Skip to main content

Well, barring a major geopolitical event in the next two days, it looks like my bet on 100$/bl oil by the end of this year will be conclusively lost. I will announce the winner of the price forecast contest (from both the DailyKos thread and the  Eurotrib thread) from last August this weekend or early next week, but, undaunted, I'd like to take bets on 2006.

This time, I have four questions. Each will have, like this year, a prize consisting of a bottle of, at your choice, French champagne or whiskey.

I'll kindly ask that you recommend this diary so that as many people as possible can take the bet.

Oil is currently around 56-57$/bl (the above graph is for Brent, from oilnergy.com), and briefly touched 70$/bl right after Katrina hit. So, pretty impressive prices, but not quite 100$/bl yet. Natural gas prices got closer, with prices briefly going over 90$/boe (barrel of oil equivalent - use the price per mbtu and multiply by 5.9) in early December, but that's not what we bet on...

With hindsight, the natural gas story has been even more dramatic than the oil one, with still a fairly high probability of shortages this winter in both the USA and the UK, following the faster than expected decline of domestic production and the extensive damage to Gulf of Mexico infrastructure by Katrina and Rita. This year is the year that the bright future of gas-fired power plants met an untimely death, which begs the question of what will replace it - wind (but to what extent?), coal (but whither emissions and global warming?), nuclear (but what do we do with the waste?).

But the lessons on the oil front are not very encouraging.

  • first, the trend, taken over a long period, looks pretty bad:

  • second, the price increases, unlike in previous years, have been caused by demand growth, and not by (mostly artificial) supply shortages. Supply is now barely coping to follow demand, and spare capacity remains extremely low, thus putting the markets in danger from any crisis or unexpected event (terrorist attack, strike, accident in a critical facility, weather event, etc...). OPEC is enjoying its relative powerlessness to bring prices down, and is not investing to add capacity, and neither are, it seems, many other countries. Oil majors are being squeezed increasingly by host countries, and are having a difficult time replacing their reserves;

  • third, the price increases this year have not prevented demand from still growing. This confirms the expectations that oil demand is very much price-inelastic (i.e. it varies little with price), and thus that much bigger price increases will be needed if we end up needing actual demand destruction. 2005 has seen very mild demand growth from China after the records in 2004

    but this is unlikely to last with the continuing strong growth of that country and the increasing numbers of Chinese people able to afford a car.

Having thus established by bearish credentials, and living true to the cartoon above, here are my questions:

  1. What will be the highest price for oil in 2006? (As usual, you may choose your benchmark. If not provided, WTI will be the default option). And as an additional twist to that question (to be used to determine the winner if needed), what will be the proximate cause of that high?

  2. What will be the year-end price for oil in late December 2006?

  3. Same questions for natural gas: year high, and end-year prices, in $/mbtu, using Henry Hub (prices in $/boe will be accepted as well)

  4. On what date will 100$/bl oil be reached? And same addendum - what will be the proximate cause?

You can also take the (anonymous) poll on that last one.

My own bet:

  1. Highest: 240$/bl, after a US bombing raid on Iranian nuclear facilities, in October
  2. Year-end 90$/bl
  3. Natgas highest: 25$/mbtu after a cold spell in March. Year-end: 17$/mbtu
  4. 100$/bl oil reached in October

Your turn.

Earlier "Countdown Diaries":
Countdown to 100$ oil (18) - OPEC happy with oil above 50$
Countdown to 100$ oil (17) - Does it matter politically? A naked appeal for your support
Countdown to 100$ oil (16) - We'll know on Monday
Countdown to 100$ oil (15) - the impact on your electricity bill
Countdown to 100$ oil (14) - Greenspan acknoweldges peak oil
Countdown to 100$ oil (13) - Katrina strikes / refinery crisis
Countdown to 100$ oil (12) - Al-Qaeda, oil and Asian financial centers
Countdown to 100$ oil (11) - it's Greenspan's fault!
Countdown to 100$ oil (10) - Simmons says 300$ soon - and more
Countdown to 100$ oil (9) - I am taking bets
Countdown to 100$ oil (8) - just raw data
Countdown to 100$ oil (7) - a smart solution: the bike
Countdown to 100$ oil (6) - and the loser is ... Africa
Countdown to 100$ oil (5) - OPEC inexorably raises floor price
Countdown to 100$ oil (4) - WSJ wingnuts vs China
Countdown to 100$ oil (3) - industry is beginning to suffer
Countdown to 100$ oil (2) - the views of the elites on peak oil
Countdown to 100$ oil (1)

Originally posted to Jerome a Paris on Tue Dec 27, 2005 at 03:38 PM PST.

Poll

When will 100$/bl oil be reached?

1%3 votes
10%25 votes
25%60 votes
15%38 votes
47%114 votes

| 240 votes | Vote | Results

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Tip Jar - Dec. 27 (4.00)

    In the long run, we're all dead (Keynes)
    Read more on the European Tribune - bringing dKos to Europe

    by Jerome a Paris on Tue Dec 27, 2005 at 03:36:08 PM PST

  •  Oil companies (none)
    won't let the 2006 election be about gas prices. And Exxon is still embarrassed about their 10bil quarter.

    I think we stay fairly static for 11 months, and skyrocket to $76 a barrel by New Years Eve.

    --
    -4.88, -7.64 | Hey Congress, keep your hands off my Analog Hole!

    by peacemonger on Tue Dec 27, 2005 at 03:52:02 PM PST

  •  2nd Quarter High (none)
    I still think the drop in prices at the end of this year has been about Oil Company PR and not the market. What I see happening next year is prices peaking around the second quarter, so that the Republican Friendly oil companies can do a small cut in the third quarter to blunt the issue at election time.

    That seems to me what happened post-Katrina. A huge spike, followed by a partial fall, but not to the old levels. Thus, everyone breathes a sigh of relief, and oil companies still make record profits.

  •  September (none)
    A weakening U.S. economy will reduce demand, but not enough to keep the price of oil from rising dramatically.  A declining U.S. dollar will exacerbate the situation.  

    1. High price: $102/bbl in September - combination of declining dollar, instability in Iraq, Iran, and/or Saudi Arabia, and a hurricane in the Gulf of Mexico
    2. Price on 12/31/06: $80/bbl
    3. Natural gas high price at $21/mbtu (February), end at $19/mbtu
    4. September 15th, but only for a couple days, for the multiple causes listed in #1

    "If you want to trust somebody with your taxpayer dollars, you'd better elect a Democrat because the Republicans can't manage money." - Howard Dean

    by CA Pol Junkie on Tue Dec 27, 2005 at 03:55:38 PM PST

  •  It seems to me more of a mea culpa is in order. (none)
    The ultimate gist of your diary is that oil goes above $100 a barrell is George Bush engages in an extraordinary geopolitical event in October 2006: Bombing Iranian nuclear facilities.

    This seems to be a clear admission that absent such an extraordinary geopolitical event oil will remain below $100 a barrel.

    Not having read all of your linked diaries, I can only speculate that your projection of oil above $100 a barrell wasn't based on Iranian bombing scenarios but other factors.  If so, then wouldn't it be more intellectually honest to devote more time to conceding your analytic errors and explaining why you were wrong instead of positing "October surprises" to salvage your credibility?

    Just asking.  Why?  Because of Williamtrialattorney's diary that asked for more or a reality to this site.

    •  Fair questions all (none)
      The mea culpa is at the top of the diary, where I say flatly that I lost my bet. Events proved me wrong. I don't know how i can get clearer than that. However, I keep on thinking that the long term trends that are in play are still there, and that my error is more one of timing than one of substance. Thus this new diary about 2006.

      As to the October surprise, it is related to the narrower question of what the highest price will be. I expect a lot of volatility (as argued in earlier diaries) and, within a general upwards trend, a lot of spikes up - and down. Upwards spikes are likely to be generated by unexpected events or geopolitical crises. It's hard to bet on a strike in Nigeria, or an accident anywhere, or a political crisis in a major oil producing country with a precise date, given the somewhat random nature of these events, so the Iranian scenario is comparatively a more likely and rational one, thus my bet.

      My point is that the market is very tight, and any event might trigger a really big spike.

      In the long run, we're all dead (Keynes)
      Read more on the European Tribune - bringing dKos to Europe

      by Jerome a Paris on Tue Dec 27, 2005 at 04:13:39 PM PST

      [ Parent ]

      •  Thanks for the response. (none)
        My objections wasn't to your failure to do any sort of mea culpa, but the lack of analysis as to why your prediction of $100b oil didn't occur this year.

        And I'm not sure if I understand your response.

        Are you saying that the $100b prediction depends upon key geopolitical instability?  Or does it depend upon long term market trends that will arise even absent some geopolitical stability?  

        Was your prediction of $100b oil in 2005 based on geopolitical instability?  I only read a few of your linked diaries and I didn't get that causation.

        If your prediction of $100b oil in 2005 wasn't based on geopolitical instability, and if the only way we get to $100b is via geopolitical instability, then what does that say about the analysts who predict very high oil prices in the near term even absent such instability?

        I think we all agree that oil dependence must be decreased.  But, worst case predictions that never come to fruition only serve to undermine the credibility of valid points.  I'm just trying to be reality based.

        •  Look at it this way (none)
          With no major geopolitical events, oil prices did go from 40$/bl or so to 60$/bl or so, close to a 50% increase. Natural gas prices shot up even more.

          The sngle disruptive event on the oil&gas market this year was the hurricanes, and all they did was take temporarily out of production less than 1% of world production (less than 1 mb/d). That made oil prices shoot up to 70$/bl for a while.

          What that means is that the market is tight, and getting worse, thus on an upwards trend and, in addition, random events may cause violent (but probably temporary) price movements. These two things are not incompatible, just two aspects of a market for a vital, and hard to replace, commodity.

          In the long run, we're all dead (Keynes)
          Read more on the European Tribune - bringing dKos to Europe

          by Jerome a Paris on Tue Dec 27, 2005 at 04:28:24 PM PST

          [ Parent ]

          •  Again thanks. But more questions ... (none)
            >>>With no major geopolitical events, oil prices did go from 40$/bl or so to 60$/bl or so, close to a 50% increase. Natural gas prices shot up even more.<<<

            Well, in my view Iraq is a continuing geopolitical event, and the lack of progress in re-establishing Iraqi production should have some effect on oil prices.  And, as you point out, there was a hurricane.

            But, not being an oil watcher, can you tell me whether the increase was sudden (event driven) or gradual (perhaps seasonal demand or price fixing as opposed to long term market forces)?

            >>>The sngle disruptive event on the oil&gas market this year was the hurricanes, and all they did was take temporarily out of production less than 1% of world production (less than 1 mb/d). That made oil prices shoot up to 70$/bl for a while.<<<

            Was the price increase due to normal economic supply/demand interactions or was it due to price fixing or gouging?  Prices in the oil market appear, to me, to be politically fixed.  And GW does not appear to have any incentive to want to keep them down.

            •  More answers (none)
              1. Look at the graphs above. The prices have been going up fairly regularly, with a few spikes and retreats, over the past 3 years.

              2. At times of tight supply, "normal" supply/demand interactions and price fixing will be really hard to tell apart, as anyone that has the capacity to put some spare capacity on the market (say, strategic reserves) will have a real ability to get prices down, at least temporarily). but anyone that can withhold some capacity can get the prices to shoot up as well. It will be volatile, both financially and politically...

              (and I apologise for not responding today if you have more questions, I am now off to bed...)

              In the long run, we're all dead (Keynes)
              Read more on the European Tribune - bringing dKos to Europe

              by Jerome a Paris on Tue Dec 27, 2005 at 05:00:24 PM PST

              [ Parent ]

            •  oil prices (none)
              I think the main reason oil prices did not go higher is that demand destruction did kick in.  Some in the U.S. - people drove less, and SUVs were very unpopular for awhile there - but mostly in Third World nations.  Americans grumbled, but paid the higher prices.  In Panama, Yemen, Indonesia, etc., people rioted over fuel prices because they could not pay them.

              IOW, we exported our shortages.  

              This is why natural gas did not go down like oil did.  Natural gas is not as easily transported.  

              "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." - Kenneth Boulding

              by randym77 on Tue Dec 27, 2005 at 05:08:14 PM PST

              [ Parent ]

          •  No "geopolitical event" in '05 but (none)
            there were two natural disasters in the form of Catagory 4-5 hurricanes that disrupted a major portion of the US oil and gas producing and refining industry.

            My concern in '06 and beyohnd is lower energy prices that will quash the current momentum toward energy efficiency (such as hybrid vehicles) and alternate energy sources(wind power).

            (-2.75,-4.77) "Whenever we dumb down the political debate, we lose." Senator Barack Obama

            by Sam I Am on Tue Dec 27, 2005 at 05:46:14 PM PST

            [ Parent ]

      •  I think you've got the right trend (none)
        It's just that I don't see that graph spiking that high that fast.
        Looking at the graph, it looks like $100/bbl mid 2008.

        So to my friends and my colleagues I say with delight, A merry Christmas to all, and to Bill O'Reilly...Happy Holidays. Congressman John D. Dingell

        by doug r on Tue Dec 27, 2005 at 06:41:17 PM PST

        [ Parent ]

  •  My bet... (none)
    1. Highest $110/bl Demand breaks through, and winter approaches. Supplies threatened with instability, but no war or production halts (except for Iraq).

    2. Year-end $100/bl

    3. Nat. Gas highest: $22/mbtu  Year-end $18/mbtu

    4. $100/bl oil reached in December, due to onset of winter and full absorbtion of a previous market glut.
  •  Russia and Ukraine (none)
    Russia is trying to jack up gas prices a thousand percent on gas its providing to Ukraine.  Ukraine is saying that it is reconsidering the lease on the the Russian Navy base in Crimea and is potentially  holding European gas supply hostage.  Still could be a very interesting year, energy-wise.  Shouldn't tie yourself to an arbitrary date.

    Republicans - For Saddam until they were against him.

    by calipygian on Tue Dec 27, 2005 at 04:04:28 PM PST

    •  That won't happen (none)
      I actually wrote my PhD disseration on Ukraine in 1992-95 and they were already playing the exact same games back then, and the result will be the same now as then: Russia will keep on delivering gas to Europe and Ukraine, and Ukraine will not pay a cent for the gas it gets (or, more precisely, the "price" it pays will be exactly equal to the "price" of transit of Russian gas to Western Europe.

      Russia cannot afford not to deliver its gas to Europe, as it is just as dependent (if not more) on these exports (for hard currency receipts and budgetary income) as Europe is dependent on the gas - and it's not like it has anywhere else to sell it. And Ukraine has shown its willingness and ability to siphon off "export gas" if deliveries to them are reduced.

      So it's a lot of noise for not much, and Europe should not listen, except to make clear that they don't want the gas interrupted, and that they buy their gas from Russia, at the Ukrainian border.

      In the long run, we're all dead (Keynes)
      Read more on the European Tribune - bringing dKos to Europe

      by Jerome a Paris on Tue Dec 27, 2005 at 04:20:00 PM PST

      [ Parent ]

      •  As for Europe's response (none)
        isn't that why Schroeder was hired on at Gazprom and authorized construction of a gas pipeline under the Baltic (for Gazprom's use, of course) right before he left office?  Seems designed to cut out the Ukrainians.

        Republicans - For Saddam until they were against him.

        by calipygian on Tue Dec 27, 2005 at 04:26:56 PM PST

        [ Parent ]

        •  Sort of (none)
          Germany needs the gas, and is probably happy to deal directly with Russia and not having the hassle of having additional headaches (like now) with the Ukrainians or the Poles on the way. Thus putting a heavy weight to negotiate what is a fundamentally strategic project for the Russians makes sense.

          The Russians need to increase their export capacity, and they need the West to pay for it, because, even today when they are flush with oil money, they have trouble allocating funds to such big projects. It makes sense for them as well to avoid the Ukrainians and the Poles for these new volumes, but it won't solve the issue for the existing pipes, as the capacity through these countries will still be used in full or close to it as it is now.

          In the long run, we're all dead (Keynes)
          Read more on the European Tribune - bringing dKos to Europe

          by Jerome a Paris on Tue Dec 27, 2005 at 04:34:24 PM PST

          [ Parent ]

      •  CSM article (none)
        Kremlin reasserts control of oil, gas

        "Amazing changes are happening swiftly, because Putin has understood that energy is Russia's key card to play at the international table," says Michael Heath, a political analyst with Aton, a Russian brokerage. "Instead of the military force the Soviet Union used to project its power, Russia is using oil as a major tool of foreign policy."

        "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." - Kenneth Boulding, economist

        by randym77 on Wed Dec 28, 2005 at 08:59:07 AM PST

        [ Parent ]

  •  Pulling numbers outta the air (none)
    I have no professional training in the field, so my guess is just that--kinda like when I try to guess the number of jelly beans in a big jar.  I could probably do just as well throwing a dart at some numbers, but what the heck...it's fun.  So here goes:

    1--Highest oil--$120/bl in September
    2--Year end oil--$80/bl
    3--Nat. Gas high -- $22/mbtu in March
    4--Nat. Gas year end -- $18/mbtu

    P.S.  If I end up like that monkey that throws darts and beats the pro stock analysts, I'll take the French Champagne--yummy! ;-)

    There's nothing in the middle of the road but a yellow stripe and dead armadillos. -- Jim Hightower

    by TexH on Tue Dec 27, 2005 at 04:11:41 PM PST

    •  oh yeah, and oil $100/bl on Aug 17th n/t (none)

      There's nothing in the middle of the road but a yellow stripe and dead armadillos. -- Jim Hightower

      by TexH on Tue Dec 27, 2005 at 04:14:54 PM PST

      [ Parent ]

    •  I'm wit u Tex (none)
      If it happens in 2006 it'll be in August or September (peak vacation season, it skyrockets these months just like every year), then drop dramatically in October/November for the elections.

      I don't like Bizarro World... I want to go home to America.

      by willers on Tue Dec 27, 2005 at 07:54:55 PM PST

      [ Parent ]

  •  I'll never beat you up about Crit Mass predictions (none)
    because what you have done, as far as I have concerned, is indentify a serious problem and the most likely result of the problem after it reaches a point of critical mass first. I honor you for that. I think the next step, to try to name a time frame for that critical mass to occur, is complete wild magic and I prefer to focus on the scenario rather than the stab at a date or a period. You are far more accurate than any business pundit I have seen on Fox News, CNBC, or MSNBC talking about how Wall Street will behave. (I seem to recall a great many gray suits predicting that oil would be, oh, I think it was 35 dollars a barrel again by now. That was the English clown subbing on Forbes on Fox's mantra not so long ago, back to 35 dollars thanks to the elections in December.)

    The politics of Oil is leading us to bad things, and I think your diaries have consistently spelled out why. You have pointed out that The Three Stooges have been invited to the grand ball. You have pointed out that the dowager hostess and her butler have put out dessert tables filled with gooey missles that vastly outnumber the amount of guests in the room. That is the issue with the Oil game I care about. When and where the pies actually start flying depends on when Moe or Curley start to randomly fool around with the obvious disaster to come as the party goes forth. I'm not a big believer in predicting that moment, or even the general time frame, but I understand the impulse to try and take a stab.

    Last night I listened to some woman in an very expensive suit talk about the Dow "leaping" to 11,000 before New Years on a Fox News business show. Her reasoning? The Dow is so close, only a mere 100 (and somthing) points.... so... of course its going to happen! Things are going so brilliantly in the economy according to the White House! It may or may happen... but that was embarassing to behold.

    THAT is the type of prediction I beat up on. Somebody (who is probably richly rewarded in his or her job on Wall Street) pulling things out of their ass just to say so. Your oil diaries have always had much more to offer than a prediction.

    If you happen to be six months off, you are better than anybody working a chair on CNBC as an Oil analyst as far as I am concerned.

    Funny thing, George Orwell just called... he said that Big Brother's name is George.

    by LeftHandedMan on Tue Dec 27, 2005 at 04:12:00 PM PST

  •  Gas prices bet (none)
    All using West Texas prices (WTI)
    1.  Highest price $84
    proximate cause:  along with tight supplies from high demand throughout the year, keeping the price in the $60s, a spike will develop after another bad hurricane season, also in October.
    1.  Year-end price will be $69.24
    2.  Gas price of $18.15/mbtu at year-end; high of $19.54/mbtu
    3.  Date for $100/bl oil:  October 2008
  •  Well... (4.00)
    1 What will be the highest price for oil in 2006? (As usual, you may choose your benchmark. If not provided, WTI will be the default option). And as an additional twist to that question (to be used to determine the winner if needed), what will be the proximate cause of that high?

    $170/bl as a result of Iranian missle strikes on shipping through the Strait of Hormuz after Israeli and U.S. airstrikes on Iran. The airstrikes will be made on the pretext of preventing Iranian nukes.

    2 What will be the year-end price for oil in late December 2006?

    $80/bl

    3 Same questions for natural gas: year high, and end-year prices, in $/mbtu, using Henry Hub (prices in $/boe will be accepted as well)

    High: $25/mbtu   Year End: $15/mbtu

    4  On what date will 100$/bl oil be reached? And same addendum - what will be the proximate cause?

    I think about April 15th, since that seems to be when they like to unveil "new product." Although, I can see why some people would select October, due to the November elections. However, I think they'll do it earlier to create more unease in America (Retaliation fears) since unease favors Bush. Too close to the election and most people would see it as Wag the Dog (Since that's what it is). But by rolling it out in April, it gives them plenty of time to play up their B.S. and to spin any negative reactions.

  •  Jerome... (none)
    Have you read the diary up on the Rec list by soj??  Thanks again for this post.  I'm betting (hope I am wrong) on early 2nd quarter.
    •  Yes (none)
      I put in a big comment to disagree with her on one big point of the diary - I don't see how an Iranian oil bourse can happen.

      In the long run, we're all dead (Keynes)
      Read more on the European Tribune - bringing dKos to Europe

      by Jerome a Paris on Tue Dec 27, 2005 at 04:30:36 PM PST

      [ Parent ]

      •  Speaking of that (none)
        is there any possibility of various powers contracting private supply contracts with Iran, using a medium of exchange other than dollars, and if so what effect would these transactions have on the market as a whole.

        What I would imagine is individual players trying to absorb Iranian oil privately, to avoid having to acquire dollars. China wouldn't do it because they are drowning in dollars, but perhaps India, or the EU?

  •  Pretending (none)
    that I know what I'm doing...

    1. 124$/bl after hurricanes in the south
    2. 85$/bl at years end
    3. 28$/mbtu due to same hurricanes in the south
    4. 25$/mbtu at end of year

    Whiskey instead of champagne please.

    GWB: best argument I know of to refute "Intelligent Design"

    by Pandora on Tue Dec 27, 2005 at 04:44:51 PM PST

  •  My stake (none)
    Considering mid-term elections and the oily people in the WH, I don't see things as bad in 2006, because I believe they will manipulate prices.

    What will be the highest price for oil in 2006? (As usual, you may choose your benchmark. If not provided, WTI will be the default option). And as an additional twist to that question (to be used to determine the winner if needed), what will be the proximate cause of that high?
    $90 a barrel, when Iran's nuke reactors are hit by bombers in MARCH 2006.

    What will be the year-end price for oil in late December 2006?  $70 a barrel

    Same questions for natural gas: year high, and end-year prices, in $/mbtu, using Henry Hub (prices in $/boe will be accepted as well)
    $25 high, $18 YE

    On what date will 100$/bl oil be reached? And same addendum - what will be the proximate cause?
    I think that the $100 mark is a ceiling that the Repubs will never let us hit.

    Support my Global Exchange trip in March to Afghanistan - small donations appreciated. Donate thru Paypal to sjumpe01@baker.edu. Donations are tax deductible.

    by Sharon Jumper on Tue Dec 27, 2005 at 04:49:31 PM PST

  •  Here goes (none)
    1. $66 - sometime in the spring as part of the last gasp of the current speculative fever.
    2.  $30 at year end - on it's way to <$20.
    3. $14.50 - sometime in Feb., $7.00 year end
    4. Sometime in the distant future after the US and China have emerged from the coming depression.

    "Men...think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." - Charles MacKay

    by mstein on Tue Dec 27, 2005 at 05:23:04 PM PST

  •  The economy is getting set to tank (none)
    World wide recession. No $100 oil unless the value of the dollar crashes. A possiblity but I do not think so. BTW this opinion and $1.75 will get you a large coffee at starbucks.

    It is impossible to defeat an ignorant man in argument

    by Jlukes on Tue Dec 27, 2005 at 05:23:36 PM PST

    •  Hang onto something (none)
      The housing bubble is deflating fast... the dollar is toast next year. If you got a house, sell it NOW... everyone I know selling a house in California has had them on the market for weeks... going into months... used to be that houses weren't on the market for more than a few days, and the asking prices are dropping fast...

      I don't like Bizarro World... I want to go home to America.

      by willers on Tue Dec 27, 2005 at 07:59:09 PM PST

      [ Parent ]

  •  2006 is an election year (none)
    If [a big IF]Bu$h Co has any control over energy prices, I would think that he would try to keep them low come election time in November 2006. Sure, he is a lame duck but the last thing he wants is a Democratic House or Senate and investigations.
  •  Remember 2006 is an election year (none)
    Keeping that little fact in mind, my TFH tells me that oil goes to $80-90/bl in June-August and then drops down to 50-60/bl range in Oct-Nov; Bush claims economy is improving, opinion polls show Bush approval back in 50s and Diebold does the rest. Revolution fizzles, no impeachment. Sorry for the downbeat news.

    What's the use of happiness? It can't buy you money- Henny Youngman

    by sheep in wolf clothing on Tue Dec 27, 2005 at 05:52:25 PM PST

  •  Here's my bet (none)
    Oil - High $108/bl WTI Year End $78/bl WTI
      High mid September'06, spike caused by continued strong storms in Gulf during hurricane season, and general inability to respond to changing weather patterns vis a vis distribution

    Nat Gas - High $125/boe Year End $88/boe
      High mid October, just as usage picks up for winter and demand can't be met.

    Precise Day of $100/bl WTI - Thursday, September 14, 2006, although oil will not, of course, hit $100 even at end of trading.

    I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man - find out who said it!

    by TheGryphon on Tue Dec 27, 2005 at 05:55:24 PM PST

  •  Total guess (none)
    Haven't a clue, just political cynicism, but the exercise will make me pay more attention to the numbers in the news...

    1. Highest price for oil in 2006: $88/bl (maybe in September, due to steady rise and hurricanes, but then it will start coming down so it's lower again before the Nov. elections--coincidence?)

    2. Year-end price for oil in late December 2006: $72.25 (repetaing my guess for 2005)

    3. Year high for batural gas: $27/mbtu, in December (runaway prices after elections, no matter who wins); end-year price, $25/mbtu

    4. October 2007 (continued unchecked general rise, followed by slight decline due to manipulation after everyone freaks out about topping $100)

    Thanks for putting on the contest, Jerome.
  •  i can't afford a prius anytime in the near future (none)
    but i can maybe get myself to a living situation that is more conducive to riding my bike!

    by the way, i've recently been checking the mileage on my 2004 Corolla. Seems to get 24 MPG in city traffic w/ snow and about 34 MPG on a highway in good driving conditions and no traffic.  Which is MUCH less than I was promised when I bought the dang thing.

    I saw something online today about how the reported MPGs for cars is often very inflated - especially for hybrids.

    Anyone else know something about this?

    I re-did my website! See how pretty DailyGranola.com is now.

    by OrangeClouds115 on Tue Dec 27, 2005 at 06:35:10 PM PST

    •  Yup (none)
      The Oct. 2005 Consumer Reports had an article that laid out just this... my Subaru is one of the worst for promised mileage vs. what it actually gets. Dammit. 8-(

      I don't like Bizarro World... I want to go home to America.

      by willers on Tue Dec 27, 2005 at 08:02:17 PM PST

      [ Parent ]

    •  Life as a Prius driver (none)
      First of all, a 2006 Corolla gets 34 city and 41 highway.  Yours is probably a mile or two less.  24 in the snow is not bad, believe it or not, and I'll bet you're haulin' butt on the highway (over 65mph, probably 70-75) to get 34.  So that isn't too far off.

      I drive a Prius in the Midwest, having put 95K miles in the last 5 years.  A few pointers.  If you drive like you're vying for a spot in the Dukes of Hazzards, you will not get EPA mileage.  EPA highway mileage is when you drive 55, not 65, not 85.  Actually, depending upon road conditions, I can get 50-60 mpg as long as I stay around 63.  Faster than 65, it will usually drop off.  EPA city driving is 35-45 mph with some stops.  It is not crawling ass  stop and go during rush hour.   Although I will note that if you don't stop-start like a moron even in crawly ass traffic, your mileage can actually be quite good.

      So, leaving aside the moronic driving (YOU KNOW WHO YOU ARE OUT THERE), minor things like tire pressure, running AC or heater (I actually find mileage suffers more in the cold than hot because of all the time needed to warm the thing up), are a factor.

      After all of that, the likeliest issue is a software problem in the car's main computer that coordinates the engine, motors and battery bank.  Depending upon your dealer's inclination, it is usually a fixable problem.

      "Are you policemen?" "No, ma'am, we're musicians."

      by vegancannibal on Tue Dec 27, 2005 at 08:37:15 PM PST

      [ Parent ]

      •  i was (none)
        going 55 to 65 the whole way to chicago and back to get the 34 mpg. with zero traffic.

        I re-did my website! See how pretty DailyGranola.com is now.

        by OrangeClouds115 on Wed Dec 28, 2005 at 03:42:45 AM PST

        [ Parent ]

        •  From the fuel economy website (none)
          http://www.fueleconomy.gov/...

          2004 Vehicles by Toyota
          Model  MPG
          (city)  MPG
          (hwy)  Annual
          Fuel
          Cost*  
          Greenhouse Gas
          Emissions
          (tons/yr)*
            EPA
          Air
          Pollution
          Score
          From 0 to 10 (best)

          Toyota Corolla
          4 cyl, 1.8 L, Automatic (4 speed), Regular  29  38  $1038  5.90  

          Toyota Corolla
          4 cyl, 1.8 L, Manual (5 speed), Regular  32  40  $948  5.40  

          Annual Fuel Costs and Greenhouse Gas Estimates are based on 45% highway driving, 55% city driving, and 15000 annual miles.

           So your driving is not too far off from the EPA ratings.  41 MPG is for the 2006 model.

          VC

          "Are you policemen?" "No, ma'am, we're musicians."

          by vegancannibal on Wed Dec 28, 2005 at 09:10:40 AM PST

          [ Parent ]

  •  is anybody (none)
    looking at the demand side of the equation?   We are nearing the end of a liquidity bubble around the world during which commodity prices have spiked.  Some of this is true demand (i.e. for expected delivery of product), but a significant portion is speculation that future higher prices may come about.  As the cost of carry for these trades go up, and the risk adjusted return drops money will flow back out and commodity prices will return to more rational pricing.  China is aggressively moving to develop future markets for raw materials they trade in a lot to help with what they consider to be unfair pricing. These markets might operate with much higher margin requirements and other rules to prevent excess speculation.   I also expect that with the increasing availability of complex trading platforms/technology that additional markets may develop for the settlement of crude contracts in Euro or other currencies allowing for more diversification for central banks away from the dollar.  http://www.uaeinteract.com/...

    All these new markets add more competition to the mix and additional opportunities for arbitrage, and thus the ability to arrive at a price derived from true global demand instead of regional demand and speculation.  

    My prediction is that we are heading for a recession in the U.S.  The housing bubble is about to pop.  Consumers are basically tapped out on debt.  If less stuff is getting shipped and made, there is less demand for oil and prices will come down.  

    I think we go below $50 a barrel in 2006.  

    In the absence of fear, truth becomes absolute.

    by bohdi777 on Tue Dec 27, 2005 at 06:37:27 PM PST

  •  Energy (none)
    Those of us following energy have repeatedly reminded people that oil is only part of the story.

    Currently the over/under number for long term oil contracts in 2006 is $72 - that is, there is basically a 50/50 chance of oil touching $72 somewhere during the year. This clearly is based on two expectations (both backed by the bond market)

    1. The US is going to pursue a slightly tighter monetary policy and strengthen the dollar.
    2. The US is going to reduce its fiscal deficit and thus lower US demand.
  •  ab initio's market forecast (none)
    Crude oil 2006 high: $60/barrel (proximate cause: interest rate reduction by Fed)

    Crude oil year end 2006: $47/barrel

    NatGas highest: $11/mbtu in Dec (anticipating 2007 winter cold spell)

    NatGas year end: $9/mbtu

    $100/barrel crude will be reached in 2008. The reason will be strong consumption and growth numbers beyond expectations coming from China and India.

    My thesis for next year for all commodities including the energy complex is a breather from their incredible bull run of the past few years. The world economy will slow on the back of deleveraging in the US and the reduction in the torrid growth rate of credit. The bond market will rally and set the stage for Fed rate reductions later in the year. In addition to rate declines the Fed will launch a major debt monetization effort through relative dollar devaluation in 2007. This will restart a major multi-year bull market in commodities.

    Despite fears of peak oil, as oil prices rise renewed supplies will come to the market through the remainder of the decade restraining oil price growth to the inflation rate.

  •  Inverted yield curve (none)
    I think we are coming into the long predicted (if not awaited) recession.  The rising interest rates combined with the petroleum tax are finally going to cut into into the credit-financed spending binge.  Another sign: housing prices and starts way down last month.  Whether this is the start of the catastrophe scenario is questionable; but any significant slowdown in the US of A will put a damper on demand for oil.  I think we will have to wait a few years.

    And I say that as someone who is heavily long (and has been long for the past six years) in energy stocks.

    •  You are right (none)
      You da man (or woman?), Knut. Here's what I see happening (I'm sure I missed a few):

      • Interest rates creeping up
      • New bankruptcy bill fucking things up
      • New housing construction down
      • Housing prices down
      • California housing bubble broke in December
      • Oil at peak now
      • Natural gas already past peak
      • Increasing population also causing energy shortages
      • Consumer debt at record levels
      • Medical insurance costs highest ever
      • Minimum wage frozen for the past 5 years
      • Tax cuts for the rich in a time of war
      • No exit strategy for a multi-billion $ war
      • Social services and assistance cuts
      • WalMart sucking America dry
      • Roads, power lines, other infrastructure not being maintained properly

      In layman's terms, the economy is SO screwed.

      I don't like Bizarro World... I want to go home to America.

      by willers on Tue Dec 27, 2005 at 08:11:45 PM PST

      [ Parent ]

  •  Man after my own heart - other $100 news (none)
    Hey Jerome, nice post with good stats.  Unless the excrement really hits the fan, Brent oil will hit $100 in '07.  Meanwhile, other $100 news.  Coal is at $80/ton and should hit $100 next year at some point.  The US will soon be a coal exporter to Asia, where they can't dig the stuff out of the ground fast enough no matter how many Chinese miners die.   Even uranium hexafluoride ore, the raw fuel for most nukes, has gone from the $20's per pound in 2002 to past $50/lb this year.  This may trigger North American extraction with its fun by-products.  Coal is bad enough, but to get a pound of u-h, you wind up with a railroad car full of crapola, to use a technical term.  So soon, one more mythology of nuclear "too cheap to meter" power will be shattered when something approaching market conditions causes their fuel prices to go up.

    It's gonna be a hot one, or a cold one, depending upon your viewpoint.  Better lay in your solar panels, wind turbines and biofuel heaters.  See ya!

    VC

    "Are you policemen?" "No, ma'am, we're musicians."

    by vegancannibal on Tue Dec 27, 2005 at 08:05:04 PM PST

  •  Here goes... (none)
    1. $59 bl
    2. $48 bl
    3. $15.25/mbtu high; $9.90/mbtu y/e
    4. $100/bl on Oct 22, 2008.  Proximate cause - economic recovery from mild global 2007 recession.
  •  Foggy predictions (none)
    (First, I don't think we'll cross $100/bl in 2005 dollars in 2006.)

    (Second, if there is a big bolus of inflation, that could change, so I'm using 2005 dollars as a reference.)

    (Third, my prediction includes an estimated 12.5% inflation along with the demand increase in China, but a demand slowing in the US as we slide into recession.)

    1. Highest price in 2006: October (of course) due to Hurricanes.  $84 (in 2005 dollars).  Accounting for 12.5% inflation (2005->2006), this could be nearly as high as $100 ($97.87), but I'm predicting it stays below $100.

    1a.  Should it hit $100, both options on the CALL and PUT side will have a profound effect upon prices so you might see it BOUNCE off $100 before driving right through.

    1b.  It won't stay above that point for long, again because of the unwinding of the options.  A lot of money will change hands, but we'll end up below that.  (In essence, crossing $100 will be because someone is trying to manipulate the market and make money on options.)

    1. Year-end 2006: $91 (in 2006 dollars, or about $81 in 2005 dollars).

    2. Natgas BOE $115 (2006 dollars)

    3. $100/bl reached in August (AUGUST) 2007 at the first sign of a hurricane headed for the Gulf. (in 2007 dollars)

    Notes:
    • Inflation is real and present.  Whether they measure it or not.  The lack of an M3 published measure is disturbing and makes me wonder about the wording of the FED's governers' statements.  

    • I expect a deep recession in 2007 -- so deep that some guys in China will be jumping out of buildings because they're too leveraged.  Not to the point of a depression, but a 1987-style correction.

    Happy little moron, lucky little man. I wish I was a moron, my God, perhaps I am! -- Spike Milligan

    by polecat on Wed Dec 28, 2005 at 07:41:21 AM PST

  •  Prediction (none)
    1. Highest oil - (WTI) $110 october, hurricane

    2. Year end oil - $77

    3. Highest Natgas - $22, february

    4. Year end natgas - $17

    "Blessing are not just for the ones who kneel" Bono

    by kd texan on Thu Dec 29, 2005 at 05:11:04 AM PST

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site