Fuel Prices

Everybody knows the earth is flat!

RonYVickie wrote:
This may be of interest to some. The oil is mainly from buried/compressed vegetative matter and as said, will not easily be happening again. Most of what is oil now, used to be forests growing in the Carboniferous era. It grew and died unmolested for 350 million years because the flora to break it down didn't evolve until the last 50 million years of the era (350 million years to 400 million years). RYV

Very tough Theory to prove, like Global Warming. :R :S

This may be of interest to some. The oil is mainly from buried/compressed vegetative matter and as said, will not easily be happening again. Most of what is oil now, used to be forests growing in the Carboniferous era. It grew and died unmolested for 350 million years because the flora to break it down didn't evolve until the last 50 million years of the era (350 million years to 400 million years). RYV

For the first time it looks like MX lowered the price close to the USA border according to this link.
Pemex Prices

12.72/l vs 12.95/l

Still cheaper by far in TX.

A few years ago we were roaming around ND and came upon the Bakken oil "boom" near Williston. We had no idea. So did a bunch of Googling and research to learn what was going on and why etc.

http://en.wikipedia.org/wiki/Bakken_formation

They have known there was a lot of oil down there for a long time. But the oil is trapped in the shale and is very deep. To get it they have to drill down a couple miles and then turn the drill horizontally and drill further under the shale. They then have to heat to sort of "melt" the oil out of the shale. With the depth and technological difficulty there has been no cost effective way to get this oil until recently. Books could be written so I doubt it can all be covered here - or in a way a normal person can comprehend it all. Basically it is pretty obvious that this is not cheap oil as it costs a lot to get it out - just like drilling platforms offshore cost a lot and have to go deep. All of the shale oil and fracking is going on in other areas of the US - Texas and Oklahoma. So oil production in the US is the highest it has ever been - making the US not only the largest consumers of oil but the largest producers. But Saudi oil is still cheaper to get out of the ground if they decide to lower their price. If the world market price goes lower the more expensive extraction methods will no longer be cost effective.

There are a couple of numbers we hear when the talk about how much oil is down there - well more than a couple but it gets more complicated. They have an idea how much is down there and then how much of what is down there is "recoverable" with current technology. So we may hear there is a lot of oil but that does not mean we can get it. A lot of oil is coming out of the ground in the US these days. But the other thing we hear is how long the known oil in the world can last. No matter how many billions of barrels are down there the fact remains the no new oil will ever be produced - what currently exists down there is all there will be. What is down there is what is down there and there will be no more. New technology may increase what is recoverable but the new technology will probably mean high costs of extraction. The harder it is to get the oil the more it will cost per barrel. If the price per barrel goes too low on the world market the "boom" in the US could end because the cost of getting the oil is higher than the barrel price.

We have seen both Schlumberger and Haliburton trucks in Mexico - years ago. There is oil in Mexico that Pemex does not have the technology to get to. That is why they are going to let outside oil companies come in to use their technology to go after the oil. But this will not be cheap oil. The days of seeing crude bubbling up out of the ground are over - they have gotten all of that oil. Now they have to go deeper and deeper which means it will cost more and more.

Lots of other factors and formulas - and there are still areas where oil can be extracted for less money - middle east of course - if they want to sell it for less they can. But once they sell all of their oil they will have nothing else of much value. They know it does not make sense for them to lower prices and increase production.

Most of this is old news........

http://money.cnn.com/2008/05/01/news/international/usgas_price

http://www.entrepreneur.com/article/206326

http://www.ibtimes.com/gas-prices-pump-europeans-pay-almost-twice-much-us-residents-1322727

http://usatoday30.usatoday.com/money/industries/energy/story/2012-04-21/global-factors-gasoline-prices/54421804/1

I am sure some forum readers know all about this - and more - but there are some out there who may not.

One thing to keep in mind - no matter how much oil is down in the ground in the US the more of it is pumped out today will mean the sooner it is all gone. Please do not turn this into politics - but I think we should use up the oil from other world sources before we use up all there is in the US. Let's not be the first to run out.

There is no such Bank as the Quebec Bank. It closed almost 100 years ago. There is a bank of Montreal but I do not think Banks in Canada are allowed to speculate. There is a Caisse Popular which is like a Credit Union. Very wealthy and they might be speculating but I am not sure if they are allowed to do that. ??? Banks in Canada are heavily regulated.

Moisheh

One of the most interesting lines I read today is, "The USA is manipulating the price of Crude Oil down to put a further financial squeeze on Russia". Income from Crude Oil sales is VERY important to Russia's Budget. Also same article said further benefit is the addition squeeze placed on Iran's budget.

rocmoc n AZ/Mexico

I cannot foresee a reason why the benchmark price of crude cannot end up in the thirty dollar range.

...I can foresee hundreds of situation where the crude benchmark can be put in the $115 bbl range in the not too distant future (and, there are hundreds of situations I cannot foresee!).

There are so many variable that drive crude, listing them would take the ~pages required for a dissertation.

Forecasting oil benchmarks out is impossible; you better hedge fast if you want to be in this business with any success.

Just one question for you: how many net crude contract bets are there currently? And, are these bets on the upside, or down side? Where are the commercial hedgers betting vis speculative bets?

....at what point will lower crude prices curtail (expensive) new drilling technology and sands extraction? Boom.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/pacific-rubiales-signs-pact-with-pemex-to-explore-for-oil-and-gas-in-mexico/article21150892/

Pacific Rubiales signs pact with Pemex to explore for oil and gas in Mexico Add to ...
JEFF LEWIS
Calgary — The Globe and Mail
Published Friday, Oct. 17 2014, 4:09 PM EDT
Last updated Friday, Oct. 17 2014, 4:13 PM EDT

EXCERPTS

The government of Enrique Pena Nieto is eager to lure energy companies back to Mexico after scrapping a ban on foreign investment in the oil and gas sector that dates to 1938. Energy reforms introduced this year have reversed expectations of steep production declines in the country’s oil sector, while raising the spectre of new competition for Canada’s oil patch in the U.S. Gulf Coast market.

From 3 million barrels per day (bpd) in 2010, Mexican production was expected to decline steadily to 2.5 million bpd next year and to 1.8 million bpd by 2025, according to U.S. government forecasts.

With the first round of licensing for foreign companies set to open next year, the U.S. Energy Information Administration now sees output topping 3 million bpd in the next decade, rising to 3.7 million bpd by 2040. That’s up 76 per cent from the agency’s previous expectations before reforms were announced.

Mexican officials have set a more aggressive target: 3 million bpd by 2018. Gains could come from enhanced oil-recovery techniques in old fields, heavy oil and shallow-water drilling offshore, as well as horizontal drilling in the country’s Chicontepec basin, which has 80 billion barrels of oil in place with a recovery factor under 4 per cent, according to Wood Mackenzie estimates.

Copy Good news about Pres Nieto , Front page of todays Toronto Globe and Mail a real news source explains it all _ China Germany slowing down_ and that is bad news for all of us However good news for blokes like me on a fixed income!!

tepetapan wrote:

Bounder Lew wrote:
Tequila. My guess and it is a very uneducated one , is that the Pres of Mex will keep to the plan of constant increases Fuel will increase in CANUS shortly when the current crises of Ebola and ISIS get sorted out a bit and stop being front page news. I have restricted my CBC newsworld and CNN time to less than 2 hrs a day instead of 10 which was another component of me being driven crazy.
All is well in Halifax NS I am fit to fly United as soon as my NOK daughter born 1969 gives me clearance to board something with fixed wings thru YHZ.
Hausta Luego Amigos.

Actually the increases are due to end within a month or two. The news in Mexico has had several articles pointing this fact out. The increases were agreed to by the Mexican Congress several years ago for a specific period of time., It is not like President Nieto can pick up the phone and increase fuel costs.