This one pisses me off

[southsider2k5]

Well what is your theory?  I keep hearing that explosive growth in China's economy is driving up demand.

 

War. How much oil are we using to support two separate war efforts involving something like 250,000 troops, not to mention all of their equiptment, including ships, planes, tanks, hummers etc. This has got to be a huge drain on energy supplies. I really would be curious to see in a vaccuum how much this affects the demand curve, which is the lone reason for the run up in prices.

[southsider2k5]

Look at the thread title ... then look at this:

What's wrong with this picture?

 

Like I said, in the original post, for the Chinese to say that about the UNOCAL deal they had better armor-plate their glasshouses...

[Rex Kickass]

We were close to capacity before the war though. Part of it is that there is a lack of refining capacity as well. Gas prices are climbing because there aren't enough refineries creating excess capacity in THIS country. The problem is that oil companies aren't really motivated to build new ones - because of red tape, and environmental regulations... given that refineries are kinda umm dirty... and because they can get a much higher profit margin with a tight supply.

[JUGGERNAUT]

It is not just the Caspian Sea itself. There are rich oil deposits surrounding the sea. My guess is it was a Dinosaur haven at one time (even though Everett refuses to believe that. Has any one ever asked him where he thinks oil came from?). In any case I've read reports it might be the richest oil region on the planet. China is investing billions in refineries & pipelines for that entire region. Including the -stan republics in between.

 

On the S American front China is greasing the palms of politicians & industry there to get their hooks into that oil supply as well. On paper it looks like game over.

 

But just like in baseball world power is not played on paper. The US could still revive itself by revolutionizing it's infrastructure with technology. Just as it has for the past 200 yrs. Likewise, America's capitalism is still rooted in Judeo-Christian values. It still has something of a conscience. China's doesn't. That usually means that has China's GDP continues to grow 3x as much as the US so will it's corruption.

 

Does a value system even exist in China? The people I know who live & work there say no. The value system is rooted in the traditions of the localitites. There is a sense of national pride but there is no value system aligned with it. In another thread I mentioned that nearly all of China's wealth lies in the pockets of communists leaders or american capitalists. Very little has trickled down to the common man. The poverty levels in China are still amongst the highest in the world. That will change some but not without a change in values. If it continues as it has China will be a nation of 300M consumers & 1100M living in poverty before 2050. Despite the severe measures to control population it's still growing. With triple digit growth it's impossible to prevent population growth. The US might be worse off than 50 yrs ago but it's still got a better ratio of consumers / poverty than that.

[NUKE_CLEVELAND]

You know what's really amazing to me is that the economy seems to be getting stronger even in the face of spiking oil. We had a nice jobs number come in today and unemployment fell to 5%, 1st quarter GDP was just revised upward, consumer confidence is strong and retail sales are very strong. Additionally the markets have totally shrugged off both oil and the terrorist attacks in London.

[Balta1701]

It is not just the Caspian Sea itself.  There are rich oil deposits surrounding the sea.  My guess is it was a Dinosaur haven at one time (even though Everett refuses to believe that.  Has any one ever asked him where he thinks oil came from?).  In any case I've read reports it might be the richest oil region on the planet.  China is investing billions in refineries & pipelines for that entire region.  Including the -stan republics in between.

Couple notes....first of all...oil doesn't actually come from dinosaurs themselves. Virtually all oil originally comes from a source rock known as an "Oil shale".

 

What is this rock? This rock is a very fine grained carbon rich rock. Very fine grained meaning particles so small you can't see them without a microscope...the technical term is "clay" sized.

 

How is it generated? Well, to create an oil shale you need several things. First, you have to be in an environment where the small particles aren't overwhelmed by an influx of larger silty or sandy particles. For example, if I'm near a beach, or if there is an active river system depositing sediment immediately on top of where i'm sitting, the sand grains will overwhelm the smaller particles and you will wind up with an impure sandstone.

 

Where do we get fine grained particles accumulating on their own? Very simple; quiet water. You can accomplish this in places far out to sea, away from sediment sources...in inland bodies of water (think the Hudson bay) where the area is a basin restricted from the ocean, or you can get it to a limited extent in places like lagoons and bogs.

 

Now the second question; where do we get the organic material (the word for it is kerogen)? The organic material comes from life, clearly. It has to come from photosynthesis at some point. It can't really come from an actual dinosaur, because an actual dinosaur is almost never going to be deposited in an area that would generate a high enough concentration of organic material. No, what you really need is an area with high productivity from photosynthetic organisms and an easy method for depositing that material.

 

This is preciesly what happened during the Cretaceous period - the last era during which the dinosaurs were alive. There was an amazing sequence of geologic events which gave rise to our current oil reserves. First of all...there was some sort of event in the mantle which caused mid ocean ridges to accelerate several times. This gave rise to a plume of younger, more buoyant oceanic crust, which thereby displaced parts of the ocean onto the land...creating gigantic inland seas (picture the U.S. flooded from the edge of the Rockies to the edge of the Appalachians).

 

These inland seas had several noteworthy elements to them. First, they were restricted - there wasn't a huge amount of wave activity that could wash away organic particles. Second, they were large, so there wasn't a huge input of outside sediment. And third, they were anoxic - meaning there was no oxygen left dissolved in the water, so that unlike today, when an organism died, its body was able to settle to the ocean floor without reacting with available oxygen and generating CO2.

 

If you want to see evidence of this...there's a wonderful unit found in the western U.S...known at least in 1 place as the Pierre shale (great exposures just outside of Pierre south dakota). The stuff is pure black, except for the occasional ash bed.

 

When you take this stuff, that you've deposited with huge amounts of carbon, bury it, and heat it...the end result is you generate oil.

 

The reason Saudi Arabia has so much oil? Well, in the late Cretaceous, inbetween Africa and Asia there was a large restricted seaway known as Tethys. This was bascially the perfect environment to deposit an oil shale; even larger than the seaways in teh U.S., more long lasting, more restricted. It is this unit which has given rise to the Saudi and Middle East oil fields.

 

In terms of the Caspian...well, let's just say that Ronald Reagan once said there was more oil in Alaska than in Saudi Arabia, and he was wrong too.

 

The Caspian reserves are substantial in the way Alaska's reserves are substantial...there are large amounts of oil there, but the oil is not nearly as high quality as the stuff from Saudi Arabia (and hence it costs far more to get it out of the ground), and more importantly, there is just far, far more oil in the Middle East.

 

Drilling activity in the whole Caspian Region has been done heavily, and has for the most part been disappointing. The current estimate of that area's total reserves are on the order of 40 billion barrels...not exactly a drop in the bucket, but still less than 20% of what was in Saudi Arabia.

 

There has been significant disappointment associated with several of the fields out there. Steven Mann, director of the U.S. State Department Office for Caspian Energy, had this to say at a conference a few years ago "Caspian Oil represents 4 percent of the world's reserves. It will never dominate the world's markets..." The EIA (Energy Information Agency) has also dramatically dropped its estimates of Caspian reserves...from calling hte area another Saudi Arabia a few years ago to now comparing it to the North Sea.

 

Several Oil companies have made noteworthy pullouts from Caspian investments. Chevron/Texaco pulled out of 1 field it had invested in because the oil simply had proven very unprofitable even at these prices...the sulfur content was very high (15%+) and the oil was difficult to extract. BP pulled out of another major oil field in Azerbaijan. Exxonmobil announced in 2002 that it was closing 1 of its major projects drilling offshore in 1 area of the Caspian.

 

The simple fact is that the Caspian oil is like the oil in Alaska...it is not light crude in many cases, it takes a lot of effort to get it out of the ground, it is not near easy transportation which makes extraction difficult, it costs a lot to refine it, and there just isn't as much there as was hoped.

[farmteam]

That's it, I'm boycotting my PEZ Dispensers. And everything else that says "Made In China."

[Balta1701]

That's it, I'm boycotting my PEZ Dispensers. And everything else that says "Made In China."

I think I can find you a cabin in Montana that will suit your needs quite nicely then.

[farmteam]

Do I get a free Moose with it?

[Balta1701]

Do I get a free Moose with it?

Only if you buy the bullets.

[southsider2k5]

More ammo for the anti-China crowd...

 

http://finance.myway.com/jsp/nw/nwdt_rt.js...8&date=20050711

[JUGGERNAUT]

<{POST_SNAPBACK}>

 

You went WAY BEYOND the EXXON explanation at EPCOT's World of Energy!

Which I have to say heavily pushes the Dino connection.

 

http://www.american.edu/ted/kazakh.htm

Back in 1997, according to petroleum scientists, the Caspian Sea region contains the third largest reserve of oil and natural gas in the world, behind the Gulf region and Siberia. Chevron's the region's biggest player at the time invested $40B over 40 yrs.

 

China's not even mentioned in that report. The world sure has changed a lot in 8 yrs.

 

http://www.eia.doe.gov/emeu/cabs/caspian.html 12/2004

It is still believed to be the world's 3rd largest reserve. Siberia is a much harsher environment to work in so that places the Caspian Sea region ahead of it. It's important to understand that OPEC is at the top of it's game in oil production & everyone else is a distant 2nd or worse. They are the NYY's in that game.

 

To get an idea of the difference, by 2015 the Caspian region is expected to reach 4M bbl/day & OPEC 45M bbl/day. In 1997 the world's demand was estimated at 70M bbl/day. Today it's approaching 85M bbl/day w China becoming a markets rapidly gaining on the US.

 

Because of the lack of productivity in exploration & workers in the area estimates have been changed to between 17 (Qata) & 33 (USA) bbl. By 2010 the region should be producing more than Venezuela.

 

On the Natural Gas front it could be equal to that of Saudia Arabia or 232 trillion cu ft.

Your welcome to read the rest but since this is a China thread the export potential to the East is of greatest importance here.

 

Over the next 10 - 15 yrs demand in Europe is expected to grow by 1M bbl/day & demand in east Asia by 10M bbl/day. To meet this demand China commissioned about $1B for a Kazakhstan-China pipeline scheduled to be completed by 12/2005.

This pipeline would span 1800 miles. At the same time a pipeline from Iraq to Pakistan-India is being considered as well. Needless to say they are looking for this region to supply the demand of the worlds two most populus nations.

 

It's not hard to see that this region is likely to become a near exclusive doman for China & India.

 

Why I will never sell my oil stocks until demand dips:

http://www.energybulletin.net/333.html

In 2011 Saudia Arabia expects production capacity to be at about 11B bbl/day.

The USDE says they will have to produce 14M bbl/day by 2010 & 20 bbl/day by 2020

to keep up with expected world demand.

 

That certainly puts a whole new spin on the war in Iraq. Is this really a war to pressure the Saudia's to give greater management control of their oil feeds to US based oil companies?

 

http://www.csmonitor.com/2005/0622/p25s02-wogi.html

Good article on production itself. Could the war in Iraq & Afghanistan really be more

about the US securing their share? It sure seems likely.

[Balta1701]

Even if the war in Iraq were really an effort to get the Saudis to open their oil fields more or to give the U.S. more control or something like that, the fact is that there's really nothing more that the Saudis can do with their fields. Either that nation has peaked or it is very close to doing so.

 

I don't have a good link on this, but a few months ago I read that earlier this year, in response to those soaring oil prices, the Saudis pledged to start pumping even more to release more oil onto the market.

 

When the oil came out...it was NOT traditional cheap to refine Saudi Light Sweet Crude. It was heavy oil. Lots of Sulfur, etc. Not easy stuff to work with, expensive to refine, etc.

 

If you really pay attention, the Saudi oil fields are something that should really concern you right now. Why? Several reasons.

 

No one over here really knows what is left in the Saudi tank. They have been pumping on the same oil fields for decades. The water content in those oil fields is rising dramatically. They haven't had a major discovery of a new field in decades. They have invested likely trillions of dollars in these sciences to try to extract every drop humanly possible from those fields. And if they can't extract more of it, if they even are closing in on their production peak, then there's really nothing that is going to come on line to reverse that trend.

 

Right now, there is simply nothing out there which can replace Saudi production. It just isn't there.

[JUGGERNAUT]

More ammo for the anti-China crowd...

 

http://finance.myway.com/jsp/nw/nwdt_rt.js...8&date=20050711

<{POST_SNAPBACK}>

 

Good article. The cost of capital in the US far exceeds that of China. Often we think of just the wage difference. A Factory worker in the US making say $20/hr vs one in China making enough yuan to equal about $3/hr in value. But that's only part of the story. The cost of constructing & operating a factory in the US is about 5 times as much as in China. Even after greasing respective politicians. Mostly because China won't float their currency like the US, Europe, Japan, & most of the other G8's.

 

I think the best analogy is that US corporations are married to the USA but have a mistress overseas in China. China no doubt will try to seduce those companies to divorce the USA in the future. China's a prostitute turning homewreck seeking to be new wife.

 

If you don't put a stop to the infidelity now divorce is inevitable & you'll get nothing in return. Not even child support.

[southsider2k5]

Something interesting I found to go along with China and oil... After registering double digit % increases in oil consumption for years, their second quarter oil consumption actually dropped, and not just a decrease in the rate of increase, it was a fall in consumption.

 

http://www.nytimes.com/2005/07/14/business...agewanted=print

[Rex Kickass]

Even if the war in Iraq were really an effort to get the Saudis to open their oil fields more or to give the U.S. more control or something like that, the fact is that there's really nothing more that the Saudis can do with their fields.  Either that nation has peaked or it is very close to doing so.

 

I don't have a good link on this, but a few months ago I read that earlier this year, in response to those soaring oil prices, the Saudis pledged to start pumping even more to release more oil onto the market.

 

When the oil came out...it was NOT traditional cheap to refine Saudi Light Sweet Crude.  It was heavy oil.  Lots of Sulfur, etc.  Not easy stuff to work with, expensive to refine, etc.

 

If you really pay attention, the Saudi oil fields are something that should really concern you right now.  Why?  Several reasons.

 

No one over here really knows what is left in the Saudi tank.  They have been pumping on the same oil fields for decades.  The water content in those oil fields is rising dramatically.  They haven't had a major discovery of a new field in decades.  They have invested likely trillions of dollars in these sciences to try to extract every drop humanly possible from those fields.  And if they can't extract more of it, if they even are closing in on their production peak, then there's really nothing that is going to come on line to reverse that trend.

 

Right now, there is simply nothing out there which can replace Saudi production.  It just isn't there.

 

The reason that the fields are so damaged is because the Saudi government decided rather than upgrade facilities, they'd help temporarily make it easier to pump oil by injecting salt water. Although after a while, it makes much of the oil much dirtier.

[southsider2k5]

China gets turned down

[kapkomet]

:bigcry:

 

[NUKE_CLEVELAND]

China gets turned down

 

 

Additonally, China's Haier corp is no longer in the running to buy Maytag.

 

See..........China is not going to buy the United States after all.

[southsider2k5]

Just saw this come across CNBC, China is dropped its peg of the Yuan to the Dollar. It will now be pegged to a "basket of currencies". It will be revalued to 8.11 Y/$ and then will be allowed to move based on the other currencies. I'll look for an article a little later with somemore detail.

[FlaSoxxJim]

Here's the abcnews.com piece about unpegging the currency to the dollar:

 

http://abcnews.go.com/Business/wireStory?id=964375