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American Automobile Fuel Consumption Debate

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Comments

Tom

This article seems to have some legs. Today's NYT has an opinion piece in which John Tierney bets (The $10,000 Question) one of the people from the story that:

the price in 2010, when adjusted for inflation so it's stated in 2005 dollars, would be at least $200 per barrel

He also invites others to get in on the action. Anup?

Mike

Beauty.

Anup, care to wager? Maybe we could do 1% of their bet.

what do you think?

APB

The price in December 2010, when adjusted for inflation so it's stated in 2005 dollars, would be at least $80 per barrel. I am willing to put 10 dollars on that.

Tom

OK, if Mike isn't going to bite right away...

Come on, Anup, I finally finished the entire article, it makes for a pretty compelling argument. $80 per barrel? That might not even be $65 in 2010 $. You're talking about it being close to equal in real terms.

Not that I want to ruin your little wager or anything.

APB

$ 80 in 2010 sounds like a very reasonable price to me, unless US economy crashes and burns in late 06, early 07 (the chances of which look pretty good at this point in time).

Mike

Anup is clearly one of those who will talk the talk, but just can't take the chestnuts out of the fire when the game is on the line.

Crude touch $70 this morning on the hurricane fears. $80 is not a meaningful bet, as Tom aptly points out. Come on, Anup, do you really believe that Indian and Chinese demand will drive this thing? Then step up to the plate, and take a swing.

If I were on the flip side, would you make the bet against me? Are you willing to bet prices won't be $200 in 2010?

APB

LOL at "just can't take the chestnuts out of the fire when the game is on the line".

I am willing to bet that the prices won't be $200 a barrel in 2010 when averaged over the entire year. I will repeat that I think $80 a barrel is a very reasonable price to pay for oil in 2010. My sources in the oil sector will tell me that this is perhaps the highest I am allowed to bet without being labled a "peakist".

I am reasonably comfortable thinking about the next five years. It is the ten or fifteen year outlook that looks really worrying. I think that Matt Simmons accepted the bet because he wants people to start thinking about peak oil, not because he is sure of winning the bet.

I have said this before elsewhere, but show me where 105 or 110 million barrels of oil is going to come without simply assuming that somehow Saudis will make up for the deficit. Current data suggests that every increment beyond 95-100 MBD range will be difficult. Throw in carbon prices in the mix and you can see a recipe for a fun time.

I have a challenge for Mike and Tom: Help me buy options for oil in 2010. I think that for about a 1000 dollars, I should be able to get options to buy about 200 barrels of oil by betting that the price will be 70 dollars. Since, I believe that $80 is not an unreasonable estimate, there is some money to be made.

APB

If you are interested in good grounded discussion of peak oil issues, please check out The Oil Drum and Econbrowser for perspectives from geologic and economic sides respectively. I might have suggested reading the entire Hirsh report, but you can get away by reading the IS&T article. This is a topic well worth studying.

Kush  Tandon

"if Saudi Aramco as well as all major oil producers made a concerted effort to have more transparency in the data. "

Will never happen. Saudi Aramco is a national oil company of Saudi Arabia and holds their own national interest - first and foremost. The leading reserve holders are national oil companies - Iranian (National Iranian Oil Company), Mexico (Pemex), Venezuela, Norwegian (Statoil, Norsk Hydro). They do not trade on the Wall Street. Why should they pull their chestnuts out?

They are not in social work business.

Moreover, never be surprised that oil is $10/ barrel in 2010 because they was a market crash in China.

Kush  Tandon

Anup,

You would not syaing things, if you looked at the oil price from 1970 onwards. It is more fickle if you even go earlier.

http://www.eia.doe.gov/emeu/cabs/chron.html

One thing you know, if you have lived in oil patch (I have) - don't trust that baby, she is full of surprises.

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