Friday, June 24, 2005

The Sixty Dollar Oil Question

Oil futures for August delivery traded at 60 dollars a barrel yesterday.

for the first time.


It was the top story on

Asian Stocks Slide as Crude Oil Rises; Samsung, Honda Lead Drop
June 24 (Bloomberg)

"Asian stocks fell on concern crude oil at $60 a barrel will boost energy costs and prompt companies to cut their earnings forecasts. Samsung Electronics Co. and Honda Motor Co. led declines.

Oil prices at around $60 a barrel will put pressure on corporate profits, as most companies have based income forecasts on the $50 mark,'' said Koji Uchida, who helps oversee $17 billion at UFJ Partners Asset Management Co. in Tokyo.

An index of energy shares was the only gainer among the benchmark's 10 industry groups.

Japan's Nikkei 225 Stock Average lost 0.6 percent to 11,502.04, as more than four shares fell for every one that rose. South Korea's Kospi index dropped 1.1 percent, Asia's biggest loser.

Rising crude oil prices also pushed down U.S. stocks yesterday. The Dow Jones Industrial Average had its biggest loss in almost 10 weeks.

Crude oil for July delivery jumped 2.3 percent to $59.42 a barrel. Earlier, it touched $60 a barrel, the highest price for a contract closest to expiration since trading began on the New York Mercantile Exchange in 1983. "

And in a rare moment of candor for a government official, there was this story a few weeks ago out of Australia.

Anderson fears for oil reserves
ABC News (Australia)
Friday, May 20, 2005

"Deputy Prime Minister John Anderson believes high fuel prices reflect the inevitable decline in the world's oil and gas reserves.

He expressed deep concern about the long-term future of oil and says fuel prices will have to be high enough to encourage more exploration.

Mr Anderson says the world could reach peak production of oil and gas far sooner than predicted because of the rapid increase in energy demands in China.

"We are using stored energy left over from ages gone by at an alarming rate and it isn't re-making," he said. "While people talk about new technologies and they say as soon as oil reaches a certain price everybody will switch over to hydrogen and what have you.

"The reality is that it may not be as simple as that and you have to wonder whether over the next decade we won't start to get towards peak production and that could be a very interesting time and a very challenging time."

And there is this news from the future from the Onion

Solopec Nations Warn Sun's Output May Fall Short of Demand
The Onion
June 23, 2056

RIYADH, MUHAMMAD ARABIA—"The governing board of the Solar Output Power Exporting Countries announced Monday that, in spite of attempts to raise production levels, increased global-power consumption may begin to outstrip the sun's output by early next year.

"Our solar-accumulation arrays in Muhammad Arabia, Iraq, Jordan, and Mexico are operating at full capacity, and still, we're struggling to meet demands," said Muhammad Arabia's Prince Fayahd al-Saud, whose family has controlled the world's energy market for more than 100 years. "

In a very short time, the sun will not be able to meet the world's energy needs."

SOLOPEC, formed in the '20s to regulate solar-energy prices, currently includes the sunlight-rich nations of Kuwait, Libya, Nigeria, Qatar, Muhammad Arabia, United Arab Emirates, Mexico, Venezuela, Iran, and Iraq.

The consortium supplies more than 90 percent of the world's solar energy, generating 35 billion charge-pads daily. Solar futures traded on the Newer York Exchange have risen 53 percent this year, with prices exceeding 55.6 credits per 400 ArabThermalUnit charge-pad as of June 14.

While some accuse al-Saud of engineering the shortage to increase prices, as his SOLOPEC energy embargo achieved in the '30s, al-Saud insists that production increases are not possible at any price.

"Once again, human consumption has expanded to meet available supply," said SOLOPEC economic director Hermann Villalobos of Mexico City. "With today's fully automatic homes, artificially sentient robotic cities, 32-lane automatic roadways, floating antigrav-suspended skyscrapers, air-conditioned city-domes, and 96-inch personal fusion-screen monitors, the energy demand of human civilization has never been higher.

Why, last year, the wattage requirements of leisurebots alone exceeded the entire world's energy-consumption rates of 1988. It's no surprise that SOLOPEC can barely keep up."

MIT scientist Glen Schraeder said he predicted the shortage a decade ago.

"The U.S. must reduce its dependence on foreign solar power," Schraeder said. "The sun was created billions of years ago, with the formation of our galaxy. When its unused energy output is gone, it's gone.

We must look for alternative energy sources throughout the universe now."

The truth is.

If we don't get cracking on building a solar hydrogen economy now,

Some one else will.

Can we afford 60 dollar oil?

We're going to find out.

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Anonymous Anonymous said...

your posts are so often timely, relevant, and thought provoking.

this one is a good example of all three

9:28 AM  
Blogger oZ said...

the sixty dollar mark is truly a bellweather mark. we may remember this day sometime in the future with an odd kind of "good old days" mentality.

10:27 AM  

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