Why Oil Could Hit $180 a Barrel


Well-Known Member
Apr 7, 2007
Why oil could hit $180 a barrel

Just when crude is becoming more costly to extract and process, producers in three key countries are short of cash. And without that money, recent finds won't do much good.

By Jim Jubak

Yikes! Oil at $117 a barrel. It has to go down from here, right?

Wrong. In the short term -- say, the next two years or so -- we're looking at bad news about global oil supply that could take the price of a barrel of crude to $180.

Needless to say, today's $3.50-a-gallon gasoline would look cheap if oil prices hit $180 a barrel. At that price for a barrel of oil, gasoline would cost somewhere north of $5.50 a gallon.

The good news is that's about the price, experts now say, that would send global consumption tumbling and oil prices into retreat, as drivers scrambled to find ways to conserve.

Of course, experts once thought $3-a-gallon gasoline would lead to a drop in consumption. The latest forecast from the International Energy Agency calls for global oil demand of 87.2 million barrels a day this year. That would be an increase in consumption of 1.3 million barrels a day from 2007 -- despite a U.S. economic slowdown and soaring oil prices.

Rest of Article Here

Of course the short answer is "because government is in the way." Government is always the culprit, as we see later in the same article:

"It's never easy to find $1 trillion in investment capital, but the Russian government has made it hard for its oil industry to attract even a small part of that capital. The Kremlin has structured taxes so that most of the extraordinary rise in oil prices flows into government coffers, not oil-company profits.

When oil rises above $27 a barrel, the Russian government takes 80% of any additional revenue in taxes. That means at $67 a barrel, an oil company gets just $8 more a barrel in revenue than at $27. If the price climbs to $107 a barrel, the oil company's revenue increases by just $16 a barrel from what it was at $27 a barrel.

That may delight U.S. consumers who believe oil companies are making obscene windfall profits from soaring oil prices, but it hasn't made companies eager to sink their money into developing new oil in Russia.

The production decline in Russia would be serious enough if it were an isolated problem. But it's not. The same conjunction of geology and geopolitics is crimping production in Nigeria and Mexico, for example.

Paying less than what's fair

In Nigeria, a third of the country's oil output by 2015 is at risk, energy advisers to Nigerian President Umaru Yar'Adua have warned, because the government hasn't been paying its share of the costs of joint ventures -- about $3 billion to date -- with Royal Dutch Shell (RDS.A, news, msgs), ExxonMobil (XOM, news, msgs), and Chevron (CVX, news, msgs). If the government's failure to pay jeopardizes the joint ventures, Nigeria can kiss plans to double its production goodbye. Instead, total oil and gas production will fall 30% by 2015.

Where has the money gone that was supposed to go into the joint ventures? It's in the pockets of just about any Nigerian government official with any clout."
Currently diesel in the UK is at £1.20 a litre in some places, and £1.09 for petrol.

You do the maths... its pretty damn expensive here.
Just do a search on "Peak Oil", TB, and you'll get a lot more than you've got. On the one hand you've got the "Cornucopians" who don't believe that we'll ever run out (at least not soon) and then you've got those who don't although I'm not sure they've got a nickname. I'm in an associated industry that serves oil and gas exploration so I'm a lot closer than most.

Anyhow, you can start your study here:


...and continue with these:



Those last two are a couple of T. Boone Pickens' favorites.

And you can keep track of the current price of oil by the barrel here:


Oil will continue to rise as long as people continue to consume at the rate they continue to do! People are spoiled and no matter what the price of gas, they still fill up the tanks of their sometimes gas gouging vehicles and drive as much as they want. People have two, three and more automobils. How can they complain if they continue to "feed the pig". The oil companies are making huge profits and the world price of gas would astound you. I wish I could share an e mail I recieved wit gas prices around the world. Some countries are paying as low as 12 cents a gallon. The gas price is affecting the costs of all of our food, clothing and anything we purchase. I have a small business and my costs for supplies has risen due to the gas price because of UPS and Fed Ex paying more for gas which is passed on to the business for delivery. Warren Buffet stated the other day "it is going to get worse and last longer" than we anticipated. Better hold on tight and prepare.

I am hearing $200 a barrel and gas over $10 a gallon, this will put us right into a massive depression, yup the party is over and now the Dems want to raise taxes, isn't that nice.
Re: Why Oil Could Hit $180 a Barrel, Or, why not?

I think people around the world should stop buying oil and go on a general strike until we bring oil prices down. If this thing is global, it will have to be done on a global basis. At least countries that aren't making money off of oil should go on strike. Open up the SPR in the US and that will lower the price. President Clinton did that very thing and prices were cut in half. Drill everywhere until we get alternatives. Force oil companies to put in pumps for E85 and other fuels. The car companies are ready, where is the infrastructure? Make the oil companies use some of those trillions to put in the pumps. They can have a fair share of the proceeds from alternatives.
Either that or nationalize them before they break our country, literally. They dig the oil out that belongs to the American people and don't even pay the royalties. If we have to put it to the voters stop this inactivity in the Congress on drilling ANWR. ANWR IS 2,000 ACRES IN 2,000,000 ACRES. The Tree Huggers have got to be dealt with.

People are to blame for high oil prices by not doing anything about it. Being a child of the 60s it's time for an oil revolution. I heard an oil executive say, "It's all about the flow of oil. If purchases stop the oil will clog up in the pipelines. The price will be cut in half." Their selling of the oil in their tanks for the current price of oil instead of what they paid for it is fraud.

You know, it is really ridiculous when the people of the world allow our world to go into a recession and depression while we know it is all about the corporate greed of all kinds.

I think the price is going up because OPEC is thinking they have to get all the money then can before alternatives come on the market. They are fools. They are killing the "Golden Goose". Stop buying oil and go on strike, now!!!:D
Ok, we stop buying gas. We can't get to work, get to school, catch a bus, deliver or buy food, pay bills . . . yeah, that's showing them. I can see it all now - homeless, starving people on a sit-down strike. Alas, we have no other choice than to surrender to this "pardon the pun" highway robbery. :mad:
:) Hi everyone: One reason why oil could hit $180.00 a barrel is because no body does anything to stop it. Those wanting to be president of our country don't even talk about it anymore! I have maybe a solution, using our vehicles of which on average hold 5 or six people, set up schedules and take, for work, shopping our neighbors where they have to go. Think of this as a way to get back at the greedy oil companies, then we will have "THEM" over a barrel, so to speak. And just maybe within a month we'll see the prices drop to $2.00 a gallon. We can do it america.