Shell Oil Former CEA Calls for $5.00 gas by 2012

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ewilkerson's picture
ewilkerson
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Shell Oil Former CEA Calls for $5.00 gas by 2012

I saw something unusual today on CNN.   The former CEO of Shell said we will have $5.00 gas by 2012.  He went on to say things would be much worse within a decade due to inaction of the government.  Of course, there was no mention of Peak Oil.  He attributed it to the BRICK countries growing usage.  At least there are some prominent people starting to talk about how serious the situation is.

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

I BELIEVE!!!!!!!!!!

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

5 dollars is a given, as the dollar falls.

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

5 dollar gas will cause chaos.  That will also mean 5 dollar derivatives like diesel and heating oil.  Energy inflation would rule our lives.  Prices of everything will go up rapidly world wide.  Food will be hit hard.  All commodities will as they require a lot of energy to produce.  I can't even imagine what will happen.  Politicians will be forced to step in.  Who knows what happens then.  Speculation will be banded by governments around the world, that is pretty much a given.  The energy markets will be reduced to producers and consumers only.  Back when oil hit 147 dollars a barrel for a short interval a study was done.  It showed that 71% of the contracts were held by speculators, entities that neither produced oil or purchased oil for delivery.  Taking speculation out of the market would substantially reduce the price.  Of course, that would not solve the fundamental problem, it would just be a band-aid but maybe at that point people and governments would adopt a new course and start taking a very serious look at energy use has a whole.

5 dollar gas would be a big deal.  It would consume all the discretionary income of the people.  Instant permanent recession.  It would be a massive wealth movement to oil producing nations.  Demand destruction would move in and change the equation some.  If it is all linear, and it probably is not, then some simple math shows -

3 usd/gal / 85/bar = 5 usd/gal / X/bar

X = 141/bar

So, 141 bucks per barrel results in about 5 dollar gas.  I suppose it could happen in 2011.  He might be right.  About all you can really count on is it will happen sooner or later.  And then there are the politicians...

This is an interesting site for oil heads.  It has been around for years.

http://www.oil-price.net/

It is predicting 105 per barrel one year out.  Of course it could be wrong, or not.  And then there are the politicians...

 

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

It also appeared on Foxnews.com http://www.foxnews.com/politics/2010/12/27/oil-exec-predicts-gallon-gas-...

... former Shell executive John Hofmeister offered a more aggressive estimate, saying Americans could be paying $5 a gallon in two years

"It is pure politics that keeps us from drilling more of our own resources," he said.

Besides attributing it to the BRICK countries he also attributes $5 oil to unenlightened politians that prevent unlimited and unregulated drilling.

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012
frobn wrote:

It also appeared on Foxnews.com http://www.foxnews.com/politics/2010/12/27/oil-exec-predicts-gallon-gas-...

... former Shell executive John Hofmeister offered a more aggressive estimate, saying Americans could be paying $5 a gallon in two years

"It is pure politics that keeps us from drilling more of our own resources," he said.

Besides attributing it to the BRICK countries he also attributes $5 oil to unenlightened politians that prevent unlimited and unregulated drilling.

As usual, politicians control this.  The democratic party has repeatedly tried and succeeded in limiting drilling in America.  I do not understand this.  It is very bad for America.  We should be hunting and drilling like crazy people at these prices while at the same time pursuing nuc and hydro power as rapidly as possible.  There is a direct relationship between abundant cheap energy and economic growth.  This is covered in CM's crash course.  It is like the democratic party hates America and wants us to have a financial/energy emergency.  They are Americans.  They should want what is best for America and the world as a whole.  This is another reason that America is going to continue to remove politicians from the democratic party in upcoming election cycles.

 

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

I took a look a the pending fuel duty increase for the new year and it makes the mind boggle. By the end of Feb I will be paying an additional £5 pounds every other week extra on fuel. At best Fuel should be at 1.16ltr. For the moment it will reflect an extra £120 a year at the pump.

Excise duty on fuels, petrol and diesel were increased by 2p per litre on 1 September 2009 to 56.19p per litre. These duties increased on 1 April 2010 by 1p per litre to 57.19p per litre. The duties then further increased on 1 October 2010 by 1p per litre. Then On the 1 January 2011 another 1p was added in Tax...! And it does not stop there, duties will continue to increased on 1 April 2011 until 2014 by 1% above inflation each year.

The Bank of England said in its August Inflation Report that inflation will likely remain above the 2% target until the end of 2011 which it has done so. It's another no brainier.

So lets do a modest scenario based on my personal usage of petrol, fuel hits 1.25 by April 2011 + 2% inflation = 127.5ltr = £76.50 to fill 60ltr tank. I am now paying £165.60 more per year in comparison to mid 2010 fuel prices when fuel was 1.16ltr. 

For the UK, if Fuel is predicting 105 per barrel? then it will get interesting. This poll shows an extraordinary level of agreement that the way the world is producing and using energy is not viable http://www.globescan.com/news_archives/bbcwsenergy/ Personal I know it was the Governmental stupidity that put us here in the first place.  

I listened to Milton Friedman while I exercised this morning. I like that man and what he has to say. What worries me though is that he earned himself the Nobel Prize in Economics, he has done the research to prove that laissez faire capitalism is the only way in all history across all countries that any society has ever flourished, and yet that still is not enough to convince his country that they are headed up $hit creek. As for the UK, I am in preparation as conditions are right for a 'perfect economic storm'

http://www.bbc.co.uk/news/business-12117902

Petrol price graph

Given that each penny increase in fuel duty raises about an extra £500 million for the Exchequer, it is easy to see why the chancellor is hiking rates. But if the nation's 34 million motorists are pushed too far they will drive less and the Treasury could actually see their tax take fall. http://en.wikipedia.org/wiki/Laffer_curve

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

dshields:

 

The whole point of peak oil (and the peaks of other resources) is that, when we get to the peak, growth will no longer be possible.  Maybe you already know that and what you're saying is that we can delay the peak with "drill, baby, drill" actions.  Imo we would all be wiser to learn to do with less ASAP - better that then kicking the can down the road as long as we can. 

And of course, there are good reasons for regulating the extractive industries that do so much damage to the environment.   

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012
dshields wrote:

As usual, politicians control this.  The democratic party has repeatedly tried and succeeded in limiting drilling in America.  I do not understand this.  It is very bad for America.  We should be hunting and drilling like crazy people at these prices while at the same time pursuing nuc and hydro power as rapidly as possible.  There is a direct relationship between abundant cheap energy and economic growth.  This is covered in CM's crash course.  It is like the democratic party hates America and wants us to have a financial/energy emergency.  They are Americans.  They should want what is best for America and the world as a whole.  This is another reason that America is going to continue to remove politicians from the democratic party in upcoming election cycles.

 

 

I don't know. It occurs to me that if we really do have significant domestic petroleum reserves, the very best thing we can do is to leave the oil in the ground for now.  Imagine the value of that oil and the strategic global advantage we will have in 50 - 100 years as other countries deplete their resource and we still have some domestic oil.

I think that it is short-sighted to race to extract as much domestic oil as we can now in the face of so much global supply uncertainty.

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

TALL - Good point but if gas goes to 5 dollars a gallon there will be a financial emergency in America that 20 somethings will be telling their kids about 15 years later.

PYRANABLADE - Regulating the extractive industries needs to be done to a certain degree to make sure that unscrupulous people do not cause devastation is a good thing but using government regulation to to control business to the point where we experience a financial emergencies is a very bad thing.  Regulation should be used to help the people of nation, not put them in the poor house.

 

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012
Tall wrote:
dshields wrote:

As usual, politicians control this.  The democratic party has repeatedly tried and succeeded in limiting drilling in America.  I do not understand this.  It is very bad for America.  We should be hunting and drilling like crazy people at these prices while at the same time pursuing nuc and hydro power as rapidly as possible.  There is a direct relationship between abundant cheap energy and economic growth.  This is covered in CM's crash course.  It is like the democratic party hates America and wants us to have a financial/energy emergency.  They are Americans.  They should want what is best for America and the world as a whole.  This is another reason that America is going to continue to remove politicians from the democratic party in upcoming election cycles.

 

 

I don't know. It occurs to me that if we really do have significant domestic petroleum reserves, the very best thing we can do is to leave the oil in the ground for now.  Imagine the value of that oil and the strategic global advantage we will have in 50 - 100 years as other countries deplete their resource and we still have some domestic oil.

I think that it is short-sighted to race to extract as much domestic oil as we can now in the face of so much global supply uncertainty.

 

I agree!!

Why drill it all out as fast as we can?  Can't we leave something for our grandchildren and their kids?

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World Oil Production Forecast - Update November 2009

Read This ...

~ VF ~

 

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012
maceves wrote:
Tall wrote:
dshields wrote:

As usual, politicians control this.  The democratic party has repeatedly tried and succeeded in limiting drilling in America.  I do not understand this.  It is very bad for America.  We should be hunting and drilling like crazy people at these prices while at the same time pursuing nuc and hydro power as rapidly as possible.  There is a direct relationship between abundant cheap energy and economic growth.  This is covered in CM's crash course.  It is like the democratic party hates America and wants us to have a financial/energy emergency.  They are Americans.  They should want what is best for America and the world as a whole.  This is another reason that America is going to continue to remove politicians from the democratic party in upcoming election cycles.

 

 

I don't know. It occurs to me that if we really do have significant domestic petroleum reserves, the very best thing we can do is to leave the oil in the ground for now.  Imagine the value of that oil and the strategic global advantage we will have in 50 - 100 years as other countries deplete their resource and we still have some domestic oil.

I think that it is short-sighted to race to extract as much domestic oil as we can now in the face of so much global supply uncertainty.

 

I agree!!

Why drill it all out as fast as we can?  Can't we leave something for our grandchildren and their kids?

I hear you but if we have out of control energy driven inflation we will have a very serious economic disaster.  Hopefully, if we drill and produce now and focus on developing other energy sources like hydro and nuc then your grand kids will not have to live in poverty in a third world country with you telling them how great it used to be here.

Energy inflation represents a very serious threat to our economic well being.  We have been stupid and ignored this threat and now it is upon us and we are unprepared.  Unless we as a nation are will to accept a substantial reduction in our standard of living we need oil at a reasonable price until we can develop cost effective alternatives.  The only ones that seem to present themselves at this point are hydro and nuc.  It would be great if other energy producing technologies could be developed, and they may well be, but that is years away and oil just keeps going up...

 

 

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

That's what we said 40 years ago.

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

So much for economic recovery. Oil prices will bring everything to a halt!

http://www.zerohedge.com/article/guest-post-who-how-and-why-140-oil-and-...

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Re: Shell Oil Former CEA Calls for $5.00 gas by 2012

It is interesting to try to unify depletion and new production to see when we fall off the cliff, and it seems lately that people are becoming more pessimistic.  It may not be that we fall off due to production declines but that China, etc. increase consumption so fast we fall short.  It used to be that we could predict what consumption was going to be and just stick a few more straws in the ground.  Obviously, those days are over and it  seems we're going to be hit from two sides.  Consumption will grow to new heights, and depletion will start kicking in.  From the many opinions I've read it sure seems that all this will coalesce in the next three years, and I do think it will be the worse scenario.

Some believe Iraq will come to the rescue.  Most industry experts say they may increase production to 6m b/d by 2020.  Honestly, I'm a firm believer that you can't stop people from fighting who have been doing it for 5000 years.  As soon as we leave, I believe we will see what a waste the entire adventure has been.

As we all have read, people tout the offshore finds in Brazil and Nigeria as saviors, but we, also, know that there are geopolitical problems in Nigeria, and drilling problems in both.  It is quite hard, expensive, and takes long lead times for deep water, and then they have great decline rates.  There just does not seem to be anything to come online fast enough and in great enough quantities to keep this from becoming catastrophic.  I think it was Matt Simmons who said that when peak really hits, it will be over in a flash.  Although, I'm not sure, I believe he was saying it could eventually lead to a nuclear  war.  Americans are so spoiled and narcissistic I do believe we would resort to some type of military action.  Besides, we've protected the waterways and a lot of  ME countries for years now.  Some people believe they owe us.

Ernest

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