Oil Surges $2 on 'Super-Spike' Prediction ($100+ a barrel)

[clem_c_rock]

http://abcnews.go.com/Business/wireStory?id=629593

<snippit>
Goldman Sachs bank <GS.N> said in a research report on Thursday that oil markets have entered a "super-spike" period that could see prices rising as high as $105 a barrel.

"We believe oil markets may have entered the early stages of what we have referred to as a "super spike" period — a multi-year trading band of oil prices high enough to meaningfully reduce energy consumption and recreate a spare capacity cushion only after which will lower energy prices return," Goldman's analysts wrote.
</snippit>

[Tux]

1. 2 things

Peak oil and outsourcing to China and India. Those are causing this rise in oil prices.

[chlamor]

5. Let us add one more-Military

Military Needs

One year supply in Iraq 7.5 billion gals of fuel
Jet fighter will use in 1 hour of flight what us motorist uses in 2 years
US Navy uses 16% of worlds diesel
Aircraft carrier uses 150,000 gals of fuel EVERY DAY
Abrams tank-Which are "performing" poorly get 1/4 of a mile to the gallon
and so

High tech military uses breathtaking amts of fuel-Increase on demand side of equation

Peak Oil is here

[leveymg]

2. A self-fulfilling prophesy (or is that profit city) for oil futures trade

rs.

Gawd, if I only had the $$$ to buy oil futures valued in Euros a year ago, as I suggested a year ago (only half-jokingly) to a friend.

I wouldn't know what to do with myself if I were that filthy rich.

:banghead:

[wuushew]

3. Where are the synthetic oil plants?

Conventional wisdom says they can make money when oil is $35 a barrel or higher. The peak is here so why no construction of new energy sources even dirty ones?

[boddhi]

4. I wonder how it feels

when people pay more for gas than for the car.

It somehow reduces my anger when I see a hummer on the road...

[physioex]

6. Holy Cow.....

Forget $3/gal now it seems like $4/gal.........

[NNguyenMD]

7. blessing in disguise

better put in that order for the Prius

[durablend]

8. Hope you still have your job (to pay for it)

When the economy collapses

[buddysmellgood]

11. There are HUGE energy efficiencies yet to be realized in both cars and

electricity. Some of them have been around for more than a decade, but market forces don't allow them. CAFE standards could easily be attained and it would only add a couple hundred dollars to the cost of a vehicle. If government continues to be weak kneed, the only thing that will bring these advances to market is the high price of oil. I say bring it on. Once it's expensive, ingenuity kicks in and Americans find a way. We are too fat dumb and happy.

[Earth_First]

9. So...$55 barrel = $2.24

$105 barrel = ~ $4.48

[chlamor]

10. Oh no we'll be paying what Europe pays

except no public transportation system as an alternative to our iconic metal bubbles. Infrastructure crumbling, food prices soaring eyc. All could change with one thing. Reduce military budget by half (and then more) and invest in Green Economy. Only person/people that can make that happen is you and your rowdy caring friends. It is going to take a herculean effort on the part of the somnambulistic American society to avert catastrophe. Any bets?

[greendeerslayer]

13. I think it was Marx...

...who predicted, "socialism or barbarism," it looks to me as if barbarism approaches.

[Chicago Democrat]

12. Not quite because of refining and transportation costs...

Actually what you pay at the pump is mostly based on supply and demand related to refining and storage capacity within the US.

The US refines all its gas here from crude either local or imported. Thats why our gas is cheaper than in Europe which imports refined products which is more expensive to do but safer.


Lets throw around some numbers
NOW Oil at 55 barrel
0.20 profit
0.20 transportation
0.60 refining cost
1.24 Crude cost at 55
----
2.24 Gas per gallon

Then Oil at 110 barrel
0.20 profit
0.30 transportation
0.60 refining cost
2.48 Crude cost at 110
----
3.58 Gas per gallon

[Champion Jack]

14. kicked

[Earth_First]

20. Thanks for the clarification...nt

[jwcomer]

21. Curious about these numbers

Chicago Democrat,

Why is refining purely fixed cost. Doesn't the refining process require energy. Even if this is coming directly out of the crude, the costs is proportional to the increase in crude price. Also, why does transportation only go up 50%. Finally, profit tends to be variable as well, so why not make it a fixed percent of the costs. Here is my calculus.

0.20 profit @ 9% margin
0.20 transportation
0.30 refining fixed (capital depreciation, etc.)
0.30 refining variable (energy)
1.24 Crude cost at 55
----
2.24 Gas per gallon

0.37 profit @ 9% margin
0.37 transportation
0.30 refining fixed (capital depreciation, etc.)
0.60 refining variable (energy)
2.48 Crude cost at 55
----
4.12 Gas per gallon

[lovuian]

15. I have a relative who works for oil company and predicted this

You guys the biggest thing that is happened is the destruction of one of the World's biggest refineries

thats 450,000 barrels of oil a day not being processed

Americans are clueless and the news media is doing a snow job

[Geo55]

16. $100 bucks per

for a sustained period will bring the U.S. to it's knees.
Buckle up kiddies....rough weather ahead.

[okieinpain]

17. well I'm glad it didn't happen to kerry.

[Up2Late]

18. UPDATE: Oil Jumps Above $55 After Spike Alert (Reuters)

(This sucks, This is just Hype and market speculators that are driving this, and an Oilman President that doesn't give a shit)

Oil Jumps Above $55 After Spike Alert

Thu Mar 31, 2005 11:53 PM ET


By Joanne Collins

MELBOURNE (Reuters) - Oil prices tracked higher on Friday, firmly planted above $55, supported by a forecast that the market could spike to $105 and by concerns that U.S. gasoline supplies may fall short to meet peak summer demand. Prices have climbed 28 percent this year as signs that rapid demand growth in Asia's emerging economies and the United States will strain world supply ignited heavy buying from big-money speculative funds. U.S. light crude traded up 20 cents to $55.60 a barrel, moving back toward the record high of $57.60 struck on March 17. London's Brent crude climbed 36 cents to $54.65 a barrel.

Top energy derivatives trader, Goldman Sachs, said in a report on Thursday the oil markets might have entered the early stages of a "super spike" period, which could drive prices toward $105. "That was a pretty big call by them (Goldman Sachs) and the market is just assessing where supply and demand really sits," said David de Garis, senior economist at ANZ Investment Bank in Melbourne. "The market is still of the mind that supply/demand is still very tight but the fundamental situation is not nearly as bad as what current oil prices would suggest." Goldman Sachs raised its 2005 and 2006 price forecasts for U.S. light crude to $50 and $55, respectively, from $41 and $40, citing resilient oil demand growth.

Prices rallied 2.6 percent on Thursday on the back of the report but also on growing concerns over falling gasoline stocks in the United States ahead of the peak summer demand season. "I don't know if we will get another big up day on Friday, but if we settle above $55.65 that will be another positive and will point to higher prices," said John Brady, a broker with ABN AMRO in New York.

SUPPLY ANXIETY

Production problems at a handful of U.S. refineries over the past week have heightened concerns over whether refiners will be able meet growing gasoline demand this summer. A 485,000-barrel-per-day (bpd) refinery in Venezuela -- the world's fifth-biggest oil exporter and a top supplier of crude and oil products to the United States -- was shut down on Thursday by a power failure.

Continued ...

[Gloria]

19. Seymour Hersh said the other night that $68-$69 would be the point

at which a real economic decline would set in....