Ready for $262/barrel oil?

[eg420ne]

WoW!!! Plus were 8 trillion dollars in debt----Oh Well


Ready for $262/barrel oil?
Two of the world's most successful investors say oil will be in short supply in the coming months.
By Nelson Schwartz, FORTUNE senior writer
January 27, 2006: 4:40 PM EST


DAVOS, Switzerland (FORTUNE) - Be afraid. Be very afraid.

That's the message from two of the world's most successful investors on the topic of high oil prices. One of them, Hermitage Capital's Bill Browder, has outlined six scenarios that could take oil up to a downright terrifying $262 a barrel.

The other, billionaire investor George Soros, wouldn't make any specific predictions about prices. But as a legendary commodities player, it's worth paying heed to the words of the man who once took on the Bank of England -- and won. "I'm very worried about the supply-demand balance, which is very tight," Soros says.

"U.S. power and influence has declined precipitously because of Iraq and the war on terror and that creates an incentive for anyone who wants to make trouble to go ahead and make it." As an example, Soros pointed to the regime in Iran, which is heading towards a confrontation with the West over its nuclear power program and doesn't show any signs of compromising. "Iran is on a collision course and I have a difficulty seeing how such a collision can be avoided," he says.

Another emboldened troublemaker is Russian president Vladimir Putin, Soros said, citing Putin's recent decision to briefly shut the supply of natural gas to Ukraine. The only bit of optimism Soros could offer was that the next 12 months would be most dangerous in terms of any price shocks, because beginning in 2007 he predicts new oil supplies will come online.

Hermitage's Bill Browder doesn't yet have the stature of George Soros. But his $4 billion Moscow-based Hermitage fund rose 81.5 percent last year and is up a whopping 1780 percent since its inception a decade ago. A veteran of Salomon Bros. and Boston Consulting Group, the 41-year old Browder has been especially successful because of his contrarian take; for example, he continued to invest in Russia when others fled following the Kremlin's assault on Yukos.

Doomsdays 1 through 6
To come up with some likely scenarios in the event of an international crisis, his team performed what's known as a regression analysis, extrapolating the numbers from past oil shocks and then using them to calculate what might happen when the supply from an oil-producing country was cut off in six different situations. The fall of the House of Saud seems the most far-fetched of the six possibilities, and it's the one that generates that $262 a barrel.

More realistic -- and therefore more chilling -- would be the scenario where Iran declares an oil embargo a la OPEC in 1973, which Browder thinks could cause oil to double to $131 a barrel. Other outcomes include an embargo by Venezuelan strongman Hugo Chavez ($111 a barrel), civil war in Nigeria ($98 a barrel), unrest and violence in Algeria ($79 a barrel) and major attacks on infrastructure by the insurgency in Iraq ($88 a barrel).

Regressions analysis may be mathematical but it's an art, not a science. And some of these scenarios are quite dubious, like Venezuela shutting the spigot. (For more on Chavez and Venezuela, click here.)

Energy chiefs at the World Economic Forum in Davos downplayed the likelihood of a serious oil shortage. In a statement Friday, Shell's CEO Jeroen Van der Veer declared, "There is no reason for pessimism." OPEC Acting Secretary General Mohammed Barkindo said "OPEC will step in at any time there is a shortage in the market." But then no one in the industry, including Van der Veer, foresaw an extended run of $65 oil -- or even $55 oil -- like we've been having.

It's clear that there is very, very little wiggle room, and that most consumers, including those in the United States, have acceded so far to the new reality of $60 or even $70 oil. And as Soros points out, the White House has its hands full in Iraq and elsewhere.

Although there are long-term answers like ethanol, what's needed is a crash conservation effort in the United States. This doesn't have to be command-and-control style. Moral suasion counts for a lot, and if the president suggested staying home with family every other Sunday or otherwise cutting back on unnecessary drives, he could please the family values crowd while also changing the psychology of the oil market by showing that the U.S. government is serious about easing any potential bottlenecks.

Similarly, he could finally get the government to tighten fuel-efficiency standards and encourage both Detroit and drivers to end decades of steadily increasing gas consumption. These kinds of steps would create a little headroom until new supplies do become available or threats like Iran's current leadership or the Iraqi insurgency fade.

It's been done it before. For all the cracks about Jimmy Carter in a cardigan and his malaise speech, America did reduce its use of oil following the price shocks of the 1970s, and laid the groundwork for low energy prices in the 1980s and 1990s. But it would require spending political capital, and offending traditional White House allies, and that's something this president doesn't seem to want to do.
http://money.cnn.com/2006/01/27/news...ex.htm?cnn=yes

eg420ne Reviewed by eg420ne on 01-28-2006. Ready for $262/barrel oil? WoW!!! Plus were 8 trillion dollars in debt----Oh Well Ready for $262/barrel oil? Two of the world's most successful investors say oil will be in short supply in the coming months. By Nelson Schwartz, FORTUNE senior writer January 27, 2006: 4:40 PM EST DAVOS, Switzerland (FORTUNE) - Be afraid. Be very afraid. Rating: 5

[Shelbay]

The camel thing is really starting to make sense. And they have what we want and need..haha-they have the oil and ride camels.:smokin:

[eg420ne]

LoL ---I guess the jokes on us...

[Euphoric]

http://www.lifeaftertheoilcrash.net/

peak oil

Other experts are predicting decline rates as high as 10%-to-13%. Some geologists expect 2005 to be the last year of the cheap-oil bonanza, while many estimates coming out of the oil industry indicate "a seemingly unbridgeable supply-demand gap opening up after 2007," which will lead to major fuel shortages and increasingly severe blackouts beginning around 2008-2012.


hemp fuel

http://www.equalrights4all.org/bach/Fuel.html

We can be energy independent, without nuclear power.
Biomass is the term to describe all biologically produced matter. World production of biomass is estimated at 146 billion metric tons per year, mostly as wild plant growth. Biomass conversion to fuel has proven economically feasible in laboratory tests and continuous operation of pilot plants since 1973. It has a heating value of 5000-8000 BTU/lb, with virtually no ash or sulfur produced by combustion.

About 6% of contiguous U.S. land area cultivated for biomass could supply all our current demand for oil and gas. This is the basis of the emerging concept of "energy farming," wherein farmers grow and harvest crops for biomass conversion to fuels.There is one farm crop that can fill all our energy needs. Hemp is the only biomass resource capable of making America energy independent. Both Thomas Jefferson and George Washington grew hemp. But, under pressure from the oil and timber industries, our government outlawed it in 1938.

[graymatter]

Not to minimize the problem, but these rich oil investers are a part of it... if I own a large stock that responds directly (UPWARD) to natural and geopolitical burps and farts, then I'm writing the apocolyptic news, in volumes.

[birdgirl73]

I, for one, am getting a camel. I like the way their eyes look, and they'd fit right into the climate in north Texas. Until he comes in, I'm taking mass transportation.

[Pennsterdam]

That would be ridiculous if oil went to $262 with the greater demand for it going on. When people start killing each other at the gas pump, run to the hills!!

[WalkaWalka]

Time to get a still and start topping off your tanks

[iamapatient]

I wonder how much tin-foil hat stocks went up? The sky is NOT falling.

[birdgirl73]

What's the tin foil hat allusion you sometimes make, IamP? I don't know it. Or don't recognize it.