Yes, all leading banks have economists on their staff, and most have petroleum economists as well. I’ve read forecasts of 5 banks now and they range fron $225 within 5 years, to $150 within 2 years, to $240 in today’s money being the cost at which alternatives (whatever they may be) will seriously cut into oil use. No one forecasts a retreat to $40 or so oil.
Banks have always been very conservative, but they can’t see any forces driving down the price of oil below the marginal cost ($60-80) of non-light crude.
MikeinNH feels very strong about solar, but it won’t propel our cars anytime soon, but will back heating oil out of the NE market. At least the natural gas supply is relatively healthy with huge foreign deposits coming on stream, and the US building many LNG terminals. Compressed natural gas, CNG is a good fuel already in Northern Italy, New Zealand, Malaysia and a few other areas. It’s quite competitive with gasoline and you could buy a captive compressor to fill up at home.
“Banks have always been very conservative, but they can’t see any forces driving down the price of oil below the marginal cost ($60-80) of non-light crude.”
Are these the same banks responsible in part for the mortgage crisis ? Their judgement is suspect.
I think the estimate of $200+ oil in 5 years is more likely, that will put gasoline/diesel prices in the $7-8 range (where they probably belong anyway).
These banks use the inputs of geologist and petroleum economists to determine what the price of oil should be if all speculative, security and emotional/political influences are removed. This base or floor price is what governments use to set royalty rates for oil companies.
Agree that banks often do their own businesss (financing) worse than amateurs do it. Lending billions to third world dictators (who have no intention of paying back) and sub-prime lending indeed questions sound judgement.
I have many colleagues who are not in the banking business who forecast even higher prices. Yesterday oil closed at close to $139/barrel and many industry experts now forecast $150 by mid summer. Within 3 years, $200 is entirely feasible. Please keep in mind for every one driver we take off the road with higher prices, 3 new ones in Asia and other developing areas are becoming car owners.
The price of anything has an economics as well as a non-economic base. If, for instance, the status/snob part was taken out of Starbucks coffee it would sell for one half the price per cup, and be closer to Dunkin Donuts and MacDonald’s. Any level-headed American trying to save money should first give up bottled water and expensive boutique coffee, and not buy popcorn at the movies.
I have many colleagues who are not in the banking business who forecast even higher prices. Yesterday oil closed at close to $139/barrel and many industry experts now …
Regardless, at some point, technology will force the price of oil down to a more “reasonable” level. At that point, the choices are even more difficult. Do we fall into the same old trap and go back to our gluttonous ways or do we continue to seek alternatives. Our predicament can be trace directly back to the 70’s oil embargo when we started to do many of the right things, only to backslide when the price our oil/gas started to fall. Right now, we consumers are being played like a violin. Choose the right path when oil is cheap is tough.
I believe you are disregarding the underlying drivers that make oil go up. Whatever Americans save on gas consumption means little if 3 billion other people are adding a million cars a year to the global fleet. In those countries gasoline is price-supported (as low as $0.20/gallon in Venezuela, for instance, and no one is cutting back) at often 50-60cent/liter (about $2/gallon) which does not encourage conservation.
Having said all that, oil will likely be displaced as a power generating fuel by natural gas, clean coal, nuclear and renewables. But cars need to run on a high energy-density fuel that is cost competitive. Gasoline, diesel, propane, and compressed natural gas are some candidates. Plug-in hybrids would be ideal, since they are energy efficient, and can cover most urban driving needs. The electricity will come from natural gas, solar, nuclear, clean coal, et.
The democrats will have a golden opportunity to chart a future of innovation and oil substitution. But don’t expect anything drastic to happpen in the next 10 years, so oil and gasoline prices will keepo rising.
“Having said all that, oil will likely be displaced as a power generating fuel by natural gas, clean coal, nuclear and renewables. But cars need to run on a high energy-density fuel that is cost competitive.”
With one out of every ten gallons produced on the world market going to power the American car…we ARE in the driver’s seat and you are still looking at oil and oil like solutions, when the alternative has been with us for years and POLITICS (CARB) in bed with GM/Toyota and Cheveron (the biggest players) has kept us lied to.
They have succeeded in convincing people that an EV with a 160 mile range that can be charged at home by solar panels, has air, heater power windows etc. never exsisted. While we sit and wait for GM to build a plug in hybrid that may go 40 miles on an expensive failure prone lithium battery and OPEC just site there and smiles.
If you feel you need to go more than 160 miles W/0 a 30 minute 80% quick charge, add your diesel hybrid…but add it to proven lead acid and Nickel Hydride batteries that are proven and relativly cheap.
That’s 1/10 of all the oil produced a threat to go of market with TODAY’s tech. Politicians don’t have the “gonads” to tell you the truth, discuss it in punlic forum, let alone take on the energy corps.
God save us all if we loose this chance.
at some point, technology will force the price of oil down to a more “reasonable” level.
Unlikely. Technology will not be developed and deployed unless there is an economic incentive to do so. If the price of oil drops for whatever reason, the new technology will not appear. This assumes that nothing comes out of left field like a “Mr. Fusion” that you pour your garbage into.
You make my point…when ones “personal” economy allows you to make the oil choice, new technology will not appear. That was my argument; it’s difficult to make the non oil choices when oil is cheap.
Mr. Solar is our savior…it’s here now; along with some other very unusual energy sources. The world is abound with non oil energy just waiting to ne tapped. It’s up to John Q. Citizen and govt. intervention to make those choices as private enterprize wont without the immediate payback our stock market mentality is use to.
Where we live the water is very hard and has lots of chlorine. So we have an installed water filter/cleaner in the house for cooking, and fill our canteens for hiking from our own filtered water. The main enviornmental benefit is keeping all those plastic bottles out of the landfill.
RO sytems are very cost-effective, I understand if you have severe tase and mineral problems.
Water comes into the house and goes through a Sediment filter. Then through a softener to remove the Magnesium, then a bubbler to remove the Radon then the RO to remove the Arsenic. The water that comes out of the RO faucet it’s about as pure water as you can get. I just have to replace the filters 3-4 times a year.
Sounds like with your ground water you need all those. If you drink soft water make sure you take mineral supplements. The body needs the normally dissoved minerals in the water. We only use soft water for washing, the kitchen has hard, but filtered water, and the toilets and the outside taps have untreated water.
I worked overseas with a local guy who had a PhD in chemistry. Because of the “dead leaves taste” of water in trpical countries, he put his whole family on DISTILLED WATER. I had to point out to him the need for naturally dissolved minerals the body needs.