You’ll never see $70 oil again.

[PWMDMD]

I think that’s a pretty bold statement considering how much this industry fluctuates and we have no idea what the future holds.

One thing I will say however in regards to oil prices, it seems like people don’t factor in inflation with oil prices. Most think of the oil price 5,10,15,20 years ago and believe that number to mean the same thing today.

$50 oil in 2000 is about $94 today…

Yup! People constantly compare nominal oil prices across decades like those dollars are interchangeable. They are not. $50 oil in 2000 is roughly $90 to $95 oil today, so when people say “oil was only $50 back then,” they are usually ignoring inflation and comparing apples to oranges. Historical oil prices make a lot more sense once you convert them into today’s dollars.

People do the same thing with gas prices. They remember paying $1.50 a gallon in 2002 and act like that would still be $1.50 in today’s money, but $1.50 in 2002 is about $2.60 today after inflation using CPI. So a lot of the “gas used to be so cheap” nostalgia is really just people comparing old nominal prices to current dollars like purchasing power never changed.

 

[2strokeNorthstar]

I watched 2 seasons of Landman and I agree with your assessment. Got to make global oil prices go up significantly for the US oil producers to make it worthwhile to drill and pump and also get that Venezuela oil.

I learned all I know about the oil industry from Bruce Willis and Billy Bob Thorton

 

[fdcg27]

Will we see $70.00 oil again?
I'd bet that we will.
An additional complication in the pricing of refined product is the refiners.
They have as much interest in increasing output to reduce product prices as the crude producers do.
The difference is that production costs vary widely among producers, so a low lifting cost producer can afford and profit from lower crude prices than can a fracker.

 

[Pablo]

Can't the @mods just combine all these oil/gas price threads?

Getting kinda thick and sometime political.

 

[ecotourist]

When I worked in the oil business (that a long time ago, when I was an engineering student), a project was looked upon favourably if it had a 3 year pay-out. That means all initial costs could be recovered within 3 years; revenue after that would be mostly profit.

A project with a 4 year pay-out might be approved, 3 years, yes, go ahead.

Of course the best laid plans don't always work out. I drilled a well looking for gas and struck oil. Oh well.

 

[Hohn]

The more confident someone is in their prediction of the future, the more certain you can be that they are wrong.

I remember the bet I won against a coworker who was also into firearms about 10 years ago when he was CERTAIN we would never see 22LR bricks below $25 again after a panic has pushed them up to $40 and higher I even saw them as high as $80.

As I type this $40 buys one a brick of reasonably good stuff, 10 years of inflation later.

Commodity prices swing, and especially for a globally traded product you will see significant swings with global events.

We may never see $70 oil again, but there's a good chance we do, even if briefly.

 

[Zee09]

Can't the @mods just combine all these oil/gas price threads?

Getting kinda thick and sometime political.

Why? Too much effort.. you personally can report the political...
Right?
I'm getting a bit tired of you

 

[Pablo]

Why? Too much effort.. you personally can report the political...
Right?
I'm getting a bit tired of you

I'm an offender!

Do I look like a narc?

 

[Hohn]

This is a good point so many miss. The "Drill baby drill" is the answer to lowering gas prices is so flawed because it assumes all these companies only want to maximize production. They want to maximize profits. ALL petroleum companies have excellent discipline and they will simply not produce oil/gas when prices are low and wait to sell it when prices are higher. Lowering gas prices for Americans isn't their objective and it never has been. We've been sold the idea that production capacity is the limiting factor when the truth is price is the limiting factor and for a given production level (the part oil companies can control) the only thing that will increase price to make selling more profitable are disruptions to supply elsewhere or more demand - drill baby drill doesn't address either of those issues.

Even the Saudis, who serve as the world effective price floor know not to produce all they can. For awhile the Saudis were the only ones who could turn a profit at $20/bbl or less.

THe problem is that the *marginal* cost of production is high. Nobody will accept the risk of building a $200B facility only to find out they can't afford to keep the lights on because oil collapsed to $40/bbl.

And we we continue to explode demand for energy with wars, datacenters and the AI revolution. Explosive demand with constrained supply is of course a recipe for higher prices.

 

[Zee09]

I'm an offender!

Do I look like a narc?

I just reported your post

 

[Pablo]

I just reported your post

Post deleted.

 

[k1xv]

If Venezuela were fully developed, it could out produce Saudi Arabia. It could happen with long term contracts with price floors and ceilings with guaranteed minimum purchase requirements. This would guarantee a minimum revenue stream to support investment in Venezuelan infrastructure. Gulf coast and Caribbean refineries were designed with hydrocracking units to break down heavy crude oils as are found in Venezuela.

 

[Snagglefoot]

Can't the @mods just combine all these oil/gas price threads?

Getting kinda thick and sometime political.

Yea but some were pre-excursion. We need to think about post-excursion.

 

[bullwinkle]

Ya. I've said similar things many times myself. Next thing we're going to hear is people advocating for price controls on gas/diesel.

If they do, they've forgotten the lessons of the 1970s!

 

[JeffKeryk]

Why? Too much effort.. you personally can report the political...
Right?
I'm getting a bit tired of you

Tired of our beloved @Pablo? Brew yourself a strong cup of coffee and get back at it!

Works for me anyways...

 

[SC Maintenance]

Why? Too much effort.. you personally can report the political...
Right?
I'm getting a bit tired of you

Careful or he will give you the up hill both ways, eating sand and glad to have it, gas was way more in my day rant.

 

[Zee09]

Careful or he will give you the up hill both ways, eating sand and glad to have it, gas was way more in my day rant.

I got a little something for you too

 

[cptbarkey]

The more confident someone is in their prediction of the future, the more certain you can be that they are wrong.

I remember the bet I won against a coworker who was also into firearms about 10 years ago when he was CERTAIN we would never see 22LR bricks below $25 again after a panic has pushed them up to $40 and higher I even saw them as high as $80.

As I type this $40 buys one a brick of reasonably good stuff, 10 years of inflation later.

Commodity prices swing, and especially for a globally traded product you will see significant swings with global events.

We may never see $70 oil again, but there's a good chance we do, even if briefly.

Place a bet and let’s find out.

https://kalshi.com/markets/kxaaagasm/us-gas-price/kxaaagasm-26mar31

 

[Zee09]

I seen $4 here today
A bunch of $3.69s still around

 

[4wd]

We need to think about post-excursion.

My neighbor had one - it was diesel