Oil Prices vs. Airline Health

[atpcliff]

Hi!

The latest quote:

NEW YORK (Reuters) - Barclays Capital analysts predict U.S. oil prices will average more than $70 a barrel by the end of 2006 on strong global demand and supply uncertainties from major oil exporters.
U.S. crude prices are unlikely to fall below $60 this year, they said.

I just read an interview with 2 Saudis who were senior oil mgmt, who have recently retired. They said that at the current increasing rate of oil consumption, that within 5 years worldwide demand will outstrip supply.

I just read the #2 guy at TOTAL (the 4th or 5th largest oil company in the world). He basically said that Peak Oil is here, which means demand is outpacing supply, which means the prices are going up, up, up. In more detail, he said that while quite an amount of oil is available, the ability to extract it from the ground at rates that meet the projected demand numbers going forward is non-existant.

He said that institutions like the US Dept of Energy that forecast massively increasing oil production numbers are fantasy.

I also just watched a market show that had 2 Brits on it. They said the #1 oil guy in Britain forecasted the 10 year price of oil in 2004 at $25/barrel, his 2005 10 year estimate was $55 and this year's 10 year estimate was $65. You can see where that's heading.

They further noted that OPEC is completely innefectual in reducing the price of oil. They stated that within the last 6 months, OPEC had ramped up to maximum oil production rates, with no effect on the price.


The airlines need to face up to the reality of oil prices at $70-$100 MINIMUM over the next 10 years. If that's not in their planning strategy, they're living in Wonderland with Alice. Hoping for oil below $60 barrel any time in the next 20-30 years is delusional.

We (the US) needs the Federal Government to get off it's A$$ and immediately start a 10 year, $10B program (that's what we spent on the Apollo program) to switch over from oil to a renewable fuel supply for transportation and electricity.

I like my job, and I want my kids to be able to lead a middle-class life.

Cliff
YIP

PS-I just got a survey from Nancy Pelosi (the #1 Dem in the House), trying to raise money and kick the Reps out of Congress. It asked me what I thought was important to America in a number of areas. There was NOT ONE MENTION OF OIL!!! Stupid politicians!!!

 

[JohnDoe]

Why is it that whenever the analysts start talking about prices going up up and up (not necessarily you cliff) because of increasing demand and exceeding supply, nobody considers that when the price reaches a certain point, demand will start to fall??

I doubt the emerging economies of China and India can handle $80-100 per barrel oil any better than we can.

Not saying we don't need to do something about it. I agree with your last couple paragraphs. We need alternatives if for nothing else than to be able to end our absolute dependancy on the middle east, venezuela, and places like that. Kick 'em all to the curb.

 

[Ty Webb]

Cliff:

At least once every few years, a new "panic" becomes in vogue. In the 1960's, it was the coming "Population Bomb", which sounded very convincing and sold a lot of books and provided interviews and income for the "talking heads" . . . . obviously, that never happened. In the 1980's, it was the "Great Depression of 1990" which also sounded very convincing . . . In the 1990's it was . . . . hell, I don't remember, but I am sure there was one.

Are oil supplies diminishing? Sure they are. Is there a reason to seek out new energy sources? Undoubtedly. Is there a reason to panic? Probably only if that is how you make your living.

I got this e-mail yesterday, for what it is worth:

GAS WAR - an idea that WILL work

This was originally sent by a retired Coca Cola
executive It came from one of his engineer buddies
who retired from Halliburton. It's worth your
consideration.

Join the resistance!!!! I hear we are going to
hit close to $ 4.00 a gallon by next summer and it might
go higher!! Want gasoline prices to come down? We
need to take some intelligent, united action.

Phillip Hollsworth offered this good idea. This makes
MUCH MORE SENSE than the "don't buy gas on a certain
day" campaign that was going around last April or May!
The oil companies just laughed at that because they
knew we wouldn't continue to "hurt" ourselves by
refusing to buy gas. It was more of an inconvenience
to us than it was a problem for them. BUT, whoever
thought of this idea, has come up with a plan that can
really work. Please read on and join with us!

By now you're probably thinking gasoline priced at
about $1.50 is super cheap. Me too! It is currently
$2.79 for regular unleaded in my town. Now that the
oil companies and the OPEC nations have conditioned us
to think that the cost of a gallon of gas is CHEAP at
$1.50 - $1.75, we need to take aggressive action to
teach them that BUYERS control the marketplace..not
sellers. With the price of gasoline going up more each
day, we consumers need to take action. The only way we
are going to see the price of gas come down is if we
hit someone in the pocketbook by not purchasing their
gas! And, we can do that WITHOUT hurting ourselves.
How?

Since we all rely on our cars, we can't just stop
buying gas. But we CAN have an impact on gas prices if
we all act together to force a price war.

Here's the idea: For the rest of this year, DON'T
purchase ANY gasoline from the two biggest companies
(which now are one), EXXON and MOBIL. If they are not
selling any gas, they will be inclined to reduce their
prices. If they reduce their prices, the other
companies will have to follow suit. But to have an
impact, we need to reach literally millions of Exxon
and Mobil gas buyers. It's really simple to do! Now,
don't wimp out on me at this point...keep reading and
I'll explain how simple it is to reach millions of
people!!

I am sending this note to over 30 people. If each of us
send it to at least ten more (30 x 10 = 300) ... and
those 300 send it to at least ten more (300 x 10 =
3,000)...and so on, by the time the message reaches
the sixth group of people, we will have reached over
THREE MILLION consumers.

If those three million get excited and pass this on to
ten friends each, then 30 million people will have
been contacted! If it goes one level further, you
guessed it..... THREE HUNDRED MILLION PEOPLE!!!

Again, all you have to do is send this to 10 people.
That's all!
(If you don't understand how we can reach 300 million
and all you have to do is send this to 10 people....
Well, let's face it, you just aren't a mathematician.
But I am so trust me on this one.)

How long would all that take? If each of us sends
this e-mail out to ten more people within one day of
receipt, all 300 MILLION people could conceivably be
contacted within the next 8 days!!! I'll bet you
didn't think you and I had that much potential, did
you! Acting together we can make a difference.

If this makes sense to you, please pass this message
on. I suggest that we not buy from EXXON/MOBIL UNTIL
THEY LOWER THEIR PRICES TO THE $1.30 RANGE AND KEEP
THEM DOWN. THIS CAN REALLY WORK.

Kerry Lyle, Director, Research Coordinator
Thanks for your support,


See you on MSNBC . . . . . . just kidding.

 

[gringo]

Did you know that Brazil has absolutely NO dependence on foreign oil? Meaning, they import NOTHING from the middle east.

They have been running on ethanol, natural gas AND gasoline quite well for many years!

Now, I understand that Brazil´s economy isn´t what ours is, but it IS booming, and there are a LOT of cars over here (no idea what the actual numbers are, but if you spend 3 hours sitting in traffic in Sao Paulo, you get a pretty good feeling). I would say that there are probably nearly as many automobiles over here as back home in the States- Brazillians LOVE their cars! (BTW, gas sells for R$2.5 a liter, which roughly equates to $5.00 USD a gallon) Alcohol (ethanol) sells for about R$1.5 a liter (at least, here in Campinas). And I see a LOT of vehicles here with high pressure tanks to hold the natural gas (usually hidden in the trunk).

Anyway, my point is, Brazil´s economy is ramping up big time (does the term BRIC mean anything to anyone here?) and they´re doing it WITHOUT aid from the sandbox.

Brazil´s got many hurldles ahead of it (some of the things I see down here make me wonder `what the hell were they thinking!!?!`), but THIS is one thing they got right on the money.

 

[El-Rushbo]

Brazil currently uses an 80-20 mix of ethanol-gasoline per gallon. They derive this ethanol from SURGAR CANE which is an abundant crop in brazil.

This is very doable here in the us but we need to force the idea through congress and the automakers and oil producers. We subsidize many farmers by paying them NOT to grow crops, why not do away with these no-growing subsidies and instead let them grow the crops necessary for ethanol production? Then institute government and tax incentives for Detriot auto-makers to develop and produce ethanol and bio-diesel vehicles.

We could easily become as oil independant as Brazil.

 

[instructordude]

This whole oil issue is really making me wonder whether I got into the right career. I just hope I can be at a major before I am 30 yrs old.

 

[YourPilotFriend]

This whole oil issue is really making me wonder whether I got into the right career. I just hope I can be at a major before I am 30 yrs old.

The first thing that will be hit is the regionals, so you will be lucky to make the regionals by age 30. Also oil doesn;t start to price out until $180+ a barrel.

 

[GogglesPisano]

The first thing that will be hit is the regionals, so you will be lucky to make the regionals by age 30. Also oil doesn;t start to price out until $180+ a barrel.

Agreed. The higher the CASM, the quicker it will be sent to the desert.