Note the prediction of an oil price drop to $60 to $80 over the next several years as consumption actually declines. Note also that Henry Groppe has a track record of solid predictions. (search for his name, I'm in a rush right now).
The Aspen Times: Where virtue, market meet.
Quotes:
And it's happened. Americans have responded. People who don't need trucks to visit the mall are looking for more fuel-efficient vehicles, and the guzzlers are sitting on the lots. Seems to be a recent change.
To find out how recent, I consulted an oil-price analyst — not just any energy expert, but Henry Groppe, a Houston-based veteran and independent thinker. "All our work indicates consumption has actually been flat these three years," he said.
In 1980, when the Iranian revolution sent oil prices soaring, everyone else — Exxon, Shell, the U.S. Department of Energy — predicted that a barrel of oil would soon cost $80, $85, $100 a barrel. In a contrarian forecast, now legend, Groppe said that oil would fall below $15 a barrel. And that's what happened.
Why did his firm, Groppe, Long & Littell, expect the price collapse? "We thought there would be a significant drop in consumption," he said.
Groppe sees consumption dropping now. "Everybody is still in denial about the magnitude of the changes." He predicts the annual average price of oil will fall back to $60 to $80 a barrel in the next several years.
The faulty forecasts, Groppe says, reflect a reliance on the flawed work of the International Energy Agency. His group gathers its own data.
For example, the IEA last year forecast a major rise in production by nations outside of the Organization of Petroleum Exporting Countries. The actual increase was tiny.
"The Saudis made a mistake taking the IEA forecast seriously and cutting production when they should not have done it," Groppe said.
That raised prices to the point where consumers started using less energy. The Saudis want us hooked.
As for the Americans' part in this, Groppe thinks that "the most important thing is more efficient usage — particularly greater mileage performance of our vehicles."
Tuesday, November 27, 2007
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4 comments:
I just wonder if less consumption in US is enough to offset increases in China and India.
Also declining producion from North Sea, Gulf, ect. are small enough to keep the production flat and not decreasing?
I think I would like to have more details before I believe.
China just raised their subsidized fuel prices last month. Oil consumption is fairly inelastic but Henry is correct in assuming that there will be impact sooner or later.
The last time prices sky-rocketed the US reduced consumption by 4 million BOPD over about 4 years...that today would surely be enough to make a dent even if India and China kept on going.
My guess is that sub-$100 oil is sustainable without demand destruction. However, $150 Oil would certainly cause consumer behaviour to change dramatically - even politicians, which follow the pulse of consumer sentiment, would be mobilized to action just as Carter did all those years ago.
"unlike the one we've had these last seven years."
Any excuse to bash President Bush. What is really going to happen to the economy a year from now? I foresee legions of Bush bashers with no one to bash. There will be an army of these peope wandering homeless and drifting aimlessly.
Here's an idea for eliminating the old gas guzzler, or for going car-free completely:
If you personally have an automobile that you no longer want or use, why not consider donating it to a charity? The American Lung Association has rolled out their vehicle donation program for 2007, and there are many reasons why a donation through the ALA is the perfect route:
• You will be eligible for a tax deduction for the current year;
• It’s virtually hassle free, as the ALA takes care of all the details, all you need to do is send them the title in advance;
• You will save the cost of maintaining and licensing a vehicle you no longer need or want;
• If the car is a “clunker”, it still has value as a donation, and you don’t need to pay for costs of towing or salvage yard fees;
• You will be supporting a non-profit organization dedicated to reducing air pollution, promoting asthma education and the research of key lung diseases that afflict millions of Americans daily.
If you are in possession of a car that you might like to donate, please take a moment and view the information about Lung Association vehicle donation programs in your area by visiting http://www.lungusa.org/site/pp.asp?c=dvLUK9O0E&b=23659.
For anyone out there who may have a car that is simply taking up space, this program is truly an ideal avenue for disposal, and it is a win-win situation for both the owner and for the millions of people who benefit from the services and information that the American Lung Association provides each year.
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