Weekly Petroleum Report - 6/17/05

[jimntx]

We need to find the answer, and quickly.
$15-19/bbl oil would be excellent and
would boost the overall economy to the
point where most airline employees
would be making money.

[post="279367"][/post]​

There's a slight problem, SpinDoc, with your "ideal" price for oil. It would shut down the domestic oil production business completely. $195 r-t for a transcon air ticket is below the cost of flying that seat from one coast to the other and back. $15-$19/bbl oil is below the cost of bringing the stuff to the surface of the ground, much less transporting it to a refinery.

And, don't believe those who would tell you that there are "oceans of oil" beneath the U.S. and only the treehuggers are preventing it's production. Tain't so. Do you really believe that the major oil companies don't already know where the available oil reserves are? A lot of what remains below the surface of the ground is thicker than tar. It's the stuff that the steam injection and other tertiary recovery experimental systems of the 80s was going after. None of them proved economically viable.

With the "China problem"--i.e., the emerging economic giant's demand for oil--I doubt that you could get $15-19/bbl oil even if you imported every drop. Unlike the airline business which seems to have an infinite supply of empty seats and therefore every increase in capacity means a drop in price , in the oil business, increased demand does, in fact, mean an increase in price because oil is a finite, and diminishing, resource.

 

[jimntx]

Oh, by the way, while I'm being a Cassandra...

Don't take too much heart in the drop in price over the past two days. Try to remember when a certain pilot pointed to a temporary drop into the high 40's as proof that $55/bbl was not a sustainable price. He went on to say that his expert sources had told him that oil would soon be in the "normal range" of something like $35-40/bbl. That was just a few short weeks ago.

I hope I'm wrong, but I'm beginning to look at my options in the event I am furloughed again.