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09/27/2010

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Antonio Turiel

Dave, if the guys at Goldman Sachs are right, present global oil demand is 600,000 b/d over global oil production, the difference being drained from floating storage. This sounds like the prelude of a not-very-far oil spike, what do you think?

The link (seek for September 13, 2010 headline): "Goldman Finds 'Spate' of Bullish Data; Says Oil Price Tide is Turning"

http://www.opisnet.com/wfbs/headlines.html

Steve Bean

I think Antonio is on the right track with his question. How will supply (production) factor in over the next year?

Dave Cohen

So, there are people out here who believe Goldman Sachs? That interesting ... you folks would be good candidates for their GSCI (Goldman Sachs Commodity Index). You can lose your shirts there ;-)

http://www2.goldmansachs.com/services/securities/products/sp-gsci-commodity-index/index.html

I could lay out all the current data and my assumptions about production, economic growth, etc. but rather than do that, I put it to people like Antonio and Steve (above) to demonstrate to me that oil production will fall short of demand in 2011. I would want to see all supply & demand data, assumptions made, etc. Using a model (like a Hubbert curve) will not do. Citing some "authority" (somebody a bit more trustworthy than Goldman Sachs) will not do either, unless you can convincingly demonstrate that they know more than I do.

Good luck with all that.

P.S. About 95% of the confusion "peak now" people have on this issue could be cleared up if they understood the difference between "production" and "production capacity". It would also help to know something about natural gas liquids.

Alexander Ac

No, the price should go down, possibly to 10-15 dolars per barel, as a result of DEFLATION, and this will kill future investment in oil production, see eg: http://www.youtube.com/watch?v=uzef43gdupk&feature=player_embedded

Antonio Turiel

Sorry, Dave, my point here is not a question of modeling supply&demand, but if we can trust GS estimate (I have no sympathy for those guys either). Let's suppose for a while they are not tricking the estimate; if they were right this would be the kind of sign we must expect from a supply tightening, wouldn't it? So my question to you is: can we trust such an estimate? And at the end price is not the real important question (I agree with you in that we should expect wild volatility) but supply.

BTW, I'm a physicist and I know what one can do with models: models are like piggy banks: what you can get out is what you have got in.

Regards from Barcelona.

Robert Baertsch

Dave,
A good way to track Chinese oil consumption is to watch car production. I think they are now producing over 14m cars annually for the domestic market and they add about 1m per year of additional production capacity. They currently have 60m cars on the road. At this rate, they should hit 120m cars (double) in 4-6 years.

Do you know what percentage of current consumption in china is for cars ?

Winston Smith

Dave
Dam I have been waiting a long time to cash in on the pain and misery of my dumb co-workers. Have you no compassion? I have been loading up on Energy Trusts, lowered my energy footprint every year, sneered at SUVS, I am ready now for my payoff. Now you tell me that I need to wait one more year. Next you are going to tell me to sell my silver & gold, eat the stores in the basement and buy a Lincoln Navigator.

Winston

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