Goldman Sacks and Barrons call it Peak Oil

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ewilkerson's picture
ewilkerson
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Goldman Sacks and Barrons call it Peak Oil

I recently the following quote from a newsletter I receive. 

 

The world's most revered investment bank was out with even more damaging news. According to Thursday's Wall Street Journal:

Goldman Sachs Group Inc. said oil supplies will become "critically tight" in 2012, largely because production leader Saudi Arabia won't be able to pump as much extra oil as many people believe.

Robust global economic growth will continue to drive oil demand that outstrips supply, so "it is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand," Goldman said.

Goldman maintains that Saudi oil production peaked in 2008 at 9.5 million barrels per day and will never reach that level again, and has raised its 2012 forecast price to $140 per barrel.

Barron's has gone even further, saying:

Despite the recent 20% decline from April highs, new highs on crude, heating oil, diesel fuel, jet fuel and gasoline seem likely over the next 12 months. Following some further easing over the summer, the second leg of the long-term bull market in petroleum–the first occurred in 2007-08–probably will begin this fall.

As oil producers' spare capacity gradually declines to worrisome levels, the average monthly price could reach a record $150 per barrel by next spring, with spikes to $165 or $170. With this, $4.50-a-gallon gasoline will become the norm. That will put a huge dent in consumer wallets, while ramping up the desirability of fuel-efficient cars.

 

The time is approaching. 

Ernest

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Thanks

Ewilkerson

Thanks for citing these articles.  They are important signposts that Peak Oil is beginning to go mainstream.

Travlin 

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Travlin
Travlin wrote:

Ewilkerson

Thanks for citing these articles.  They are important signposts that Peak Oil is beginning to go mainstream.

Travlin 

I was about to write the same thing.  I wonder, though, if their price estimates and timelines aren't a bit too conservative.

Nonetheless, how long do you think it will take before this awareness at the top of the financial food chain filters down to the unwashed masses?  And, what will they do when they get it?  I believe Chris predicted it would drive spiking prices and hoarding.

Doug

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Travlin, Remember how Chris

Travlin,

Remember how Chris puts it, "Markets will be volatile."

Cheers,

Ernest

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Doug wrote: Nonetheless, how
Doug wrote:

Nonetheless, how long do you think it will take before this awareness at the top of the financial food chain filters down to the unwashed masses?  And, what will they do when they get it?  I believe Chris predicted it would drive spiking prices and hoarding.

Doug

It's possible that it will take longer than we can imagine. Just look at what happened a couple of months ago when oil was north of $110. Some were blaming speculators, others were blaming Obama for not allowing more drilling. The vast majority of the people completely unaware of the reality will go along the political blame depending upon their sensibilities.

There was a guy on the Financial Sense that explained it the best I think. Speculations and market manipulations are responsible for the short term market volatility while the market fundamentals drives the long term trends and it's not easy to clearly see the slow moving direction when there is so much noise on the "signal".

I'm also wondering how long it took to acknowledge the US production peak, I suspect it took a few years until you could clearly see it on a graph.

 

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ewilkerson
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If you'd like to put me or

If you'd like to put me or anyone on your ignore list that is fine.  I'm only trying to help people gain what little knowledge I have.

Cheers my friend,

Ernest

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Reference

Ernest,

Thanks very much for that. I am always on the lookout for references with wide-spectrum "bonifides" to help with geting the word out.

And it really helped that  you the reference to the Journal (date). With the current state of the discussion-argument, I feel I can only make use of what I can actually document. The Barron's I was able to Google.

Thanks again,

Christian

 

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Share the links?
Since the original post did not have links, it would be helpful if one of you shared them.
Travlin 
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Links

Ernest,

I'm with Travlin'. Do you have a link to the article?
I'd like to read it and be able to reference it in the future.

Cheers, and thanks for the good find!

Aaron

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Thanks!

Thanks KWalter! Much appreciated,

Cheers,

Aaron

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Barron article

Interesting article from Barron.

I found the following chart helpful to visualize the effect of oil price on GDP:

150_oil_chart

 

I'm not sure they are quite fully on-board with the Peak Oil concept as they write:

"Barron's estimates that the effective price of crude was about $110 in this year's second quarter, which just ended. So a projected increase to $150 by the second quarter of next year assumes a rise of $40. Oil is likely to stay at $150 for several months, before the promise of greater supply brings a gradual easing."

 

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ewilkerson
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Links

Guys and Gals,

Sorry I did not post the links.  I had received the information from a newsletter.  Next time I'll find them myself.  Thanks KWalter for getting those and helping everyone out.

Cheers,

Ernest

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