[212Export]

Dear friends

Okay, everybody talks about it....the price of crude oil and its derivatives. If I'm not wrong, some of you work directly or indirectly in the oil business. What are your ideas about the drilling aspects, peak oil idea's, new innovations and after all the direct influence to our beloved hobby ? Any thought are welcomed!

 

[archiegibbs]

My own view is that the price of a litre at the pump will never fall below it's current level. Governments and oil companies have seen that the public are still prepared to buy gas at these extortionate prices, so why reduce the cost.

I also have a sneaky feeling that the leaders of the developed world are not too keen to see oil prices fall despite what they say to the contrary. Look at it this way, the economy has slowed down, tax revenues from business and individuals has fallen, state welfare benefits have increased. With lower taxes how will the UK & USA pay for their wars in Iraq and Afghanistan? Simple, keep oil prices high, the VAT on top of the cost of a litre will make up for the shortfall in taxes from a slowing economy, on top of that, they can impose huge windfall taxes on the oil companies for massive profits they have made.

Additionally the oil companies don't want to see the cost of a litre reduce and neither do the oil producing nations. So there we have it, high fuel prices are here to stay and there's nothing we can do about it.

Forgive my sceptiscism, but I am fed up listening to lies and empty promises from a socialist government that has raped and pillaged the British economy and bankrupted the country over the last 12 years, and then sat back and watched the financial services industry meltdown without lifting a finger to help

 

[212Export]

My own view is that the price of a litre at the pump will never fall below it's current level. Governments and oil companies have seen that the public are still prepared to buy gas at these extortionate prices, so why reduce the cost.

I also have a sneaky feeling that the leaders of the developed world are not too keen to see oil prices fall despite what they say to the contrary. Look at it this way, the economy has slowed down, tax revenues from business and individuals has fallen, state welfare benefits have increased. With lower taxes how will the UK & USA pay for their wars in Iraq and Afghanistan? Simple, keep oil prices high, the VAT on top of the cost of a litre will make up for the shortfall in taxes from a slowing economy, on top of that, they can impose huge windfall taxes on the oil companies for massive profits they have made.

Additionally the oil companies don't want to see the cost of a litre reduce and neither do the oil producing nations. So there we have it, high fuel prices are here to stay and there's nothing we can do about it.

Forgive my sceptiscism, but I am fed up listening to lies and empty promises from a socialist government that has raped and pillaged the British economy and bankrupted the country over the last 12 years, and then sat back and watched the financial services industry meltdown without lifting a finger to help

Archie, I have high sympathy with your arguments and view of the high european costs of everything by socialist induced thinking. But besides that how about possible unrest in third world countries once their governements have to show them the real price tag of oil and energy (and therefore food price etc.) ?

 

[archiegibbs]

Archie, I have high sympathy with your arguments and view of the high european costs of everything by socialist induced thinking. But besides that how about possible unrest in third world countries once their governements have to show them the real price tag of oil and energy (and therefore food price etc.) ?

That's a good point, and I don't claim to have the answers. I do think that 3rd world governments have a responsibility to inform their citizens that the popoulation cannot keep expanding as it is a massive drain on the country's resources. If you look at the developed world, the population has been very stable for the last 100 years, in fact if you take out 3rd world immigration, the populations of the 1st world have probably fallen.
A vastly expanding population puts increasing pressure on natural resources and food, sooner or later there won't be enough to go round. Whether it's fair or not, the 3rd world cannot afford to pay what we can in the west, and sooner or later there will be mass starvation in the 3rd world. Therefore, the governments of these countries should be planning ahead for this eventuality and encouraging birth control (easier said than done I know).

Added to that, corruption and mis-management in some 3rd world countries makes their economic position far worse than it should be. Look at Zimbabwe, it has huge natural resources and was once one of the richest countries in Africa, it even produced food surplus', but now it has rampant inflation, the farming industry has been destroyed and the country is one of the poorest in the world. It should not be that way.

I'm not going to go on any more, as I don't claim to know anything about world politics or economics. What is clear is that too many people inhabit the world, it doesn't have the resources to cater for us all, birth control is the only solution, if that does not happen within our lifetime's we will see war, famine and genocide on a scale never seen before, and that is a scarry thought.

 

[212Export]

Simply said we are to many people in this world ?!
I assume that after all nature will take care for it by its own mean. Nature (organisms) will stay after all most likely without the species called human beings which putted in historical long term means has been anyway just a blimps in the time axle.

 

[212Export]

Oh Archie I just clicked on your webside...you 're advising people on the mortgage decisions ? An interesting proffesion especially in these days in the UK. Lots of opportunities lies ahead. Heard in Switzerland this morning the "Taylor Wimpey" news. Your competence is in demand I assume !!

 

[archiegibbs]

Oh Archie I just clicked on your webside...you 're advising people on the mortgage decisions ? An interesting proffesion especially in these days in the UK. Lots of opportunities lies ahead. Heard in Switzerland this morning the "Taylor Wimpey" news. Your competence is in demand I assume !!

I wish our competency was in demand. The mortgage industry is suffering it's worst crisis ever, in 24 years I have never seen anything like this. Banks do not want to lend money, what little bit they are lending is so expensive that no one is taking it up. Even if they wanted to lend money, they haven't got any, they are all on the verge of bankruptcy. Northern Rock and Bear Stearns were just the tip of the iceberg. Now it's spreading to housebuilders and car manufacturers, before long the retail sector will be in sharp decline and unemployment will rise causing an even larger downward spiral.This time last year, I had 50+ employees, now I have less than 20 staff, our business turnover is down 70% on this time last year. We are not an isolated case, the whole industry is in the same boat. Figures realeased by a group of national lenders yesterday show that lending in June was down 90% on May, and May was down 70% on last year.The market has completely ground to a halt.
I have a hardcore of very good and loyal staff left, and my business will survive, but profits and bonus' (which pay for Ferrari's) have dissappeared for the forseable future.
When I sold my beloved 328 in April and my Mercedes in May, it was very hard and upsetting, but I am so pleased that I did, the money is in the bank earning interest and will provide a small rainy day fund if the market deteriorates further and I find myself without a job.

http://newsvote.bbc.co.uk/1/hi/business/7487078.stm

This link to the BBC news shows the current state of the mortgage industry.

 

[212Export]

I fully understand the whole situation. We had this here in Switzerland as well in the beginning of the 90's. And I realized how extended house pricing was in Spain when traveling there in the Fall of 2006. (Anyone recalculating the real costs of houseprices there thought he is in another world). Never the less these situations are the longterm makeup of future riches Archie That's what I meant. Keep on going..even if it means to sell the beloved "Cavallino". Chances are well you will have one again in the future.....!

 

[archiegibbs]

Keep on going..even if it means to sell the beloved "Cavallino". Chances are well you will have one again in the future.....!

Oh absolutely, I waited over 20 years for the right time to buy my first Ferrari. I got a good job, savings and investments, several properties, a wife and family first to ensure I had a good foundation. The next Ferrari will not take 20 years to come, as long as I can keep hold of what I've worked the last 20+ years for, as soon as the credit crunch is over I will be back behind the wheel of a Ferrari. I have the cash to buy one now, but I think it would be foolish to spend it before the crisis is over. As many of our friends on here have said in the past, finding another Ferrari and test driving different examples will be great fun when the time is right.
At the moment I am still torn between a 550, 355 GTS and another 328GTS. I really loved the purity of my 328, except for ABS it had none on the modern electronics that are found in newer cars. Not wishing to take anything away from your wonderful Scudi, I do feel that modern cars with their computerised everything have taken away some of the raw driver appeal of cars. That's great in a daily driver, but if I really want to drive a drivers car, in my opinion I want it raw, without any of the gadgets and gizmo's. Having said all of that, if I could ever afford a Scudi or a 599 I would have no hesitation in buying one
Coming back to the topic of this thread, OIL, one consolation of being an ex-Ferrari owner is that I don't have to put gas in a car that averages 18 MPG

 

[212Export]

Yes, everything has its advantage, you're right.
I agree also on the rawness factor. Probably the reason why longer term out I'm still looking to own once a F50 or F40.

 

[t1fosI]

Oil is a fascinating topic, the geo-political situation is always foremost in everyones mind, but there are so many other factors & players.

In brief my opinion is that there is no shortage of oil in the market today, what we are seeing is the market speculating that there will be a future shortage (most likely as a result of increased demand from industrialising Eastern economies) and this is pushing up the price of crude oil.

When we speak about the price of fuel, I think this must be seperated from the price of crude. It must be noted that oil is used to manufacture other than fuel (e.g. plastics).

So the price of fuel - in my opinion, the price that we pay at the pump (or for heating oil) today should technically not be a consequence of the price of crude oil today. There is a temporal delay in bringing fuel to market, so the price of fuel today theoretically in the main should be determined by the price of crude say a year ago (futures markets etc). However in reality this is not the case. When the price of crude goes up, the price of fuel goes up immediately. In my opinion this is a consequence of the oil refiners/fuel distributors using current events to ensure they optimise retail prices thereby maximising profit.

The question is, if today oil is $146/Barrel - what will be the price of fuel one year from now? no idea, but you can bet your bottom dolllar that it will be higher than it is today (as have the speculators).

I agree with Archie that fuel prices are extremely unlikely to come down and that this trend will continue (for us in the developed economies anyway).

If we contextualise these high fuel prices within the realm of the greater economy (in the UK at least) they come at a time when a number of other factors are at play.

The economy has been growing for a few years as a result of greater public sector spending and low interest rates (translate into cheap money). However,
1) The public purse is now empty and the government is living on overdraft, so it has to cutback (a classic case of spending more than you earn). However in order to sustain its 'high maintenance lifestyle' it is attempting to increase earnings by increasing taxes (i.e resorting to daylight robbery).
2) Interest rates are going up - because the Gov't, sorry Bank of England, believes that inflation is too high (one reason for no more 'cheap' money)
3) Banks are more cautious about lending - sorry we lent you more than you earn and now we want it back (aka 'credit crunch' another reason for no more 'cheap' money).

As our economy has begun to retract (interest rates have been increasing since early last year ('07) to combat inflation, the credit crunch started in June 07, the Gov't has been bankrupt for some time) other economies have continued to grow. So in antcipation of demand from these developing economies the people who buy and sell oil have decided that as the demand there increases prices will also probably increase. This means that we too have to pay a higher price for oil ( & so fuel) at a time when we are paying higher prices for everything else already (inflation, no 'cheap' money). The developing economies who were growing as a result of the money we were spending with them are now also slowing (partly because we are not spending as much money with them) and as they work on thinner margins they are now feeling the pinch.

I could go on, but I better get back to work!

Only one more thing for now, the higher prices we pay for fuel serve the interests of our Govt for 3 reasons
1. Increased tax reciepts from a) Crude b) Fuel duty/VAT.
2. Increased prices are helping slow the economy so should reduce inflation in the longer term (irony)
3. They have a 'bogeyman' which detracts peoples attentions from their own incompetance! 'Wag the Dog!'


The FT has an ongoing analysis on the oil situation for anyone who is interested, you can read upto 5 articles before it asks you to subscribe just reset you browser/cookies and it will let you read another 5 etc. Definately worth a subscription in my opinion .
http://www.ft.com/indepth/oil




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[desotodave]

I am not the world expert on oil, but I am a currency trader and the price of oil impacts my business very directly so I follow the trends etc. If you look at charts, forecasts and projections of all the so called experts, we should see oil at $170 to $180 a barrel by the end of the year. So far most people I know are complaining about the price, but they are not significantly changing their habits.

 

[212Export]

T1fosI: Thanks for your time spend to respond in such an insightful manner. Your thoughts are interesting and your conclusions seem logical. Many thanks for it !!

Desotodave: I agree very much with "never fight the trend". On the other hand my stomach tells me that to too many people outthere it seems clear that the oil has only one way to go which is up......! Looking at the markets longer term...this may be a setup to possibly turn in the not-so-distant future. Maybe

 

[archiegibbs]

212Export, how about running the Scudi on LPG or biogas

 

[212Export]

212Export, how about running the Scudi on LPG or biogas

No problem, as long as the sound and acceleration is equalized

Seriously...I'm driving a Audi A2 for everyday use (5.5 liters per 100km average) and I'm working 30 meters from my home. Additionally I', lucky enough of almost no need to travel business wise. Therefore my Co2 balance from that corner looks fine and opens the door for some "Scudish" behavior year in and out

 

[archiegibbs]

No problem, as long as the sound and acceleration is equalized

Seriously...I'm driving a Audi A2 for everyday use (5.5 liters per 100km average) and I'm working 30 meters from my home. Additionally I', lucky enough of almost no need to travel business wise. Therefore my Co2 balance from that corner looks fine and opens the door for some "Scudish" behavior year in and out

I'm also considering buying a very small car for daily use (commuting and city driving), not so much for Co2 emissions, but purely to save on gas costs. I think for reliability, power to weight ratio, fuel economy, styling and driver appeal that the Smart Roadster or Smart Coupe may be a sensible buy. Does anyone have any thoughts on this?
As you say, having one environmentally friendly car opens the door for something a bit more fun at the weekend

 

[t1fosI]

On the other hand my stomach tells me that to too many people outthere it seems clear that the oil has only one way to go which is up......! Looking at the markets longer term...this may be a setup to possibly turn in the not-so-distant future. Maybe

What goes up, must come down! That is a an interesting propositon. In essence, are we looking at an oil 'bubble'? or on another level a 'steel bubble', a 'rice bubble' etc?

The logical argument would be that if the developing economies (or the developed economies) slow down, than so should their demand for oil, leading to a fall in the price of the commodity. I guess in some ways as happened after the 73-74 oil crisis. It is highly plausible. However I guess a lot depends on the rate/type of slowdown and their subsequent ability to accelerate to growth.

Other factors like alternative energy sources are also a consideration with oil prices, but not so much in the medium term I think.

So far most people I know are complaining about the price, but they are not significantly changing their habits.

Dave's point begs an interesting question, at what point does price significantly alter buying habits? At what price do we go 'cold turkey' and shake our oil addiction? Actually do Gov'ts & Oil Co's (aka 'the dealers') really want people to change habits given the potential losses in revenue?





.

 

[archiegibbs]

What goes up, must come down! That is a an interesting propositon. In essence, are we looking at an oil 'bubble'? or on another level a 'steel bubble', a 'rice bubble' etc?

The logical argument would be that if the developing economies (or the developed economies) slow down, than so should their demand for oil, leading to a fall in the price of the commodity. I guess in some ways as happened after the 73-74 oil crisis. It is highly plausible. However I guess a lot depends on the rate/type of slowdown and their subsequent ability to accelerate to growth.

Other factors like alternative energy sources are also a consideration with oil prices, but not so much in the medium term I think.



Dave's point begs an interesting question, at what point does price significantly alter buying habits? At what price do we go 'cold turkey' and shake our oil addiction? Actually do Gov'ts & Oil Co's (aka 'the dealers') really want people to change habits given the potential losses in revenue?





.

T1f, I can't really see us changing our habits, oil prices have beem going up steadily for years and it hasn't put us off yet. We all moan about fuel prices, but we still put up with it. There isn't an alternative, we all love our cars too much and won't all suddenly take to public transport.
Even if the west reduced demand, it would make no difference as countries in the east are massively expanding their car usage and will make up the shortfall in demand from the west.
Someone needs to develop an engine that can run on household waste, the amount of stuff my wife and kids throw away in a week would end the world fuel crisis

 

[JazzyO]

Seriously...I'm driving a Audi A2 for everyday use (5.5 liters per 100km average) and I'm working 30 meters from my home. Additionally I', lucky enough of almost no need to travel business wise. Therefore my Co2 balance from that corner looks fine and opens the door for some "Scudish" behavior year in and out

I'm so proud of you, 212Export. You work 30m from home and you still drive there in you A2!


Onno



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[Pete04222]

Lots of interesting responses on this topic. I work in the oil industry, but I am on the "shovel" end of the business. I don't refine it, I don't market it and I have nothing to do with the pricing of it. I drill deepwater oil wells for a living. My product is a 30,000 foot deep hole in the ground 100 miles offshore.

What little insight I can provide is that there is indeed no shortage of oil in the world. As technology increases we have the ability to discover and recover oil reserves that were not accessible a few decades ago. I remember drilling production wells about 10 years ago in water so deep that the technology did not yet exist to recover the oil. Those wells are producing oil now. If you can find it, someone will figure out how to get it. There was a recent discovery in Brazil of an offshore reserviour that contains more oil than Saudi Arabia. Brazil is getting ready to become an economic powerhouse. It is too bad their government is such a pain in the ass to deal with. Their oil industry is controlled by the government.

As for the pricing, yeah, it is speculation that drives the price. The futures market. OPEC has the biggest impact in the pricing by controlling the supply but it is the market that really drives the price. You get a hurricane in the atlantic ocean and the price of fuel goes up due to speculation.

As for the taxes on fuel, well I would say that, unfortunate as it is, they are needed. They pay for the road building and upkeep and they control the amount of pollution and traffic. Take Singapore for example, it is very expensive to own and operate a car there. It is an island about 3 times the size of Washington D.C. and 4.5 million people live there. If cars and fuel were cheap you wouldn't be able to move or breathe. The public tranportation system is brilliant and the taxis are subsidized so during off-peak hours you can go pretty much anywhere on the island for $5. You really don't need to own a car in Singapore.

Having said all that, I am fairly immune to rising fuel costs. When the price of oil goes up, the oil companies have more money and my pay goes up and my services are in more demand. When the price of oil goes down, my bonuses go away but it is cheaper to live.