What is your guess: future of oil prices?

[texbaylea]

I suddenly find myself rooting for oil prices to go up I recently sign a mineral lease and what happens depends on the future of oil prices. A new well was recently started a 100 yards or so from the property but we were not included in the unit. That well and another had been contracted for before the slide in oil prices. The company had planned on 8 wells in this part of the county and apparently is holding off on the next 6 wells to get a clearer picture of the financial future.

I think or maybe hoping that prices will start back up slowly before the end of the year. What is your guess??

Vernon

 

[LMTC]

A well 100 yards from your property? Ummm, have you seen "There Will Be Blood?" I know nothing about drilling for oil, but if the info in that relatively recent movie is at all accurate, the well off your property could be pumping from a pool under your property. I'm sure people with real knowledge will jump in.

 

[Nissan197]

I think oil prices will hold steady. In my area gas is going for around $1.70 a gallon. Of course, 8 cents of that is taxes. I don't think it will go above $2.50 a gallon for some time. At least that is what I am hoping. Who knows. Where I live there are a lot of small oil wells, nothing like in Texas and the quality is not as good, but I know the owners make some $$$ off them. I even had two on my property, but they were plugged when I purchased the property.

 

[SnowRidge]

It's looking more and more like the huge run up in oil prices was due to massive speculation more than anything else. If those (censored) made money doing it, I suspect they will try again, once oil starts to rise.

A sound economy needs stable energy prices, probably more so than low energy prices, although having both would be ideal. We need to find a way to keep the massive speculators out of the futures market, while still allowing the market to operate in the manner necessary to serve suppliers and consumers of raw energy products.

It will be a tall order.

 

[2manyrocks]

Anybody's guess where prices are headed in this economy. General trend is up because there is more global demand for energy, but with half of everybody's retirement assets gone, people may choose to stay home and save their resources.

 

[texbaylea]

A well 100 yards from your property? Ummm, have you seen "There Will Be Blood?" I know nothing about drilling for oil, but if the info in that relatively recent movie is at all accurate, the well off your property could be pumping from a pool under your property. I'm sure people with real knowledge will jump in.

They were trying to use an old well bore but for some reason that did not work out. I believe that they intend to drill horizontally when they reach the horizon they are going for. I have not kept up with Texas regulations as they apply to horizontal drilling so I don't know what the restrictions are.

Vernon

 

[EddieWalker]

Got some friends in the oil industry here and they are all in a panic about losing their jobs. Oil is so cheap that it's not worth the money that it takes to get it out of the ground.

Nobody seems to know how much oil is out there and with all the new discoveries, limiting what is pumped seems to be the limiting factor on how much is available. The news says demand is down, but it's the coldest winter in decades, and I find it hard to believe that demand is down that much to make the price of the oil collapse in such a spectacular fashion.

The big thing that caused the price to drop was the threat of opening up the US oil for drilling that's been withheld. As long as we don't drill all our own oil, the oil available to the world is limited. Add millions of barrels to what's already out there, and it becomes so plentiful that there will be no way to keep the price up.

The is no energy shortage, there is no shortage of oil and there is no reason for all the BS about it except to create panic and make people think they need an alternative to oil.

Eddie

 

[dmccarty]

Oil prices will stabilize if not go down a bit lower. Not real sure how much lower it can go but its under 40. Much of the alternative fuels required oil to be at or above 40. If oil stays under 40 the alternative fuel companies will go bust. That might hit farm land prices but since the Feds are requiring Ethanol who knows how that will pan out.

And eventually the oil price will go up but if the economy is having problems I don't see the demand any time soon. How long it will take to go up is any ones guess. But I bet it will be a few years before we have another run up like we just did. These things seemed to have a 20ish year cycle.

Just happened to notice an ad in the Wall Street Journal tonight. It was for a 1000HP oil drilling rig. Used to be worth about 10 million. They are looking for 3-4 million. Maybe you can invest in the rig and drill on your own. You will be buying low. Course if you wait a bit long the rigs might be given away.

The oil companies are not making much money now that the boom is over. Exxon sounds like it might be in better shape than others since it did not jump on the alternative fuel band wagon. Other commodities are in trouble. Like garbage. The recyclers are not getting much money for garbage as the economy has slowed.

Later,
Dan

 

[JB4310]

There was a good storey on 60 minutes last week about the wall street investment houses causing the run up in oil, even went back to Enron and all their boy genius's that went straight to work for wall street after the collapse of Enron.

$140. a barrel was unrealistically high as is $40. to low, these low prices are just an over correction and IMO even with lower global demand prices can only go higher.

Only cost me $30. to fill my Jeep Cherokee today, almost felt guilty, after $250.+ to fill the 52 gallon tank in my 3500 Ram 6 months ago!!!

 

[Alan L.]

If I was sure gas would stay around $2 for the next 2 or 3 years I'd get rid of my Honda Accord and my 1994 F250 powerstroke and get me a new GMC/Chev truck to make my 110 mile round trip to work each day. I actually like the Honda much more than I ever imagined, but having to maintain that 3rd vehicle is a pain.

With gas up to $1.60 or so its costing $20 to fill up the Honda. Not bad.

The Honda was also nice to have when we drove it 5500 miles this past summer to Yellowstone, Glacier, and the Grand Canyon, when gas was $4 a gallon. I remember paying $3.80 at a station in the Navaho reservation in northern Arizona and thinking that was a great deal.

 

[Scooby074]

I think oil is going to stay approximately where it is for a little while. As people get used to cheap gas again (heck i already noticed im driving alot more) , and move back into larger vehicles again then we'll see gas shoot up again (supply and demand). Our gas went up around 8cents a litre last week alone. Alot of the middle east ( and western canada for that matter) relies on high priced oil and these low prices must be killing them. Several friends of mine who work in the oil sands are laid off and it doesnt look good.They cant make money where oil is now. The oil companies will be looking to raise prices as quickly as they can.

I see it almost like a drug dealer. Give them what they need even at the expense of profits ( ie: cheap oil or drugs) get them hooked then jack the price. Alot of people dont have a long term memory and will forget where gas was by this time next year and well go though this all again. I hope these current low oil prices dont kill off alternate fuels and electricity generation development because that is the future. Cheap oil wont be here forever. As unpopular and difficult as this will be we really need to get off oil and on to future technology. Or we'll be at the whims of the oil price yo-yo for the foreseeable future.

 

[jgrreed]

Up, period. It'll wax and wane, but overall, up.

They are like drug dealers!!!.... and it's all of us with short memories that play into their game. Have any of you seen any Discovery or History channel documentaries lately on "End of Oil", or "Future Energy Sources", since the price of a barrel dropped below 50$?? No?? Me neither......

As for the comment that the oil coming out of the ground is not even covering the cost of production, that's not true. A friend of mine is a production engineer in Fort Mac, and he told me that a barrel of oil coming out of the tar sands (the most expensive mode of production on earth, I think) cost $22USD to produce, so even at $37USD, they're winning a freakin' lottery everyday. Oil coming out of conventional wells is making them even more.

I fell into the hype about the "end of oil", and spent a lot of time wondering how that world will shape up. I don't know if I'll see that world, but I'm going to be past at least the first step in preparing for it if it comes - thinking about it. I'll never forget $150USD oil, paying $1.59CDN/liter for diesel, or the diesel shortage we had this year in Alberta (Ya, not a typo - a diesel shortage in freakin' Alberta!!!! Most stations were absolutely empty for about a week due to some poor refinery shut down planning).

Enjoy the cheap, easy, convenient fuel while we can.

-Jer.

 

[EddieWalker]

It looks like Hugo Chavez is rethinking his position on Western Oil Companies. He's now trying to get them to come back and develop a multi billion barrel reserve of oil that they have there that isn't being used. When done, it will add over a million barrels a day of oil to the world supply.

I'm not advocating being wasteful, but it's pretty difficult to read about all the oil out there that's not even being pumped, plus the reduction of what is available and think there is an energy shortage.

What will probably drive the cost of fuel up faster then anything else will be additional taxes. Now that fuel is cheap, it's going to become the target of legislators to see how much they can get from it.

With the massive spending plans and bailouts on the table, they will have to raise taxes somewhere. The real question is when and how much.

Eddie

 

[weldingisfun]

It looks like Hugo Chavez is rethinking his position on Western Oil Companies. He's now trying to get them to come back and develop a multi billion barrel reserve of oil that they have there that isn't being used. When done, it will add over a million barrels a day of oil to the world supply.

I'm not advocating being wasteful, but it's pretty difficult to read about all the oil out there that's not even being pumped, plus the reduction of what is available and think there is an energy shortage.

What will probably drive the cost of fuel up faster then anything else will be additional taxes. Now that fuel is cheap, it's going to become the target of legislators to see how much they can get from it.
With the massive spending plans and bailouts on the table, they will have to raise taxes somewhere. The real question is when and how much.

Eddie

I'll second the additional taxes. The price of oil will probably remain steady but the price of gas at the pump will go up due to BIG tax increases.

 

[dmccarty]

I'll second the additional taxes. The price of oil will probably remain steady but the price of gas at the pump will go up due to BIG tax increases.

The new Energy Secretary has stated that the US should have gas prices in line with Europe. Supposedly he has backed off on the statement.

Time will tell.

Later,
Dan

 

[JB4310]

Now what's gonna happen? with low prices no ones going to invest in exploration, which was the most important thing 6 months ago?

There's a temporary dip in demand due to global economic slow down but just wait til China starts growing again and gets her license, we're gonna be right back to where we were last year.

Hugo is on the ropes down there with his own people from the news reports, he may not be around much longer. His UN sulfur comment will go down as an all time classic though, just like Krushevs shoe.

 

[jinman]

Have we all forgotten that all it takes is a couple of bad hurricanes or political unrest to destabilize oil markets? I trust what has been the history of the last few years. This period of relative peace can quickly erupt into chaos by problems with Iran, North Korea, Afganistan, Pakistan, etc.. I'll have my fingers crossed and hope for the best, but I surely won't be lulled into a false sense of security. Oil is too easy a target to stay stable for long, no matter what the supply or demand.

 

[Scooby074]

As for the comment that the oil coming out of the ground is not even covering the cost of production, that's not true. A friend of mine is a production engineer in Fort Mac, and he told me that a barrel of oil coming out of the tar sands (the most expensive mode of production on earth, I think) cost $22USD to produce, so even at $37USD, they're winning a freakin' lottery everyday. Oil coming out of conventional wells is making them even more.


-Jer.

Wow. I was under the impression that the break even point was around $50 for the tarsands. I wonder why alot of the future development has been put on hold? Most of my friends are hoping they find some money in the new year to continue the projects theyre on but most arent hopeful and have begun looking for other work. Maybe theyll have to move back to home to NS to find a job lol.

 

[Unclebuck257]

I live in a part of Texas that is right in the middle of what they call, "The Barnett Shale". This is one of the biggest natural gas deposits in the US. Additionally, we have plenty of oil too. At the present time, about half of the drilling rigs out there right now are "in storage" in the yards of the drilling companies. Very few, or no, new oil/gas leases are being bought up and the oil/gas industry is laying off people big time, in all positions, but many in lower positions.

The high spike in oil/gas prices a few months ago was definitely caused by speculators, but now the problem is a two fold problem. The banks are a big part of the problem right now by not lending out money to the industry for operating capital to buy up leases and just operate on a daily basis. But also maybe more important, is the low price of a barrel of oil and a BT of natural gas right now. It's hard to make any money for most of the new comer companies. Most will lose money based on what their drilling and operating costs are right now.

As the Arabs cut back production to raise the price of a barrel of oil, oil will eventually get back up and settle at about $80.00 to $100.00 a barrel again and natural gas will follow accordingly. It will take a few months for this to happen though, maybe 6 months or so, and then all will stabilize in that price range and stay there. At that price, everyone in the O&G industry can make money and operate comfortably and the O&G industry will be operating at full capacity again, rehiring all those they let go. Gasoline prices will go up again too, but not to the $4.oo per gallon area it had been a few months ago.

That's my prediction based on my discussions with many in the industry.

Oh, and I also do palm readings by appointment too!!! LOL!

 

[Knute]

What will probably drive the cost of fuel up faster then anything else will be additional taxes. Now that fuel is cheap, it's going to become the target of legislators to see how much they can get from it.

Eddie

I actually saw someone on another forum complaining about how gas was to cheap and people were destroying the environment blah blah blah and thought the government should impose a tax to keep gas prices above $3 / gallon, regardless of the actual price. If the price of gas dropped to $1 an 'automatic' $2 tax would be applied, if it went up to $2.50 a 50 cent tax and so on.

Seattle wants their own Big Dig to toss money in and can't afford it, we can be sure they'll be looking to increase the gas tax, license tax and any other tax they can think of to pay for it.