Oil at $20?

(podcast here)

Verleger talks about oil falling to c. $20 which may seem outlandish at the moment but the reality is that oil will likely take a fall in the short term, even with OPEC’s efforts to direct the market it won’t change the outcome, if oil is not being bought fast enough then it means that it will have to go into storage, the real story in this for me is one of oil storage and there are only a limited number of places you can store oil, you can leave it in the ground (not likely), you can store it in large land based tanks (these are getting very full) and then there are Ships, and that is a key, oil shipping is probably going to see a lift in business.

There is too much supply for existing demand and in the same way that the end of subsidies along with financial meltdown brought prices down from $147 the ongoing existence of these factors means that we won’t see a short term run up …

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Peak Water

There is a concept in the Oil and economics called ‘Peak Oil’. It is the point at which the maximum rate of petroleum extraction is reached after which the rate of production goes into terminal decline. Oil is a finite resource so if there are not alternatives found before the world runs out (and I don’t believe we are actually going to run out any time soon) there could be a worldwide energy crisis. Enough about ‘peak oil’ though, because today we will talk about ‘Peak Water’.

The world has always had food shortages, at almost any given time some part of the world is going hungry or they have enough instability that food supplies don’t reach their intended targets and many people starve. Starvation is a massive issue and one that is vital to fight, rapid population growth is probably as big a threat but one that is not as simple to solve. However, these issues pale in comparison to the issue of water.

If the world water supply is 100% then only a mere 3% of it is …

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I don't know where 'Oil' be this time next year.

Where is oil going? We have seen predictions of $200 per barrel from Goldman Sachs analyst Arjun Murti (he was the guy who was right about $100 oil last year when it was $50) and recently Alexey Miller of Gazprom said they see oil going to $250 per barrel by this time next year.

I am going to go against these great minds and instead predict a fall off in crude oil prices. Why? Simply put, I believe that a global downturn and the end of fuel subsidies in many Asian nations will all converge to give an overhang, and this, combined with an OPEC vision of a world bound to oil will bring about the fall.

It’s important to expand on these points, firstly, Asian nations are all talking about ending fuel subsidies, in many countries subsidies account for up to

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I don’t know where ‘Oil’ be this time next year.

Where is oil going? We have seen predictions of $200 per barrel from Goldman Sachs analyst Arjun Murti (he was the guy who was right about $100 oil last year when it was $50) and recently Alexey Miller of Gazprom said they see oil going to $250 per barrel by this time next year.

I am going to go against these great minds and instead predict a fall off in crude oil prices. Why? Simply put, I believe that a global downturn and the end of fuel subsidies in many Asian nations will all converge to give an overhang, and this, combined with an OPEC vision of a world bound to oil will bring about the fall.

It’s important to expand on these points, firstly, Asian nations are all talking about ending fuel subsidies, in many countries subsidies account for up to

Read More