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  • kyoufuu

    They made their poor policies work simply by dollars coming from expensive oil. And now, they’re unable to pay.

    Not only that, regardless of how many millions of barrels they claim they will cut per day in production, it does not affect the continued decline in the price. Each OPEC member will continue to cut out the legs of others, which will show no real drop in production.

  • woodsman

    and the price of oil dropped anyway. If someone in the government had some sense they would be looking at the prospects of planning future drilling scenarios and try to get this started now. When the price of oil started to go up someone might be in a position to control the damage to something reasonable (say $60/barrel) instead of the horrendous $145/barrel we saw a few months ago.

  • Hancock

    That made poor purchasing decisions at the height of the oil/gas price hysteria in late summer. Here in the DC metro area, I remember news reports of some local school systems and governments (arch-liberal Montgomery County MD comes first to mind) who were falling all over themselves trying to secure long term contracts to buy gasoline and diesel fuel for buses, police cars, etc. at the ‘bargain’ prices of $3.75-$4 a gallon, because the liberals in charge of those counties assured us that ‘the price is only going to go up from here because the world is running out of oil’.

    I hope the taxpayers in those jurisdictions remember who made these foolish decisions, and punish them accordingly. (actually, in reality, they wont, they will simply move to northern Virginia and accelerate the process of ruining things here by voting in more liberal politicians and wondering why they get the same bad economic results)

  • Vladimir

    Crude oil for January delivery closed today at $33.87 per barrel.

    Not that I take this as a total refutation of Peak Oil Theory.

    The price curve doesn’t look like it does because massive new supplies have come online. Rather, the market conditions we’re seeing are the result of expected erosion of demand due to a global economic slowdown, coupled with capitulation/margin calls on hedge funds and large institutions.

    Oil is a tremendously valuable commodity. That’s why there’s almost no limit to the price on the high side when supplies are tight. On the other hand, when there’s too much supply, the incremental barrel costs money to store, so it has little value.

    Note that February ’09 oil is over $42; June ’09, six months out, is over $50.

    Rig activity is slowing down very fast. All the operators we know are putting the brakes on wherever they can, shelving & mothballing projects that made sense with $80 or $100 oil. We are still seeing drilling costs and many supplies and services priced at pre-bust levels because of existing contracts. There’s no way they can stay high for long.

    One thing that is notable is that natural gas prices have fallen, but not as fast as oil. At one time the price of oil was 14 times the cost of a thousand cubic feet of gas; now it’s close to 6:1, close to the “fair” value based on the energy content of the respective fuels.

  • Achance

    I have with my fuel oil company. If you heat with oil, unless you’re really poor, it only takes a time or two of waking up to a cold house and no hot water to enter into a “keep full” agreement with your fuel oil company. I’ve had one for many years and really never pay any attention to the oil tank; just come home some days and find an envelope on the door telling me they’ve filled the tank.

    I really gave it no thought when the oil guy showed up a couple of months ago. Then I got the envelope off the door and I’d just “bought” 450 gallons of oil at $4.65/gal. There went Gov. Palin’s natural resource rebate – for both of us! It’s still too expensive here because it is Alaska oil tankered to WA and refined and barged back here, all on Jones Act bottoms, but I still had a couple hundred gallons in the tank and waiting a month or so would have saved a BUNCH of money.

  • Achance

    say Chairman of the Alaska Oil and Gas Conservation Commission, I’d become very concerned about the welfare of the Prudhoe Bay field and the safety of the TAPS about now and cut production down to the bare minimum required to fulful enforcable contracts. Not a lot of point in giving oil away and we did way to much of that in the ’80s and ’90s.

  • http://www.hakubi.us/ Neil Stevens

    The runup in price didn’t prove it, and the drop in price doesn’t refute it.

    But the fact that supply right now is apprently so vastly outstripping demand is something that runs pretty counter to the theory, heh.

    So the real, actual scientific theory is still out there ready to be proven or not, but the pseudoscience spouted by the left lately surely is.

  • asleep06

    nt

  • Vladimir

    …as a result of the “Asian flu” financial crisis.

    The sudden loss of a few hundred thousand barrels a day of demand caused the price to spike to as low as $8.75 for a few days.

  • zuiko

    It’s still about $2.50/gal here (compared to $1.60 for gas). Must be even higher there. I wonder how much propane has dropped… I bought 1000 gallons of that in September.

  • Husker

    How will this affect dictators such as Hugo Chavez that nationalized their economies, and were solely fueled by the high oil prices? Their constituencies are going to be really p.o.’d when the electricity isn’t there, or the social programs start drying up, because they can’t afford to keep them going. Pitch forks and torches.

    Hollywood idiots Sean Penn, Danny Glover and Kevin Spacey will be the stars of an upcoming Congressional hearing on giving humanitarian aid to the “poor” country of Venezuela.

  • Adjoran

    is just the collapse of a price bubble, unrelated to doomsday cults like Peak Oil.

    That the PO frenzy is pure and unadulterated nonsense is evidenced by their Mecca, peakoil.com, where expressions of doubt about any of their catastrophic scenarios results in removal and banning. It’s a fringe religious cult, not science or economics, which is promoting this tripe.

    The market analysts who study oil always maintained that the price projected from supply and demand figures ought to be in the $35-$50 range. The rest was driven by fear as threats surrounded major producers: Venezuelan coup attempt, Iraq invasion, Russian takeover of private oil companies, Nigerian labor problems and rebellions, Iranian attempts to go nuclear, etc. The sharp increase in price drew in more ordinary investors, including major pension funds, and it was sustained by the oil companies’ need to buy futures at any price (in order to ensure delivery so they could refine it in future months).

    Once the bubble burst, a return to market-driven levels was bound to come quickly.

  • http://www.hakubi.us/ Neil Stevens

    .

  • http://www.hakubi.us/ Neil Stevens

    Whenever we said anything like that before, the left shrieked that we’re anti-science and just corruptly cozying up to oil barons.

  • zuiko

    At least there will still be a decent market for arms and nuclear tech sales to supporters of terrorism.