heard reports of a new oilfield in UK where they estimate to recover 20% and clearly in a hundred years we can say we might do better in recovery of oil then presently.    

The long term trends should be the most certain but I get what you are saying, people over reach in their conclusions.   Many say population growth has disastrous repercussions, I dont think so as we also grow in other ways

[rababo]

It's better not to choose oil as long term investment.
Now, there are many new energy resource created to replace oil.
I know the use of oil as energy fuel is still massive. But one day, I'm sure we'll replace oil with other resource, since oil is finite in earth.

[tyz]

Those alternatives will not replace oil in the next two or three decades. So, investing in oil in a 5 to 10 years horizon is not a bad idea. The demand for oil is increasing yearly because countries like India or African countries make good for economic development.

It's better not to choose oil as long term investment.
Now, there are many new energy resource created to replace oil.
I know the use of oil as energy fuel is still massive. But one day, I'm sure we'll replace oil with other resource, since oil is finite in earth.

[Slowturtleinc]

So markets did not dip to much with the news of OPEC breaking from meetings,maybe delayed reaction coming in the next 2-3 days.
Find it funny nothing happened to any real effect in the markets.

[botany]

So markets did not dip to much with the news of OPEC breaking from meetings,maybe delayed reaction coming in the next 2-3 days.
Find it funny nothing happened to any real effect in the markets.

By markets, do you mean equity markets? The crude oil market has tanked with the above news.
Crude oil fell 7% before recovering slightly.
http://www.bbc.com/news/business-36070255

[bryant.coleman]

By markets, do you mean equity markets? The crude oil market has tanked with the above news.
Crude oil fell 7% before recovering slightly.
http://www.bbc.com/news/business-36070255

It will go down to sub-40 levels. The Saudis are making unreasonable demands. They want Iran to freeze the production. How this is possible? The Saudis have increased their output by almost 50% during the past 4-5 years. On the other hand, right now the Iranian production is less than their output during the pre-sanction era.

[jaysabi]

I have an tendency of pointing out when you're not making sense or fundamentally misunderstanding something you're proclaiming expertise in, which just happens to be the majority of the time. You've flip flopped yet again. Projections are well-founded, they're just idle talk; back and forth, back and forth. Here's an idea: before you engage in debate, figure out what you believe first. Then write things that support what you believe

Long-term projections are idle talk. I'd rather say such an expression is oxymoronic per se (or just moronic, lol). Projections make sense if they are short term, when you can assume, to a degree, that things won't change much ("a mathematical extrapolation of an event"). Projections for 100 years are outright bullshit. At least, the ones you made reference to, but, in fact, anything related to humanity as of now, for that long a time span. There's nothing else to say. It is more interesting to see why you are so hell-bent on this nonsense, wow...

Why so much pain in the ass?

Math is not idle talk. You are idle talk. Math is math. If you want to prove your point, take a projection and mathematically show why it is not accurate. Since you cannot do this, your further assertions that projections are idle talk is actually the only idle talk happening here.

[jaysabi]

By markets, do you mean equity markets? The crude oil market has tanked with the above news.
Crude oil fell 7% before recovering slightly.
http://www.bbc.com/news/business-36070255

It will go down to sub-40 levels. The Saudis are making unreasonable demands. They want Iran to freeze the production. How this is possible? The Saudis have increased their output by almost 50% during the past 4-5 years. On the other hand, right now the Iranian production is less than their output during the pre-sanction era.

One thing that is interesting is to watch the Saudis and Iranians jockey for regional supremacy and use oil as a proxy front in their conflict. The longer they fight, the more damage they do to themselves.

[Yakamoto]

By markets, do you mean equity markets? The crude oil market has tanked with the above news.
Crude oil fell 7% before recovering slightly.
http://www.bbc.com/news/business-36070255

It will go down to sub-40 levels. The Saudis are making unreasonable demands. They want Iran to freeze the production. How this is possible? The Saudis have increased their output by almost 50% during the past 4-5 years. On the other hand, right now the Iranian production is less than their output during the pre-sanction era.

One thing that is interesting is to watch the Saudis and Iranians jockey for regional supremacy and use oil as a proxy front in their conflict. The longer they fight, the more damage they do to themselves.

Both are rich countries, I doubt they care what happens in the short term. They're playing chess while we'll playing checkers.

They have money right now, they'll have money later on. They aren't worried when they're only losing a few million per day and they have billions in reserve.

[deisik]

By markets, do you mean equity markets? The crude oil market has tanked with the above news.
Crude oil fell 7% before recovering slightly.
http://www.bbc.com/news/business-36070255

It will go down to sub-40 levels. The Saudis are making unreasonable demands. They want Iran to freeze the production. How this is possible? The Saudis have increased their output by almost 50% during the past 4-5 years. On the other hand, right now the Iranian production is less than their output during the pre-sanction era.

One thing that is interesting is to watch the Saudis and Iranians jockey for regional supremacy and use oil as a proxy front in their conflict. The longer they fight, the more damage they do to themselves.

Both are rich countries, I doubt they care what happens in the short term. They're playing chess while we'll playing checkers

I still wouldn't put these two countries on the same chessboard. Not that I am in favor of Iran (I am, lol), but they have much more than just oil in their inventory, so to speak. But what does the KSA have beyond oil and camels?

The largest on the block US military bases?

[deisik]

Math is not idle talk. You are idle talk. Math is math. If you want to prove your point, take a projection and mathematically show why it is not accurate. Since you cannot do this, your further assertions that projections are idle talk is actually the only idle talk happening here.

Triple lol. Could you please be so kind as to first show how are you going to describe real world events with math? A theory of chances? Okay, but what will a possibility of a given long-term projection outcome (100 years, as you said) be if you take into account the possibilities of changes in the factors that may and will actually happen during that time span? Infinitesimal or just laughable? Let's get real, after all. And how on earth are you going to factor in the events which you can't even imagine (to happen), i.e. can't account for altogether, but which, nevertheless, do happen occasionally, and more often than not with devastating consequences, wtf?

Math is math, and it points a finger at you

[expert4knowledge]

Math is not idle talk. You are idle talk. Math is math. If you want to prove your point, take a projection and mathematically show why it is not accurate. Since you cannot do this, your further assertions that projections are idle talk is actually the only idle talk happening here.

Triple lol. Could you please be so kind as to first show how are you going to describe real world events with math? A theory of chances? Okay, but what will a possibility of a given long-term projection outcome (100 years, as you said) be if you take into account the possibilities of changes in the factors that may and will actually happen during that time span? Infinitesimal or just laughable? Let's get real, after all. And how on earth are you going to factor in the events which you can't even imagine (to happen), i.e. can't account for altogether, but which, nevertheless, do happen occasionally, and more often than not with devastating consequences, wtf?

Math is math, and it points a finger at you

You are right, I have to add that maybe we can theoretically show everything with math but in real world current math and stat cannot describe many of phenomena of the world such as oil price.

[deisik]

Math is not idle talk. You are idle talk. Math is math. If you want to prove your point, take a projection and mathematically show why it is not accurate. Since you cannot do this, your further assertions that projections are idle talk is actually the only idle talk happening here.

Triple lol. Could you please be so kind as to first show how are you going to describe real world events with math? A theory of chances? Okay, but what will a possibility of a given long-term projection outcome (100 years, as you said) be if you take into account the possibilities of changes in the factors that may and will actually happen during that time span? Infinitesimal or just laughable? Let's get real, after all. And how on earth are you going to factor in the events which you can't even imagine (to happen), i.e. can't account for altogether, but which, nevertheless, do happen occasionally, and more often than not with devastating consequences, wtf?

Math is math, and it points a finger at you

You are right, I have to add that maybe we can theoretically show everything with math but in real world current math and stat cannot describe many of phenomena of the world such as oil price.

If the world is truly stochastic, you can't do this even theoretically using however advanced mathematic or statistic concepts. Ultimately, you will be endlessly trying to account for the repercussions of your own calculations detonating through the world (aka the butterfly effect)...

Even a broken clock would be more correct than that