5 ms·

> we're likely to see prices at the pump go up by orders of magnitude over a relatively short timescale Do you really believe that in a short period of time ga

by steve19 10y ago

> we're likely to see prices at the pump go up by orders of magnitude over a relatively short timescale Do you really believe that in a short period of time gasoline is going to cost a few orders of magnitude more... that's 1,000x the current cost? Post-fracking that's unlikely to happen. Prices may return to previous levels, but they won't move much more than that. Alternative energy will reduce demand for oil and therefor depress the price of oil, not the other way around.

madaxe_again 10y ago
Orders of magnitude doesn't mean 1000x - just 10x is enough. As to fracking - the wheels have already fallen off, low oil prices forced a production hiatus, stop/start is inefficient and costly, and you need only look at the headlong rush in the UK that kinda petered out to get an idea of where fracking is going - nowhere. The fossil sector is in big, big trouble - this chaotic oscillator will not stop until the market decouples from energy. The only question is whether they'll be allowed to collapse, or if we'll see state bailouts that keep them limping along. As to reduced demand - that's also part of the problem. Oil prices are not purely demand driven, they have costs to meet, shareholders to appease, and massive capital investment needs that will not be met with a suppressed price, which will feed the death spiral they've been in for some five years now.
- pessimizer 10y ago
  > Orders of magnitude doesn't mean 1000x - just 10x is enough. That's "order" of magnitude, not "orders."
  - deleted 10y ago
    [deleted]
  - Retric 10y ago
    It's a vague term as: Other orders of magnitude may be calculated using bases other than 10. https://en.wikipedia.org/wiki/Order_of_magnitude https://en.wikipedia.org/wiki/Order_of_magnitude In base 2, 2x = 1 order of magnitude 8x = 3 orders of magnitude. Worse both informal definitions are in common usage.
  - madaxe_again 10y ago
    11x would be "orders", if we're playing semantic pedantry.
- TheCowboy 10y ago
  Where are you getting the information that stop/start is inefficient and costly for fracking? It's less than conventional oil wells. I've found a significant cost of fracking is establishing the wells. If the price goes up that much, fracking is viable and will happen. The only way fracking is out of the equation if when low prices keep it from being profitable. Fracking presently functions as a cap on the price. If prices vary wildly, then there are strategies to deal with that, and the variation needs to be explained. How does it come down so rapidly? Assuming healthy economics, probably because of fracking. It doesn't make sense to say that market prices aren't demand driven just because other costs and factors exist. If suppliers will lose money at a given low price because of costs, eventually supply decreases and prices rise, etc.
  - madaxe_again 10y ago
    Info mostly comes from banter with energy market traders who are getting ready for a mixture of feast and bloodbath. I used to work a futures desk, mostly on intermediates. I got a decent sense of the market in those few years, and watching it is an ongoing pastime. Re: the specifics around fracking start/stop - it's staff. You either retain salaried workers who are unproductive for stretches, or you work contractors, which is expensive. Either way it drives up cost. Re the demand driven bit - I explained that poorly. Oil is a very "special" commodity, in that it has spectacular investment costs, incredible levels of state funding (and debt), and a price determined by anticipated demand more than anything else I'm aware of - you need only look at the volume curve across futures to see this - and the fact that we are still in a contango market. This adds up to the price of oil being driven by overall economic growth forecasts, which are theoretically demand, but aren't. This results in expenditure (exploration and exploitation), which has a several year time lag. Fracking has been oh-jesus expensive and may never turn a profit. Investors (states) are getting shy. I'm still explaining this poorly - I'd need to write an essay to convey what I'm trying to get at - there are a few dynamics at play and I will be amazed if we don't start seeing even more instability. Confidence in the market is very, very low. Talk to traders, not what the press says. Of course the press says it's rosy - nobody wants a premature sell-off, even if there could be some tasty dead cats in it for the vultures. We still need oil for energy for the time being.
- greedo 10y ago
  Wishful thinking, and backtracking as well. Magnitude change isn't 10x, and short of an increase in taxation, the idea that my current $2/gal gas will become $20 is just inane.
frgewut 10y ago
If your closest gas pump is 20 miles away fuel cost wouldn't matter anyway. I also expect that a lot of pumps will be closed in cities because of pollution, smells and other factors.
greedo 10y ago
He's just being foolishly hyperbolic with the term "magnitude." He even uses hedge words to protect his oracular status.

by steve19 10y ago

madaxe_again 10y ago

Orders of magnitude doesn't mean 1000x - just 10x is enough. As to fracking - the wheels have already fallen off, low oil prices forced a production hiatus, stop/start is inefficient and costly, and you need only look at the headlong rush in the UK that kinda petered out to get an idea of where fracking is going - nowhere. The fossil sector is in big, big trouble - this chaotic oscillator will not stop until the market decouples from energy. The only question is whether they'll be allowed to collapse, or if we'll see state bailouts that keep them limping along. As to reduced demand - that's also part of the problem. Oil prices are not purely demand driven, they have costs to meet, shareholders to appease, and massive capital investment needs that will not be met with a suppressed price, which will feed the death spiral they've been in for some five years now.

pessimizer 10y ago
> Orders of magnitude doesn't mean 1000x - just 10x is enough. That's "order" of magnitude, not "orders."
- deleted 10y ago
  [deleted]
- Retric 10y ago
  It's a vague term as: Other orders of magnitude may be calculated using bases other than 10. https://en.wikipedia.org/wiki/Order_of_magnitude https://en.wikipedia.org/wiki/Order_of_magnitude In base 2, 2x = 1 order of magnitude 8x = 3 orders of magnitude. Worse both informal definitions are in common usage.
- madaxe_again 10y ago
  11x would be "orders", if we're playing semantic pedantry.
TheCowboy 10y ago
Where are you getting the information that stop/start is inefficient and costly for fracking? It's less than conventional oil wells. I've found a significant cost of fracking is establishing the wells. If the price goes up that much, fracking is viable and will happen. The only way fracking is out of the equation if when low prices keep it from being profitable. Fracking presently functions as a cap on the price. If prices vary wildly, then there are strategies to deal with that, and the variation needs to be explained. How does it come down so rapidly? Assuming healthy economics, probably because of fracking. It doesn't make sense to say that market prices aren't demand driven just because other costs and factors exist. If suppliers will lose money at a given low price because of costs, eventually supply decreases and prices rise, etc.
- madaxe_again 10y ago
  Info mostly comes from banter with energy market traders who are getting ready for a mixture of feast and bloodbath. I used to work a futures desk, mostly on intermediates. I got a decent sense of the market in those few years, and watching it is an ongoing pastime. Re: the specifics around fracking start/stop - it's staff. You either retain salaried workers who are unproductive for stretches, or you work contractors, which is expensive. Either way it drives up cost. Re the demand driven bit - I explained that poorly. Oil is a very "special" commodity, in that it has spectacular investment costs, incredible levels of state funding (and debt), and a price determined by anticipated demand more than anything else I'm aware of - you need only look at the volume curve across futures to see this - and the fact that we are still in a contango market. This adds up to the price of oil being driven by overall economic growth forecasts, which are theoretically demand, but aren't. This results in expenditure (exploration and exploitation), which has a several year time lag. Fracking has been oh-jesus expensive and may never turn a profit. Investors (states) are getting shy. I'm still explaining this poorly - I'd need to write an essay to convey what I'm trying to get at - there are a few dynamics at play and I will be amazed if we don't start seeing even more instability. Confidence in the market is very, very low. Talk to traders, not what the press says. Of course the press says it's rosy - nobody wants a premature sell-off, even if there could be some tasty dead cats in it for the vultures. We still need oil for energy for the time being.
greedo 10y ago
Wishful thinking, and backtracking as well. Magnitude change isn't 10x, and short of an increase in taxation, the idea that my current $2/gal gas will become $20 is just inane.

frgewut 10y ago

If your closest gas pump is 20 miles away fuel cost wouldn't matter anyway. I also expect that a lot of pumps will be closed in cities because of pollution, smells and other factors.

greedo 10y ago

He's just being foolishly hyperbolic with the term "magnitude." He even uses hedge words to protect his oracular status.