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Tim in N FL
Joined: 12 Feb 2006
Location: North Central Florida, USA
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 Posted: Jul 07, 2006 12:20 PM Post subject: OT: Driving toward a milestone-Triple digit oil is coming... |
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This story is not really "new" and this trend in fuel prices is not altogether unexpected but still, as I bear witness to 15-17mpg (city), ~215 miles-per-tank, and ~$46.00 to $50.00 (USD) fill-ups in my '87 535is, I shudder to think about where we're heading. The idea of a modern BMW turbodiesel powerplant conversion has come to mind on at least several occassions.
FWIW,
Tim
| Quote: |
KEVIN KERR
Driving toward a milestone
Commentary: Triple-digit oil is inevitable
By Kevin Kerr, MarketWatch
Last Update: 11:45 AM ET Jul 7, 2006
NEW YORK (MarketWatch) -- Oil at $100 a barrel? Oh yes, and like most milestones, this is one that you are not likely to forget.
As we stand on the precipice of such lofty prices, I understand that there are those who believe that $100 oil is pure nonsense.
We've been watching oil very closely. At $40 we said crude would hit $60. At $50 we said it would hit $75 within a year. Some scoffed and called me a fear monger. Now that we're at $75, I'm telling you that under the right conditions oil could not only hit, but sustain a $95 to $110 price per barrel by the end of the year. I say it's not only likely, but almost inevitable within 12 months.
Now before I get flooded with e-mail from those who believe oil is going back down to $35, let me lay out my case before you hit the send button.
Fill 'er up for a trip down memory lane
In 1967, the year of my birth, gasoline was around 33 cents a gallon. I was reminded of this when a friend sent me a birthday card that tells you how much stuff cost when you were born: A bar of soap was 2 cents, a movie was 60 cents, and you could buy a three-bedroom house for $16,000. It was the most depressing card I have ever gotten -- and it was an eye opener too. Prices climb, that's what they do. And nothing climbs faster than a finite commodity that is in low or declining supply and in growing and high demand.
Crude oil is exactly that commodity. It's in high demand all over the world and shows no sign of slowing, even with prices at $75. Complaining yes; slowing of usage, no.
Crude oil, at least the cheap and easy to get to stuff, is dwindling. What's left are things like oil sands that are costly to refine, sour crude that also requires additional refining, deep-water drilling and other less than desirable and more difficult methods. Most of all these things cost more money and that cost is passed right along to you and me.
The usual suspects
Now I'm not breaking any new ground here, many people have written articles on why $100 crude oil will be with us soon. I wrote on it in an article for MarketWatch in February, when crude was $60. See story.
Crude is now hovering around $75. A one two punch of terrorism on oil facilities along with a bad hurricane season or severe damage to the Houston ship channel and a spike to $100 is very well within reach.
Geopolitical wrangling, such as is taking place with North Korea, Venezuela, Nigeria and Iran all raise the eyebrows of traders who are concerned that any and all these events could impact the already fragile oil supply.
Is it really that hard to believe? Oil reached nearly $75 per barrel without a catastrophic supply event. Compare that with the previous price spike in the second half of last year, which was sparked by the Gulf hurricane season.
Truthfully, physical supply of oil isn't a factor for traders right now, or at least not a primary one. Fear is the biggest factor and perception of what "could" happen. Any actual disruption will build on the base of fear that's already been created.
Given current supplies, the reality of $100 oil may be hard to swallow but this is a free and open market and prices are set by what people are willing to pay. Do not discount sentiment and please, don't blame the messenger. End of Story
Copyright © 2006 MarketWatch, Inc. All rights reserved. |
Original Article on Marketwatch.com |
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RobbieR
Joined: 12 Feb 2006
Location: Woodstock, GA
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| Posted: Jul 07, 2006 12:52 PM Post subject: Re: OT: Driving toward a milestone-Triple digit oil is comin |
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| Tim in N FL wrote: | | The idea of a modern BMW turbodiesel powerplant conversion has come to mind on at least several occassions. |
Good article. Unfortunately, BMW has had their head in the sand in regards to diesel options in the US. It's not a problem with Mercedes and VW. There's no excuse for BMW to not do the same.
Perhaps after the new Tier 2 Diesel regulations start in 2007, they'll start bringing over some cool diesels that Europe has been enjoying for years.
A good website to monitor fuel prices:
http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=24 |
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Wiseguy
Joined: 12 Feb 2006
Location: Between 17K and Rt 52 but a lot closer to 52
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| Posted: Jul 07, 2006 2:11 PM Post subject: |
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The lack of Disel availability in this country is pure and simple Horsesh*t.
Diesels emit 2/3 the amout of CO2, but are a tad high on NOx I think it is.
Overall they pollute less, they burn less fuel that requires LESS crude to make, etc etc etc. |
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Rich in WI
Joined: 12 Feb 2006
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| Posted: Jul 07, 2006 2:12 PM Post subject: |
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I think the author is correct that we can expect $100+ barrels of oil. However, I think we're looking at a 2 year time horizon rather than 1 year. A political crisis could bring that time sooner, but I don't see it happening right away based on market forces.
At $100 per barrel, we're talking somewhere in the $3.50 to $4.00 per gallon territory. At $100 per barrel, economic pressures will start to dampen demand on a global scale, which will slow the price increase. However, economic studies of U.S. consumers have shown that no appreciable changes in behavior will occur until gas reaches $5 per gallon. Thus, worldwide demand will slow before U.S. demand. This will slow the rise in price and is one reason I think we're looking at a 2 year window, rather than one year.
Not that two years gives me a warm fuzzy feeling.
And by the way - China has higher automobile fuel economy standards than the U.S. right now, and in 2008 those standards are set to get even stricter. Perhaps the Chinese have a little longer term vision than the U.S? Maybe?
Rich in WI |
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RobbieR
Joined: 12 Feb 2006
Location: Woodstock, GA
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a
Joined: 12 Feb 2006
Location: Marshfield ,MA
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| Posted: Jul 07, 2006 7:36 PM Post subject: |
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| the thing that ires me about the situation is that the least bit of news sends oil prices higher. F'rinstance what does the N Korean "missile crisis" have to do with oil futures? |
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Rich Euro M5
Joined: 10 Mar 2006
Location: Klein, Texas
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| Posted: Jul 07, 2006 7:40 PM Post subject: |
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| Quote: | | I bear witness to 15-17mpg (city), ~215 miles-per-tank, and ~$46.00 to $50.00 (USD) fill-ups in my '87 535is |
Tim,
Is all your driving city ?? I getting about 22.5 mpg in mixed city / freeway Houston rush hour. A little over 310 miles per tank of gaswithout getting into the reserve (tattle tale light). I drive 70 miles R/T from the burbs to the Texas Med Ctr. My 5er is an '86 535i/A. Seems you need to do some tuning. And unless you're ECU is chipped, don't run Super, you'll get better performance and save money.
Rich |
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Karl Heinz
Joined: 12 Feb 2006
Location: Cocoa, FL
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| Posted: Jul 08, 2006 11:10 PM Post subject: |
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Rich, Tim has a well tuned 5. He might need a valve adjustment and new tranny, but I think issue is more right foot related than anything else. 
C'mon, Tim, you know that was coming, especially from me. 
BTW, I am waiting for the 120D to arrive from BMW. I will be one of the first in line for that little bad boy. And if it does not make it within the next two years, my butt will be planted in a nice little Mini Cooper S or e30 318is. Might even consider a Scion Tc. |
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BMWCCA2
Joined: 12 Feb 2006
Location: Central Virginia
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| Posted: Jul 09, 2006 12:44 AM Post subject: |
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| I've driven the 2.0L turbo diesel in the E90 320d and it is one fine ride. Every chance I get I tell the German engineers how well that car/engine would be received in the States. They have been fed a bunch of crap about the U.S. never buying 4-cylinder BMWs. I tell you, if they just sold that car here and never told anyone it was a 4-cylinder, no one would ever know! What a smooth and powerful 4-banger that is! |
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