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200/bbl won't be achieved because at about 150$+/bbl alternative technologies like coal to liquids become possible. Once the coal to liquids plants are built (you need high oil price to justify building the facilities in the first place) then the price will drop down to below 100$/bbl.
OPEC knows this which is why they try to maintain a price target of around 100-120$/bbl. 100$/bbl ideally. If the price gets too high we simply switch to alternatives and that switch kills demand for conventional sources.
200/bbl won't be achieved because at about 150$+/bbl alternative technologies like coal to liquids become possible. Once the coal to liquids plants are built (you need high oil price to justify building the facilities in the first place) then the price will drop down to below 100$/bbl.
OPEC knows this which is why they try to maintain a price target of around 100-120$/bbl. 100$/bbl ideally. If the price gets too high we simply switch to alternatives and that switch kills demand for conventional sources.
Consider this: During the 1973 oil embargo, the US experienced less than a 10% shortfall in oil supplies. That was enough to double fuel prices in the US, cause major shortages and supply disruptions and send the economy into deep recession. By the way, that little dust-up started in, well, Egypt (and Israel) and quickly spread all over the Mideast. Yes, Egypt has little oil of its own, but is plenty close to the places that do have a lot, as well as being close to the supply lines.
slackjaw makes fun of my prediction that we could have seen $500/bbl. oil in 2010. I missed my prediction (happily) because things stayed far more "stable" than I expected that they would in the oil-producing countries. That was a tremendous stroke of good fortune for the US, but relying on that to continue is like relying on Lotto tickets for a financial strategy for retirement. The odds are against it working and even if one is lucky for awhile, that luck won't last.
James Kunstler makes the point in this week's blog ( The Earth Shifts - Cluster**** Nation ). This part is salient, speaking about the long-term stability of the Mideast and what it means for us:
Quote:
To return to an earlier theme, what should amaze us now in the unraveling of this region is how remarkable and long the recent era of stability lasted. Meaning, most of all, how reliable those tanker shipments of oil have been moving through the Straits of Hormuz and the Suez Canal to their destinations in the lands of the Crusaders (and their younger kin in the New World). To put it pretty starkly, the so-called developed world can't keep its act together more than a week without that steady mainline of Arabian oil, even though it doesn't represent most of the oil traded in the world. The margins are too thin. There's no wiggle room, really, especially for us, in our kingdom of freeways. We lose ten percent of our oil supply and that's all she wrote for business as usual around here. I'll put it even more starkly: we can't afford to let this s*** get out of hand for a New York minute.
As for alternatives, I fully am in favor of developing coal liquefication technologies to refine medium distillates (diesel fuel, etc.) from coal. To be economically viable, though, fuel prices (without tax) would need to be in the $4.00/gal. range for a sustained period to make that technology viable--and that price level would break the back of our current energy-inefficient transportation system (read: highway-reliant). At that, it would probably take a minimum of 5 years to build any significant coal-refining plants to produce the fuel. That would probably be too late to save much of the US economy. No matter how one looks at it, our current auto/truck/highway dependent lifestyle is living on borrowed time--sooner or later, our good fortune will run out. And we are doing nothing to prepare for that . . .
According to a shell station owner in town he says he was told gas is suppose to hit $4.38 gal in ca in 2 months. Right now im paying $3.26 gal. Two dollars too much.
You are probably paying 30-40cents a gallon due to the cost of the land it's sitting on.
Throw on various taxes, refining fees, federal costs, EPA costs and I think the oil company would damn near have to extract it and refine it for free to get you $1.26 gas.
Probably close to $2 of the $3.26 you are paying is winding up in the hands of the US govt. at one level or another. Probably $1 is extraction cost and the 26cents left over is misc + profit to the oil companies.
You are probably paying 30-40cents a gallon due to the cost of the land it's sitting on.
Throw on various taxes, refining fees, federal costs, EPA costs and I think the oil company would damn near have to extract it and refine it for free to get you $1.26 gas.
Probably close to $2 of the $3.26 you are paying is winding up in the hands of the US govt. at one level or another. Probably $1 is extraction cost and the 26cents left over is misc + profit to the oil companies.
And, if all of the general fund taxes used to pay for everything associated with highways, roads, and streets--along with all of the specific defense costs associated with securing foreign oil supplies for us--were added to the fuel tax rather than socialized across all taxpayers, well, that would probably add another $2-$3 per gallon in taxes to fuel. Actually, I think all of those costs SHOULD be added to the fuel tax rather than continuing to be funded through other general taxes. Then the American public would see what the true, real cost of our fuel-prolifigate lifestyle is. But today's Americans are more and more adverse to paying the REAL cost of anything. They think if that cost is socialized on someone else or hidden where they don't see it (like in the national debt, as one example) that they won't have to pay it. How dumb can we get? Apparently, pretty damned dumb.
I wouldn't be suprised to see $150.00 a barrel by the summertime.
Then again, OPEC might push the price down to $30.00 for a short time again just to keep the economy from collapsing. My crystal ball is it bit fuzzy on this one.
Egypt produces less than 1 Million barrels per day. Their fields peaked long ago and they are in decline. When they get to about 700,000 barrels per day, they will probably cease commercial production, because the cost is way too freaking high.
All oil fields use water-injection. MENA countries use salt-water injection due to the lack of available fresh water. The process keeps static pressure and and also prevents the field from collapsing if the geology isn't stable.
Oil from fields is transported via pipelines to processing facilities (these are NOT refineries) which remove impurities and particulate matter in the oil, and also separates the water/salt-water (which is usually transported back via pipeline and injected back into the field).
When ratio of oil/(salt)water reaches a certain percentage (and I don't know what that is), it costs more to process the oil and you lose profits. As oil continues to rise in price, it does become marginally profitable to continue to extract the oil. That's why many US fields were shut down in the 1970s and the re-opened here in the last 10-12 years, because the price of oil per barrel has been consistently high enough to offset the costs of processing (and the major US fields -- Illinois Intermediate, West Texas Intermediate and East Texas Sour -- but not Louisiana Sour -- have already peaked and are in decline).
I don't think unrest in Egypt is going to cause the price of oil to rise drastically.
As I said, Egypt doesn't produce much and soon enough they'll only be producing for military/industrial use and not for commercial use or sale on the world market.
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