$200 Crude in 2012?

In May 2008, as crude oil steamed toward a July -- and all-time -- high of $147 per barrel, a Goldman Sachs (NYSE: GS  ) group predicted that black gold's price could move as high as $200 within the following 24 months. Few financial forecasts have ever received more attention. Instead, during the second half of the year its price rolled over and began a free fall to near $30 as December brought the eventful year to a close.

 It now appears, however, that Goldman might just have been early in its prognostication, rather than simply  wrong. Oh, I know, light, sweet crude is currently trading near $100 a barrel, and it would require a host of major events to drive it to double that level, especially during 2012. But almost unnoticed is a price increase by nearly a third in just the past month.  And far more important, it seems that a number of game changers can -- and probably will -- occur as we move into the impending new year. I'm wagering that a host of the potentially catastrophic events could involve Iraq and its neighbor to the east, Iran. The result, almost certainly, would be a steep escalation of crude levies.

Swimming in oil?
For now, energy affairs in war-torn Iraq are progressing swimmingly. The country's production has grown by leaps and bounds since major oil companies from around the world -- beginning with a BP-led (NYSE: BP  ) consortium, and later including ExxonMobil (NYSE: XOM  ) and Royal Dutch Shell (NYSE: RDS-B  ) -- began accepting the government's unusual contractual terms and started reinvigorating its major (albeit waning) fields. Indeed, with help from Schlumberger (NYSE: SLB  ) and its oilfield services compadres, the companies have boosted Iraqi production from a couple of thousand barrels a day to 2.6 million daily barrels in just over a year.

Even more impressive are the seemingly reasonable notions that the country could reach 9 million barrels a day within a few years. That number assumes, however, that the companies are able to plug away unabated. And therein lies the rub. Indeed, a number of emerging speed bumps will need to be negotiated to prevent production from actually reverting to previous levels and world crude prices from making the Goldman Sachs folks appear amazingly prescient.

Questionable pullout and the lurking dangers

  • Last month, President Obama announced a complete pullout of all U.S. forces from Iraq, thereby making room for as many Iranians as that country's President Ahmadinejad wishes to deploy to his neighbor's territory. The Wall Street Journal called the announcement "a disappointment for U.S. defense officials." There's likely a stronger -- and more appropriate -- term than "disappointment" for those officials, who likely were discharging volumes of smoke from their ears, as were the members of Congress who'd demanded that Iraq "tap its oil resources to pay some of the U.S. war costs," a demand that the White House not surprisingly refused to support.
    Nevertheless, watch for dangerous developments from a combination of the two primarily Shiite-populated "I" countries. It seems that the potential for a progressively closer relationship between the pair -- they're already tending to be mutually supportive on regional issues -- is enhanced by Prime Minister Nouri al-Maliki's having resided in Tehran while Hussein was in power. As a result, he retains a number of contacts in the dangerous land of Ahmadinejad.
  • Further, ExxonMobil has ruffled feathers in Iraq by becoming the first member of Big Oil to reach an agreement to search for oil and gas in the country's semi-autonomous Kurdistan region. The Kurdish area is thought to hold as much as 45 billion barrels of oil and 200,000 billion cubic feet of gas, amounts approximately comparable to those in Libya.
    But while the new deal obviously will provide a substantial opportunity for Exxon, it has sufficiently raised the dander of Iraq's central government -- which reportedly sent three letters admonishing the big company before its Kurdistan agreement was signed -- that it could ultimately endanger Exxon's license to perpetuate its current work on southern Iraq's giant West Qurna field. Beyond that, the Kurdistan Regional Government may have held discussions with Chevron (NYSE: CVX  ) , which is not currently involved elsewhere in Iraq, and Italy's Eni (NYSE: E  ) , which is.
    Obviously, the primary concern involves the potential for widespread conflicts between the companies working in Iraq and those that wish to spread their efforts to the Kurdistan region. According to the Iraq Oil Ministry's Abdul Mahdi al-Ameedi, "Exxon should choose between either continuing with its deal with the Kurdistan Regional Government or lose its contract in southern Iraq."
  • Clearly more danger lies in Iran's development of nuclear weaponry, which -- if it weren't already widely known -- was documented last week in a United Nations report. As part of an effort to provide a regional counter to the rogue nation, the U.S. is in the process of formulating a deal to provide the United Arab Emirates (U.A.E.) with thousands of "bunker buster" bombs, among other munitions.
    At the same time, the Obama administration is reportedly preparing to fortify the six members of the Gulf Cooperation Council (Saudi Arabia, Bahrain, Oman, Qatar, U.A.E., and Kuwait). Beyond that, concerns are mounting almost daily regarding the potential of Israeli airstrikes (with or without U.S. support) against Iran's nuclear facilities.
  • And finally, within Iraq, minimally publicized Shiite-Sunni factionalism appears to run the risk of spilling over into a renewed civil war with the attendant danger of possibly drawing in Shiite Iran and Sunni Saudi Arabia -- neither of whom are especially fond of each other to begin with. The normal factionalism has been intensified by the Shiite Maliki's determination to purge the nation's security and intelligence forces of those who served in Saddam Hussein's Sunni-dominated regime.
    At the same time, with the U.S. about to complete its role as a peacekeeper in the country, Maliki has yet to fill a number of ministry posts, given his concern about a coup emanating from potentially disloyal security units. As such, he remains personally in charge of the ministries of defense, interior, and national security.

I could continue to discuss potential difficulties in the oil-rich Persian Gulf area, along with other exporting countries, such as Libya and Nigeria. But you get the point: The Middle East and North Africa -- and especially the all-important Iraq-Iran-Saudi Arabia region -- remain very much a tinderbox, with the potential to drive crude prices to stratospheric levels.

As a result, my oft-repeated words of advice to Fools is to become as familiar as possible with potential energy investments -- Chevron and Schlumberger remain excellent possibilities -- and monitor them closely, ideally with the help of The Motley Fool's Watchlist, zeroing in on Chevron here, and Schlumberger here.      

Looking for more ideas? The Motley Fool has created a new special oil report titled "3 Stocks for $100 Oil," which you can download today, absolutely free. In this report, Fool analysts cover three outstanding oil companies. To get instant access to the names of the three oil stocks, click here -- it's free.       

Motley Fool newsletter services have recommended buying shares of Chevron and The Goldman Sachs Group. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Fool contributor David Lee Smith doesn't own shares in any of the companies named above. The Motley Fool has a disclosure policy.      


Read/Post Comments (43) | Recommend This Article (46)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 16, 2011, at 5:43 PM, 1960vw wrote:

    An to imagine, we could be self reliant on our own production if only environmentalist extremes and Democrats get out of the way!

  • Report this Comment On November 16, 2011, at 5:43 PM, xetn wrote:

    Two things will increase the cost of oil: greatly reduced purchasing power of the dollar due to money creation by the Fed and, war in the Middle-East.

    Both are real possibilities as the major powers are all inflating their currencies (but the Fed is way ahead of the rest) and the growing threat to attack Iran.

  • Report this Comment On November 16, 2011, at 5:58 PM, newageinvestor wrote:

    Given the fact that the European Union is in for a double dip recession, which will ripple across the globe, demand is not going to increase enough for this to happen. I just think this article is really sensationalistic without taking into consideration all of the facts.

  • Report this Comment On November 16, 2011, at 6:06 PM, maiday2000 wrote:

    This is a wild piece of propaganda that would require so many improbable events to occur simultaneously it is hardly worth publishing.

    That said, we have scores of billions of barrels of oil within our grasp in the U.S. and under the outer continental shelf; that is, if we have the stones to confront the rabid environmental lobby that prevents us from improving energy security and creating jobs within our borders. We control our destiny.

  • Report this Comment On November 16, 2011, at 6:12 PM, lovesdos wrote:

    yes, the price of oil will one day reach 200 dollars but it will not happen in 2012, it is called inflation.i doubt that it will happen in my lifetime, i am 84 and i do not plan on dying anytime soon

  • Report this Comment On November 16, 2011, at 6:20 PM, DaveTudor wrote:

    Today the public debt of the United States of America became $15 trillion for the first time, with $3 trillion run up by Bush and Hastert, $1 trillion by Bush and Pelosi, $3 trillion by Obama Pelosi and Reid, ans $1 trilion by Obama Reid and Boehner, Oh yes, and $7 trillion by Washington through Clinton Hastert and Lott.

    Obama is so conce4rned about our economy, he and Reid nearly shut down the government in August ro raise taxes and further cripple the economy.

    This week he postponed a pipeline that would have increased to supply of crude oilin the world markets, and thus cut upward pressure on oil prices. I don't know if Obama and Reid can get us to $200 per barrell oil, but they are sure trying.

  • Report this Comment On November 16, 2011, at 6:27 PM, Educationist wrote:

    I just returned a few weeks ago from The Hague the HQs for Shell Oil. The speculation there is the crude may touch at least $130-140 next year ; but this may change to a higher magnitude. It is this reason George Soros was telling that the Saudi Arabia is keeping her oil underground and pumping out carefully.

    A good buy if you want your grand children to enjoy.

  • Report this Comment On November 16, 2011, at 6:44 PM, TMFBiggles wrote:

    @ 1960vw--

    That's not true at all. The deficit between US production and US consumption is near the level of Saudi Arabia's output.

    Even if you want to be wildly optimistic about the shale plays discovered this decade, there isn't going to be close to the level of production coming online to bring our oil balance to zero.

  • Report this Comment On November 16, 2011, at 6:50 PM, Nuadormrac wrote:

    We should all remember to "thank" the Nebraska legislature on a national basis, from all other 49 states, for helping to jack up our gasoline prices. If enough people could flood their political offices lines of communication, with enough disgruntled messages, as we all express our displeasure and disgust at the prospects of having to pay more, all because of their decision; perhaps they might think again. If not, at the very least, it will feel better, after taking aim at them politically speaking, for having cost us money....

  • Report this Comment On November 16, 2011, at 7:04 PM, Alg0rhythm wrote:

    Great article! Provides tons of context. I think investment in civilian infrastructure, American consultants and massive jobs for the people will get Iraq doing for self and less a vacuum for Iran to fill. Less than 25 billion will create a lot of good whatever Muslim holidays approximate Christmases, and people too tired from work to be terrorists or militants.

    Good news because it means that the place I will make my massive fortune, alternative energy marketing, home energy solutions and financing, should be well recognized the place to put your money, safe 6% 12 year bonds..

    looking for partners...

    prince.darrell@gmail.com

  • Report this Comment On November 16, 2011, at 7:34 PM, bmcquiston wrote:

    War is always the answer for the "Fools" who have never experienced it. Had we as a nation taken what will ultimately be trillions spent on the misadventure in Iraq and invested it at home, it wouldn't matter what Iran does. The problem isn't the Democrats or the Republicans, it's the millions of sheep in this country who buy into all the BS they are fed rather than taking the time to research the facts and do a little critical thinking. Too much work I guess. Easier to just sit in front of the tube and bluster, "we should just nuke 'em all".

  • Report this Comment On November 16, 2011, at 8:00 PM, buddyglee wrote:

    i love hearing about mistakes made by these "experts"

  • Report this Comment On November 16, 2011, at 9:12 PM, chil4356 wrote:

    You want to blame anybody then blame the Clinton administration and Congress for deregulating the commodities markets when they passed the Commodities Futures Modernization Act of 2000 as well as the Gramm-leach-Bliley Act.

    Personally I think that long before the price could hit $200 a barrel there will be riots all over America and the CFTC will have no choice but to take measures to limit the big investment banks hedge funds and other speculators from running the price up that high.

    American consumers are already stressed to the max because of the effect energy prices have had on them. I really don't think that there is room for much more robbery by Wall St and other commodities traders.

  • Report this Comment On November 16, 2011, at 9:14 PM, maiday2000 wrote:

    @bmcquiston

    A critical thinker would know that "nuke 'em all" is just as simplistic answer an answer as "investing billions at home instead of Iraq."

    And if anyone thinks that what Iran does in the Middle East doesn't matter IF ONLY we had invested that trillion dollars at home, they sure aren't much of a thinker at all, much less a critical one.

  • Report this Comment On November 16, 2011, at 10:07 PM, mike2153 wrote:

    Thank God for environmental extremists and Democrats.

  • Report this Comment On November 16, 2011, at 10:13 PM, TruffelPig wrote:

    You write: "the companies have boosted Iraqi production from a couple of million barrels a day to 2.6 million daily barrels in just over a year."

    Do you mean a couple thousand? Makes no sense.

  • Report this Comment On November 16, 2011, at 10:20 PM, Davemuse wrote:

    No one knows if there is going to be a big war in the Middle East, either among the oli producers, or in an effort by Israel to wipe out Iraq's nucluear inferstructure, or whatever. But most attentive persons can sense the intensity and the intensions toward violence, so clearly, thus there is some probability that war will break out. And the U.S. has this propensity to intervene to help our "national interest," which could be an accellerant for war. And stateside, politicians calculate how to allign themselves so as to gain greater political power.

    Not many potential top leaders in American politics are committed in certain ways that will telegraph what our nation;s response to a middle east war, except the serious money continuing to flow from Jewish citizens in support of Israel.

    The above is not all incluside, but suggests that avoiding war will not be easy, from either a political or an oil/economic collectivity.

    And it there is a simultaneous attact by those controlling our government in Washington DC aimed at 60-70% of the American people, we will find our nation so angered that they will not want to pay any attention to crises not on to their survival concerns.

    So one high probability situation is that politiclal processes and their outcomes will not be reached in tradtional ways, including much less consideration for what the broad base of the population might want,

  • Report this Comment On November 16, 2011, at 10:24 PM, kjnk wrote:

    Oh wait, a camel farted in the desert, oil is going to hit $300. Give me a break! Some clowns ( speculaters) want the price to go up so they can make some more money) give any reason under the sun to get it to go up.

  • Report this Comment On November 16, 2011, at 10:49 PM, Chontichajim wrote:

    Even if oil doesn't reach $200/bbl in 12 months due to middle east it will reach it shortly after due to its finite supply, OPEC control, and growth in developing Asia. Right now Asia and South America are stuck with inflation and weak export markets while Europe and North America are near recession and oil still goes up. No one except possibly Brazil is serious about alternatives to oil so it will dominate the world for decades with a major price increase when the world economies improve.

    The only question is which companies to invest in. I will add SLB to my watchlist where I have two other service companies still a little to pricey for me. I have BP and TOT already so unless I sell TOT I do not want CVX. After the French tax TOT still pays 5% and it has low PE and international wells including improvements in Libya. CVX has a refinery a few miles away so maybe smelling their product makes me reluctant to buy it.

  • Report this Comment On November 16, 2011, at 10:50 PM, MNrunner wrote:

    This is one of the most poorly constructed articles I've ever seen from MF... WTI is merely closing in on the global market based on a reversal of the Seaway pipeline. The upwards tick is not world wide demand based but simply a leveling of crude values based on the true value of crude...

    Meanwhile, gas cracks are being obliterated and crude cuts are occurring throughout the US and presumably the word. What will that mean? Cheaper crude oil.

    Oh, and did you mention the Bakken fields? WTI like in properties with outlets via pipeline and rail. No, you didn't. This crude is only increasing in production and isn't being shipped overseas due to transport expense. Let's see how WTI balances on this...

  • Report this Comment On November 16, 2011, at 10:55 PM, banniep333 wrote:

    I want to know why doesn't anyone know about Alabama's best keep blackgold secret? About 500 oil and gas wells bet the govenor of ala and the feds know plenty because the oil companies have made billions and the land owners have gotton pennies in roalities,the state have made plenty of revenue you dont hear the govennor of this state complainting.The judge in conecuh county, ala and all the croocked lawyers are holding all oil the U.S. could use we dont have to go outside the U.S. It's in our back yard.

  • Report this Comment On November 16, 2011, at 11:03 PM, DB777 wrote:

    Well libya was the last reason for oil prices to go up, but now I guess we must have a new excuse. We are just being ripped off by the oil companies and nobody seems to have an ideal on how to stop it! The oil fields in North Dakota are said to have enough oil to support the US for the next 100 years as long as we keep it for ourselfs. Our oil company's know this but refuse to build more refinerery's because it would drive down fuel prices. Some how we must find a way to put this to a stop, since the Bush's deregulated oil look where it has gotten us!!!! They are out of control, of course!!!!!

  • Report this Comment On November 16, 2011, at 11:05 PM, junkmail99723 wrote:

    Price of oil (all commodities) is driven by the greed of the likes of Goldman Sachs and their commodities index funds. Any excuse at all to drive that price as high as they can.

  • Report this Comment On November 17, 2011, at 1:44 AM, William13579 wrote:

    Our economy is not going to get better if factors that hurt it in the first place continue such as rising gas prices. I get a kick out of a comment from some idiot that was so proud of himself for investing in alternitive energy that he is going to make it rich, well idiot when this economy collasps like it very well could, your big wealth isn't going to be worth anything. If you own a office building that is said to be worth X amount of dollars but you can't rent any of the space then the building is actually worthless. Money will become deflated because of income generating assetts are worthless unless people have money to rent or purchase, total collasp will be eniment if we don't take steps to build our economy instead of the few being so greedy that they tear our economy down. The oil business or rather gas business should be condemned for such high profits when everybody is hurting so bad. Maybe we should string up some of these oil executives and show them that all the billions they have cheated Americans out of is worth anything if they are dead.

  • Report this Comment On November 17, 2011, at 3:38 AM, petrogold wrote:

    Many things beyond our thinking will happen in the world, there will be ups or downs around the globe. Yet to see the downfall of many countries, many tyrant govts will go down. Many economy will be downgraded.Many people will die of starvation and some new countries will be super power while others will lose it. Wars will become routine of the politicians. No one will care about the others life.

    No one will care if neibor is having food to eat or not..

    Many individuals will be billionaires. Technological change cannot be forecasted. Many new innovations beyond our imagination will be made.

    Many Riches will be poorers while the poorers will be rich.There will be no respects for elders, seniors, people will eat human flesh. House price will be sky rocketed. Oil will be the center of all wars.

  • Report this Comment On November 17, 2011, at 4:40 AM, MichaelDSimms wrote:

    Every war when it comes, or before it comes, is represented not as a war but as an act of self-defense against a homicidal maniac.

    George Orwell

    If ever there was a maniac, it currently resides in Iran. And there is no if there will be war again, it is merely when, where and what for.

  • Report this Comment On November 17, 2011, at 12:22 PM, jrj90620 wrote:

    I agree with xetn.It looks like all this fiat creation is the primary force for all the price increases I'm seeing.

  • Report this Comment On November 17, 2011, at 3:29 PM, Vigla wrote:

    @ Dave Tudor,

    Your rant belongs in the 1980's. This ain't the 80's anymore. There is a thing as too much deregulation and tax cuts... We've reached that point. Money in the hands of a powerful few is not good for any economy. To suggest also that somehow the 3 trillion added to the debt is somehow Obama's fault is also misleading at best. We were already running trillion dollar deficits when he walked in. Unless you could think of a better way to shrink those without touching defense or massive cuts to entitlements and perhaps education, please let me know. Problem we have is revenues. People are not working and the revenues have dropped. The rich pay far too little as well. So we cut taxes and forced a bunch of people out of work due to nonsensical conservative policies. Recipe for disaster.

    Put the blame where it is due, on conservative policies.

  • Report this Comment On November 18, 2011, at 3:18 AM, PeakOilBill wrote:

    After giving a speech about the future of human space flight and his attempt to make man a multi-planet civilization by colonizing Mars using a reusable rocket that the company he founded, SpaceX, is developing, Elon Musk, the creator of PayPay, Tesla Motors and other companies, took questions from members of the National Press Club in Washington D.C. One question was why he ever got involved in a difficult industry like the electric car, when he was obviously so interested in space. He replied that it was obvious to him that the supply of crude oil on Earth was finite, and that as soon as supply could no longer keep up with the demand, the price of oil would begin to rise rapidly, and that such an occurrence would 'collapse' the economy.

    He might be a few years early in his timing, but his conclusion about what will happen to the price of oil must be correct. Of the 7 billion people on this planet, only a tiny percentage can afford an all- electric car. A few billion people will want to be like the USA, Europe, and Japan, with their own private cars. Every day, thousands of them get rich enough to buy their own car. They will need a hell of a lot of gasoline and diesel.

    If you could own only one thing for the rest of your life, oil would probably yield the greatest return. It will go down during economic contractions, but the overall trend will be up from now on. We have been using more oil than we have been finding for roughly 40 years. How long can that continue before the price explodes? Using 2&2/3 CUBIC MILES of oil every year adds up fast. It depletes the porous rock saturated with oil fast too.

  • Report this Comment On November 18, 2011, at 11:17 AM, BTN100 wrote:

    2012? Not a chance. The last time oil spike was during an econmic expansion (which high oil helped kill). Completely different economic backdrop, and even then specualtors caused the spike.

    BTW, do you even realize that US gasoline **exports** have doubled in the last three years?

  • Report this Comment On November 18, 2011, at 12:58 PM, HMan570 wrote:

    It seems that eveyone know that the price of oil is controled by the Arab World. America has plenty of oil of its own and we should not have to pay such a price for oil? It is up to our leaders in Washington to get some backbone and think about its people before every other countries people first? We have little leadership in Washington as well as our State Houses as both seem to think that the American people have money to burn. No jobs, jobs that are paying less then they were 10 years ago, unemployment is not 9% it is more like 24% but our Government don't want to tell us the truth? We have a do nothing Congress except for spending money on other countries and grow our debt daily while they sit back and take money for big oil, banks and wall street. Taxes at both fed and state our out of control and we the people can't do anything about it as the two parties put who they want in office and ignore the people wishes. We do need Change and have not gotten it, time for the people to put down the remote control and strat spending time looking at who is makeing the laws and why are the laws only understandable to lawyers? Until the people get up in arms nothing with change. Got out and vote all sitting politicians both in State and Fed Government and perhaps things will change.. Remember if your going to keep sending lawyers to Washington and you State houses the problem will only get worse.

  • Report this Comment On November 18, 2011, at 1:25 PM, DJDynamicNC wrote:

    " It seems that the potential for a progressively closer relationship between the pair -- they're already tending to be mutually supportive on regional issues -- is enhanced by Prime Minister Nouri al-Maliki's having resided in Tehran while Hussein was in power. As a result, he retains a number of contacts in the dangerous land of Ahmadinejad. "

    Remember when they were going to greet us as liberators and build a democratic client state for us in the region and it would only cost a few billion dollars and almost no lives and it would all just be swell? Oh and also there were going to be WMD in there somewhere. And Osama Bin Laden.

    Oh well. Easy mistake to make.

  • Report this Comment On November 18, 2011, at 1:46 PM, DJDynamicNC wrote:

    "Got out and vote all sitting politicians both in State and Fed Government and perhaps things will change"

    Won't help, unfortunately. Whomever we send to Washington will just get bought again. It's like patching a water leak with fresh lumber; it's just going to rot the wood away again until you turn the flow off at the source.

    That's what Occupy is all about. Get the money out of politics, or you'll never get the politics out of money.

  • Report this Comment On November 19, 2011, at 7:53 PM, BlackQuartz wrote:

    This is my first post here with you Fools after two months with the service... I'm sorry guys and gals, but this is the quality of conversation I except to be degraded by when I'm sitting under a television in a McDonalds or airport somewhere in some God forsaken corner of this country. Paranoid and vitriolic warmongering, really?!?! I'm sure they're a baAAAazillion other sites and spaces to let off some steam like this... but here... enough already, please. I go home for the holidays when I wan't to get exposed to this sort of animosity... I'm here to get to some objective education. So please, stay objective and factual when talking about Iran taking over the middle-east, and Obama f$%king it all up . . . again. It's getting really stale. Pretty please. Fool on, Friends.

  • Report this Comment On November 19, 2011, at 9:08 PM, jlclayton wrote:

    BlackQuartz, I agree with you wholeheartedly. For those of you who are giving your opinion and information in a way that promotes logical and lively debate and discussion--thank you!

    For those of you who are using this forum to simply bash a politician or political party, I, too, would ask that you keep those comments to yourself and focus on what we are all here to do--learn how to make sound investment decisions.

    JC

  • Report this Comment On November 20, 2011, at 8:14 AM, TimoDOZ wrote:

    I don't get the word "except". This seems not the correct word which seems not to be used in a proper context.

    There's an historic glut of Natural Gas in North America. We are already signing contracts to export 100s of millions of tons of LNG. Lots of sloganeering but no Acta non Verba. Not a penny of tax on what is going to be exported to pay for laying down the branch lines to US consumers where 80% who are served by town sewer and water have no gas main running by their house. Taxes that could fund our country's infrastructure and infrastructure jobs! Just like in the Cruise industry where Americans love to be sucked up to by third world wogs, these LNG tank ships will be owned by foreign companies that do not pay US taxes, and be manned by Foreign wogs who do not pay any US income taxes. It is the nightmare of the American Bison all over again. Who would have thought back is 1824 that 60 million buffalo could be slaughteredd to near extinction in 40-50 years. We have "They say" a 100 year supply of Nat gas so we might as well export it and get some money for it. Exporting will drive up the price to $6-$7/MM~BTU eventually, good for EOG and CHK profits. $3.35 is too cheap. How much gas is left in the Cook inlet basin after exporting it for +20 years? Not enough to export any during the winter months when local consumption is near the peak of what those now depleted wells can deliver. Jobs jobs jobs! Great sloganeering but no Jobs on LNG tankers for us. No jobs digging up the streets to lay down nat gas branch line piping. No Taxes to pay for anything ever, especially not on the LNG we are going to export. After all a tax on exports might put us at a disadvantage to Canada's exports. How do those socialists do it ... I mean get a near 30% increase in the value of their currency against the US Pe$o in 3 years? Oh that's right they have way too much taxes which somehow gives their forest products industry a permanent unfair trade advantage. At least that's what I find on the piles of lumber at my Lowes. Then there's the coal... A Hong Kong conglomerate just buying out GACHF. Why do those Chinese want to buy met coal if their economy is going into the hopper? Probably to make steel plate to use in building the hulls of some LNG carriers. More jobs jobs jobs for Chinese workers. America is about Texas not taxes!

  • Report this Comment On November 20, 2011, at 8:42 AM, TimoDOZ wrote:

    Obama announced a complete pullout from Iraq? So 5K US Marines head for stationing in Northern Austrailia & another 5K troops from Iraq join the several thousand at Camp Spearhead in Shuaiba. Nixon told us in '68 he was getting us out of Vietnam. I seem to recall that war ending when someone else became President 6-7 years later. An end to increased defense spending and the War in Iraq more change we can believe in if it ever happens. Why these right wingnuts complain about this Republican President just mystifies. $800 billion stimulus 40% devoted to tax cuts. More tax cuts when the "Dumya's" cuts would have expired after 6-7 quarters of economic GDP growth. Continued ZIRP to bail out and allow reserves builds at the TBTF banks. A Fed chair who is hand picked by a GS CEO. ZIRP everlasting harvesting boomers trying to save for retirement, retirees with their CD income confiscated by ZIRP everlasting, the raid on and destruction of the funding levels of THE BIG BAD UNIONS' pension trust funds. Fannie and Freddie feverishly working to bail out deadbeats with their underwater mortgages while leaving the elderly to fend for themselves with Insurance companies that offer "Government Guaranteed" Reverse Equity mortgages that have avg commissions of 20%. So suddenly these sharks in Real estate, insurance, and assessors that work in this reverse equity mortgage industry are Democrats?Why would you want to have a guy in there as President who is not a cartoon character if you are a Republican. We always hurt the ones we love.

  • Report this Comment On November 22, 2011, at 12:09 PM, DJDynamicNC wrote:

    Goodness, it really is a shame that there is absolutely no possible alternative to oil at all that anybody could ever possibly even remotely come up with ever.

    Oh well, I can't imagine we'll ever run out of oil or suffer negative geopolitical consequences from being dependent on a substance which must be acquired from foreign nations, so no harm done.

  • Report this Comment On November 22, 2011, at 6:46 PM, hbofbyu wrote:

    We will never run out of oil until we have to. (When the price of oil becomes more expensive from start to finish than the alternatives).

    There has never been a real reason to be afraid of "peak oil" and there never will be.

  • Report this Comment On November 23, 2011, at 12:13 PM, oilproducer wrote:

    I'm in the oil business. Based upon many of the previous comments people are clueless about the oilfield. I'll rely primarily on quotes:

    United States Joint Forces Command:

    U.S. JOINT OPERATING ENVIRONMENT REPORT 2010

    “A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent conservation measures, investments in alternative energy production, and efforts to expand petroleum production from tar sands and shale would mitigate such a period of adjustment is difficult to predict. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest...By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day...The implications for future conflict are ominous, if energy supplies cannot keep up with demand and should states see the need to militarily secure dwindling energy resources.”

    That's your military/Pentagon talking to you. The German Military issued a similar report last year as well. You can google both. How could you visualize a 10M bbl/day shortfall? According to the EIA's website the US consumes 19M bbl/day. Of that amount 9M bbl represents finished motor fuel gasoline. So try to image every roadway across all 50 states vacant of gasoline automobiles, all gas pumps dry. That's what a global shortfall represents.

    How could this shortfall happen? Increasing demand along with declining production and the need to replace those field declines with new projects.

    Oilfield production output declines over time. So a relevant question relevant question might be: What is the annual decline rate on existing global production and how much new production needs to be put online each year to not only offset not only the decline but to meet increasing oil demands from developing countries?

    IEA World Energy Outlook 2008

    Main text

    "The projected increase in global oil output hinges on adequate and timely investment. Some 64 mb/d of additional gross capacity — the equivalent of almost six times that of Saudi Arabia today — needs to be brought on stream between 2007 and 2030. Some 30 mb/d of new capacity is needed by 2015. There remains a real risk that under-investment will cause an oil-supply crunch in that timeframe. The current wave of upstream investment looks set to boost net oil-production capacity in the next two to three years, pushing up spare capacity modestly. However, capacity additions from current projects tail off after 2010. This largely reflects the upstream development cycle: many new projects will undoubtedly be sanctioned in the near term as oil companies complete existing projects and move on to new ones. But the gap now evident between what is currently being built and what will be needed to keep pace with demand is set to widen sharply after 2010. Around 7 mb/d of additional capacity (over and above that from all current projects) needs to be brought on stream by 2015, most of which will need to be sanctioned within the next two years, to avoid a fall in spare capacity towards the middle of the next decade."

    IEA Word Energy Outlook 2008 Press Release

    "The prospect of accelerating declines in production at individual oilfields is adding to these uncertainties. The findings of an unprecedented field-by-field analysis of the historical production trends of 800 oilfields indicate that decline rates are likely to rise significantly in the long term, from an average of 6.7% today to 8.6% in 2030. "Despite all the attention that is given to demand growth, decline rates are actually a far more important determinant of investment needs. Even if oil demand was to remain flat to 2030, 45 mb/d of gross capacity - roughly four times the current capacity of Saudi Arabia - would need to be built by 2030 just to offset the effect of oilfield decline", Mr. Tanaka added

    Those 800 fields produce 2/3rds of the world's crude oil supplies. Four new Saudi Arabian equivalents would mean the oil industry needs to put online the equivalent of a new Saudi Arabia every 5 years...just to offset the decline rates in current oil production. But then if you also want to not only offset that declining production but also meet increasing demands the IEA estimates a new Saudi Arabia equivalent would have to be put online every 3.8 years! (2030-2007) / 6 = 3.8. If you believe that volume of production will materialize as needed then you have nothing to be concerned about financially and to your way of life. But if you don't believe it will materialize....

    Aside from the military who in the media and/or who in the gov. is attempting to inform you about an impending oil crunch?

  • Report this Comment On November 23, 2011, at 12:18 PM, oilproducer wrote:

    I'm new to posting on the Fool so I don't know if these youtube interviews are allowed but here goes. BTW be sure to note the oilfield backgrounds for the following men. For example, Dr Sadad al-Husseini is not only a Brown University PhD but the recently retired VP of Saudi ARAMCO who was head of Saudi production.

    http://www.youtube.com/user/OilEducationTV#p/u/2/oZp-OxZuflE

    http://www.youtube.com/watch?v=NAdnuGUYXp8&feature=relat...

  • Report this Comment On November 23, 2011, at 1:08 PM, oilproducer wrote:

    "The oil business or rather gas business should be condemned for such high profits when everybody is hurting so bad. Maybe we should string up some of these oil executives and show them that all the billions they have cheated Americans out of is worth anything if they are dead."

    Question: Who is the world's largest oil and gas company? Exxon? Nope, Exxon ranks as 17th (source: http://www.petrostrategies.org/Links/Worlds_Largest_Oil_and_.... The 16 larger companies are nationalized, government owned companies.

    If you notice in the source link, government owned companies control about 90% of the world's oil reserves. So how is "Big Oil" responsible for price gouging when they control less than 10% of the reserves?

    Even Dick Cheney acknowledged the 90% ratio in a speech to the London Petroleum Institute in 1999. Quote

    "From the standpoint of the oil industry obviously and I’ll talk a little later on about gas, but obviously for over a hundred years we as an industry have had to deal with the pesky problem that once you find oil and pump it out of the ground you’ve got to turn around and find more or go out of business. Producing oil is obviously a self-depleting activity. Every year you’ve got to find and develop reserves equal to your output just to stand still, just to stay even. This is true for companies as well in the broader economic sense as it is for the world. A new merged company like Exxon-Mobil will have to secure over a billion and a half barrels of new oil equivalent reserves every year just to replace existing production. It’s like making one hundred per cent interest discovery in another major field of some five hundred million barrels equivalent every four months or finding two Hibernias a year.

    For the world as a whole, oil companies are expected to keep finding and developing enough oil to offset our seventy one million plus barrel a day of oil depletion, but also to meet new demand. By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from?

    Governments and the national oil companies are obviously controlling about ninety per cent [90%] of the assets."

    source: http://www.energybulletin.net/node/559

    By 2002 Cheney was VP conducting a secrete energy group researching future oil supply needs.

  • Report this Comment On November 23, 2011, at 1:13 PM, oilproducer wrote:

    "The oil fields in North Dakota are said to have enough oil to support the US for the next 100 years as long as we keep it for ourselfs. Our oil company's know this but refuse to build more refinerery's because it would drive down fuel prices."

    3 to 4.3 Billion Barrels of Technically Recoverable Oil Assessed in North Dakota and Montana’s Bakken Formation—25 Times More Than 1995 Estimate

    http://www.usgs.gov/newsroom/article.asp?ID=1911

    The US consumes about 7 billion bbl/year. So the Bakken represents about 6-8 months worth of oil production, not 100 years.

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