My simplest contest to date: On what day will oil prices hit $100 a barrel?
Please express your wild guess sophisticated prediction in terms of number of days from January 1, 2009.
While I know that each of you has special knowledge and expertise that allows you to make such market forecasts with startling accuracy, I’m really going for a “wisdom of crowds” thing here [yes, I know, recent events in the economy and stock market suggest the crowds don't actually have much wisdom, but stay with me on this]. So I’m planning to come up with a statistical average of all the guesses — and that can’t be done easily if you give me dates.
The winner gets a post on Climate Progress (!) — plus a figurative laurel and hardy handshake, as Mel Brooks would say.
My guess is 545 days, mid-2010 (roughly my 50th birthday — and I do mean roughly).
The price of oil has really been bouncing around in the last week. Here is some useful background from a recent Greenwire article:
NEW YORK — Market experts are predicting that global oil prices will trend upward this year as producers fall into line behind supply cut mandates, and low gasoline prices push demand up.
Barring a much more serious deterioration in the world economy, many analysts suggest that resurging demand for gasoline in the United States, the world’s largest oil consuming country, and falling overcapacity due to production cuts announced by the Organization of Petroleum Exporting Countries (OPEC) will lead oil prices to return to the $70-a-barrel range sometime soon.
Many of those experts have mixed track records. From record highs of just over $147 a barrel for crude last July, many predicted that demand destruction would see the cost per barrel ease somewhat to settle in the $80 to $100 range by the end of 2008.
Instead, the turmoil in financial markets and subsequent bank bailouts caused prices to plummet more than 60 percent in the second half of 2008. Yesterday, crude prices settled at just below $50 a barrel in trading at the New York Mercantile Exchange (NYMEX), spurred upward by political instability in the Middle East.
But most energy analysts say the recent cuts by OPEC are more significant than traders are taking into account. Signs that OPEC members are cooperating better than they have in the past and keeping to their reduced quotas are now leading many to believe that the cartel may be restoring its traditional role in controlling wild price swings.
In the previous strong markets, “OPEC has had no impact on the oil prices since 2004,” said John van Schaik, New York chief of the market information company Energy Intelligence Group Inc. “Now, with spare capacity rising again, yes, now OPEC is becoming more relevant again.”
Van Schaik called the 3.1-million-barrels-per-day cut in output by the cartel “dramatic.” If OPEC members largely meet their targets, total output would be reduced by about 4 million barrels a day from the July 2008 price highs, a roughly 12 percent cut in OPEC output, representing about 4.6 percent of total global supplies.
In a note to clients, Tim Evans, an energy analyst with Citigroup, predicted that the OPEC cuts will result in a demand deficit of at least 1.5 million barrels a day during the beginning of 2009, eventually growing to 2 million barrels a day or higher by the second half of the year, depending on whether oil producers vote for more cuts in production.
“In time, we see prices firming to perhaps the $70-per-barrel mark by the end of the second quarter and a further rally in the second half that could approach $90, a level that would signal OPEC for more production, instead of less,” Evans said.
Investors seem to largely agree with this forecast. In a survey by Barclays Capital taken from a gathering of energy market players last month, most respondents said they believed the current low pricing environment was temporary. Four in five said they expected crude oil prices to average above $75 a barrel for 2009.
There are some dissenters — analysts at Cambridge Energy Research Associates (CERA) believe that spare capacity will continue to rise and could reach 7 million barrels a day, or 8 percent of world demand, by 2010 if market trends hold.
Virtually all energy market players are bullish on oil in the long run, though. Last year’s dismal assessment of future oil production by the International Energy Agency, with data showing that output from the world’s largest fields is falling faster than predicted, only helped to fuel a general consensus that energy prices will rebound so long as oil remains the world’s dominant fuel source.
Observers admit to a commodities bubble
For the broader energy commodities markets, the past several years have proven a roller coaster in which traditional drivers tell just part of the story. At times, players have insisted that supply-and-demand fundamentals were behind the rapid ascent of oil, driven mostly by rising consumption in China and India. But today many observers admit that a speculative frenzy was behind much of the “commodities bubble” that lasted for most of this decade.
“The tight balance between supply and demand in 2002-08 was not the only factor driving the increase in oil prices,” analysts at CERA acknowledged in a December assessment.
Enthusiasm for commodities helped flood the exchanges with new activity. In 2008, the weakening value of the dollar and fears of a slowing U.S. economy, along with the continuing bear market in equities, drew a whole new class of investors to commodities and to oil in particular.
“There was very little rationality in this market for the past three years, ” said van Schaik.
Despite the ultimate price fallbacks, 2008 was a record year for activity in raw materials, with trading volume on NYMEX 19 percent higher than the previous year, according to data by CME Group.
But trading in the fourth fiscal quarter erased prior price gains. The Dow Jones-AIG Commodity Index was down by more than 8 percent in December and more than 39 percent compared with the end of 2007. The Dow-AIG Crude Oil Index has led the slide, falling by almost 33 percent. Trading volume is way down, due partly to the holiday season but mostly because investors have largely backed out of commodities in the search for safer harbors.
For the record, I am going to use the NYMEX price, which is West Texas intermediate crude.
Related Posts:
- Normally staid IEA says oil will peak in 2020
- Will we see $3 gasoline before $5?
- Note to media/Bush: Saudis/OPEC don’t control the price of oil any more!
- Note to Bush, media: Opening ANWR cuts gas prices one penny in 2025
- Peak Oil? Bring it on!
- Thirsty oil-rich nations reduce exports
- Why I don’t agree with James Kunstler about the “end of suburbia”
- My 1996 warnings and predictions: “MidEast Oil Forever?” — Part I: Drifting Toward Disaster
- Plug-in hybrids and electric cars — a core climate solution
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Just a reminder:
Please express your wild guess sophisticated prediction in terms of number of days from January 1, 2009.
545 is my bet.
448
April 1, 2010
wild guess wisdom suggests current price driven build down in exploration will come back to bite us a bit sooner
well it was 150 a few months ago, based on that I’m going to say – uh next Tuesday?
well okay – I’ll take 425 – spring of 2010.
325 Days – I’m seeing scaleback in oil exploration here in Alberta and elsewhere – production will fall to critical levels even before the world economy fully recovers.
490
May 12, 2010
part of me thinks it may be much sooner – this summer possibly. But I think the rotten economy will keep demand down and this summers peak will be around 80 dollars before dropping slightly in the fall.
700 days, because a crowd of 5 is no crowd at all. Therefore it cannot be wise or somesuch.
470 days. But it is a nightmare scenario: high federal budget deficits and a weakening dollar. Hope I’m wrong.
The goal is still the same: permanent demand destruction for coal, oil, gas. Leave the beautiful stuff in the ground so it can hold up the dirt.
555 days just in time for summer 2010
I’m going to be optimistic and give it 180 days. We’ve seen how quickly prices can rise (and fall) and hopefully the economy recovers enough for this to be possible by summer 09′. I do think we have reached peak oil.
Mark me down for 225 — mid-August.
Hurricane season. Height of driving season. Enough time for signs of economy recovery. Enough time to see Obama’s commitment to stimulus spending. Throw in some random geopolitical strife and it’s a good bet.
380 days – winter heating in early 2010 as non-OPEC production struggles and OPEC refrains from filling in the gap until prices move toward the $150 range again… We’ll see.
I muse on the subject daily at http://www.setenergy.org
Onwards to sustainability,
Dennis
We will see oil at $100 bbl. by June 1st, 2009
Depends on how well OPEC can actually scale back production.
I’m not a betting man.
mark shapiro makes me wonder if it is the same to ask when oil will hit 75 EUR. four interwoven panicky variables (supply, finance, demand, forex)!
ok fine. 88 days, because of russia/ukraine. energy traders will freak; strings tied to the rescue money are weak; zombie bankers will bailout-finance huge commodity bets trying to save themselves with a brief bubble.
855 days.
I’m a bit more pessimistic about this because while I’m sure the price will rebound fairly quickly, I think there will be several forces trying to stabilize the price after the recent volatility. So I’m shooting for my 29th birthday.
While I expect the horse latitudes of “demand destruction” (which strikes me as a euphemism very similar to what Lomborg et. al. mean by “adaptation” – i.e., difficulty toward hardship toward pain toward misery) to continue (which would indicate a point farther off), it’s impressive that OPEC seems serious about these cuts.
At the same time, Peak Oil marches on.
And, under these circumstances, acute black swan events become ever more likely.
So averaging the chronic conditions together and factoring in the possibility of acute crises (though I’m not really quantifying these, just sort of thinking about them), I’ll say 180 days.
My guess is 375 days. It seems Opec really is keeping to the quota. I really think the drop in production is a relief for Saudi’s, don’t know how much longer they could have kept up without showing their hand.
Not until a partial “recovery” starts to drive up demand again. Say, 606 days or so…
1000 days — economic crash will keep downward pressure on oil.
258 Days (my 61st birthday)
I am going to say 33 days to bring the average down.
I think were in for a big, nasty surprise soon – like Saudi announcement; major war; or both – probably will happen in 2009 or early 2010.
500 days, spring 2010
469 days (April 15, 2010) – Recovery and seasonal demand drive price over $100 and above $150 before the end of 2010.
350 days, approx christmas 09. Seems to be swinging wildly, the upswing could easily be that early.
Hmmm. I’ve already bet my neighbor that gasoline will be back to $3/gal by Dec 5 2009. But he was drunk and probably doesn’t remember. Depends on so many things . . . Russia . . . the crisis in Gaza . . . Sarah Palin’s energy leadership in the great state of Alaska . . . I’ll go with 260 days which will bring it to the vicinity of my 60th birthday.
Two driving factors… the price of oil relative to “a basket of world currencies”, as they say, and the price of a US dollar relative to the aforementioned basket.
If the trillions of dollars being pumped into bailouts, and financed by… what exactly? … doesn’t cause serious inflation and a plummeting US dollar by the end of 2010, I’ll eat my hat. Oil will go up at least as fast as inflation takes the dollar down, I think much faster.
I vote for 500 days, just because things tend to take longer than I usually expect – otherwise I would choose a number under 400.
Aptera recently announced their first production Type 2e electric car is postponed to January 16, and volume production won’t start until October 1, 2009. I’ll use those dates to bracket my estimate. Memorial Day lies roughly in the middle of that range, so let’s pick May 25.
145 days.
Note: I will throw out intentional outliners! This wisdom of crowds thing would probably be better had everybody not had a chance to see everyone else’s guess. We’ll see!
The high cost of fuel this past year did serious damage to our economy and society. After a brief reprieve gas prices are inching back up again. Our nation should not allow other nations to have such power over us and our economy . We have so much available to us in the way of technology and free sources of energy. WE seriously need to get on with becoming an energy independent nation. We are spending billions upon billions in bail out dollars. Why not spend some of those billions in getting alternative energy projects set up. We could create clean cheap energy, millions of badly needed new green jobs and lessen our dependence on foreign oil all in one fell swoop. I just read an eye opening book by Jeff Wilson called The Manhattan Project of 2009. It would cost the equivalent of 60 cents per gallon to drive and charge an electric car.If all gasoline cars, trucks, and SUV’s instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. Why don’t we use some of the billions in bail out money to bail us out of our dependence on foreign oil? This past year the high cost of fuel so seriously damaged our economy and society that the ripple effects will be felt for years to come. http://www.themanhattanprojectof2009.com
147 days, based on the falling dollar
I’ll predict 666 days.
236
900 days.
Some countries might be able to reduse oil supplied to the world market for a few weeks and months, but it basically the same as going on strike. The first few weeks and months are easy, but once the savings money is gone, you have to go back to work to get a paycheck. Same thing with these oil exporting countries, they have bills to pay and will start putting more oil in the world markets to bring in some money.
By then, the very low interest rates from the Federal Reserve will have done it’s job and rebounded the economy, but also started some inflation.
100 dollars in 900 days.
$2.00 to $2.35 a gallon for this month then the gas tax will kick in adding another.17 cents
March 12, 2010 is my SWAG ( = 427 days from January 9, 2009)
My guess is 400 days. That should give me enough time to build my passive house and write a post that is even mildly worthy of this excellent blog.
261 days.
521 days exactly.
Long before the economy fully recovers, but the economy is well and truly stuffed. If we accept $75 for 2014 oil (current price) then we are accepting that we are at the start of a significant depression.
Now we can expect an Obama bounce, but will it last. Probably not, but long enough for $100 oil.
So 100 days.
912 days. 2.5 years.
1000 days, because the recession goes longer, and some countries start to cautiously tax CO2-emissions, reducing demand.
Taxing oil and natural gas (and coal anyway) would be a great way to transfer resource rents from producing countries (“them!”) to consuming countries (“us!”).
244
The WSJ used to run a series on using a dartboard vs the top experts at picking stock winners. The darts won almost every time. I used a javascript random() function to get 244. I’m not being flip…just using the time-tested method with complex systems.
The narrowness of demand to potential supply has become so tight that oil prices have become super-sensitive. Anything that threatens 2% increase in demand or 2% unexpected decrease in potential supply will send prices rocketing. Nobody knows what combo of political strife, depletion gotchas and demand growth will do the $100 first.
I don’t think OPEC voluntary cuts will do it because they can turn the spigots on again to adjust price. They are just as afraid of $100+ as we are. It’s *potential* supply shortfalls that will send the price to “11″.
300 days. Not that I think that demand will rise, but rather that the dollar will fall (and many other things with it).
The Saudis are opening a huge new field. They want the price at $80 (it covers their overhead, i.e. the cost of running the entire country, not the direct cost of production, which is
The Saudis are opening a huge new field. They want the price at $80 (it covers their overhead, i.e. the cost of running the entire country, not the direct cost of production, which is less than $2/BBL). The previous spike had less to do with supply and demand than speculation, but I can’t predict whether another spec bubble will occur or not. $100 oil is seen as damaging to the economy, so OPEC will try to keep it lower than that. Demand is down and will continue that way for a long, long time, years, I think. I think demand will continue to drop for 2 years before starting to recover, possibly longer depending on the depth of the recession / depression. I’ll take 1825 days (5 years). Hint: If you want to use the normal distribution, this will be an ‘outlier”, but this doesn’t make my expert prognostication any less valid. Try using a different distribution. Weibull might be a candidate.
Sorry for double post, I used a “less than” symbol which it thought was an HTML tag…
This is an interesting exercise as there are forces which would serve the keep the price low, others to send the price higher, and still others (ie OPEC) attempting to maintain stability within a range. Incidentally, I believe another group wishing for OPEC to successfully maintain that price range (or higher) are all the companies with Canadian Tar Sands projects.
Like a previous reader, I’m in the “we’ve already peaked” camp, so this would lead me to believe that $100 oil would be hit as soon as demand outstrips OPEC’s ability adjust production to keep it within the $70-$80 target range. On that basis, I’d say mid 2010.
On the other side of the coin though, I am also a pessimist on the economic recovery, particularly in the U.S., which I think will be deeper and wider than almost anyone is currently predicting. So this would lead me to add a year to mid 2011.
But with all the “stimulus” that appears to be the current trend, the U.S. dollar is sure to go down and likely steeply, perhaps even quicker than OPEC can react. This is, I think, the most important factor.
Therefore, I’ll take a day with personal significance,
March 29, 2010 = 452 days.
400!
That’s mid Q1 2010. Economy should recover by then hopefully. I do think we might see $80 oil briefly this year. Because of that, I personally went ahead and hedged my gas with petrofix.com. Don’t think there is much more downside from here so it is worth a shot.
212 days: August 1st, 2009
my 88 days was based on tougher future treatment of big banks. with public funds continuing to flow into the gaping holes via toxic paper, there’s little need to play games in any other sandbox, you can buy from the distressed and resell to your special subsidized captive market.
http://www.nakedcapitalism.com/2009/03/has-gaming-of-public-private.html
505