The Effect of the Price of a Barrel

Discussion in 'Current Affairs, News and Analysis' started by heard_it_all_before, May 25, 2008.

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  1. With many comentators speculating that the barrel could reach $250-$300 in the near future. It would be interetsing to gague the views of many on what effect this would/could have on society.

    E.G. Increase in crime, police guards at fuel stations or possibly even rationing and curfews. Or as is possible from an ever increasing labour mong nation, nothing!

    Your views please...
  2. Trans-sane

    Trans-sane LE Book Reviewer

    Everything will get more expensive.

    How is EVERTHING moved around this country/planet? In vehicles powered by petroleum products. Ok, fuel oil remains cheaper than a cheap thing relative to everything else, but it is still more expensive than it used to be. Diesel and petrol are both expensive just about everywhere in the world.

    This may well encourage farmers to grow "biofuel" despite the problems that exist with it- namely you could never grow enough fuel in a million years and food prices are already skyrocketing (the price of rice in Europe has gone up by ~100% this year as it isn't being exported by China and India. Burma is a big rice producer though... oh hang on.)

    Finaly plastics these days are found in just about everything. What are plastics made from? You guessed it oil products. Other things made from oil: medical products including a large number of drugs, paints of various kinds, eletricity in may places including a significant chunk of the UKs power. All of these will become much more expensive and harder to obtain.
  3. If we do see oil in that price range then the sh1t will have hit the fan. We would be experiencing a severe stagflationary environment, with the economy crashing and possibly 30 or 40 per cent inflation. However, in these circumstances the price of oil would soon fall as recession would lead to less demand. But by then, the damage would have been done.

    I don't see $250-$300 oil in the near future, though analysts at Citibank have warned that oil could reach $200 later this year. However, this could be an attempt to lure retail investors to invest in oil at the height of the bull market, thus increasing the price of oil at the same time as the institutional investors cash out. It's an old institutional trick, used for everything from commodities to equities. A similar tactic has been used recently with the stock markets, with bankers and analysts talking the FTSE and the DOW up, while they have cashed out and invested in oil -- thus inducing the recent spike in the price of oil.

    Speculation is party to blame for the price of oil and where there are speculators there will be a cycle of price fluctuations. It's possible the price of oil could drop soon when the largest institutional investors consider the bubble ready to pop, and cash in and invest in some other commodity (Uranium, gold, palladium, etc), thus creating a new bubble somewhere else.

    It's not just speculation that's causing the spike in oil prices. A lot of the price rise has to do with the weakness of the dollar. Oil is mainly traded in dollars. The less valuable the dollar (and it's taking a fall) then the more dollars it takes to buy oil.

    My mind is not yet made up about peak oil, but it's something I'm looking at. When was the last time we saw petrol stations without fuel, apart from during times of industrial action? There's not a shortage of fuel available to businesses or consumers, even at these prices.
  4. On the plus side, a bit more investment in oil alternatives?

    As conventional fuel gets more expensive, alternative arrangements become more commercially viable. Stuff like H2 or electrically powered vehicles, the development of second generation biofuels. Increased use of freight rail etc.

    Could turn out to be a good thing in the long run. If we manage to wean ourselves off mineral oil, or reduce usage, then we won't be too concerned what happens in the Mid East...
  5. It may also be time to start thing of different transport solutions, I don't really ever see us going back to making everything in this country so becoming less reliant on imports, but we could start using the railways more, maybe smaller coaster style transport ships, to move stuff from larger ports to smaller ones, etc
  6. If Bruin plans a fast move to arrest the slide in popularity of Nu Liabor,what better than to adjust taxes that the UK pays on it's fuels?

    He could:

    aa.Bring the price of diesel per litre(at the refinery) down to that(or less than that) of petrol.This is what happens almost everywhere else in Europe,as they realise that industry depends on diesel.Bruin looks at the price of diesel,and what he can then tax it for,as ''free money'' to support the £60 billion that the UK quangos consume,aid to africans etc...

    bb.Decouple Excise duty and VAT from the price of fuel at the refinery,by taxing fuel,from an Excise Duty point of view,on a volume basis(per litre) instead of price/litre.Consider VAT as the percentage of the ex refinery price,when he has implemented aa above,rather than the present system of VAT being charged on the sum of the price of a litre of diesel and the Excise Duty.

    Will he do any of these things?? Very doubtfull IMHO.
  7. Dunc0936,

    The problem with Britain's railways is that much of the network is diesel-powered.I friend on the railways siad that the price they were paying for diesel had doubled in the last year.

    An investment in electrifiying most of the remainder of the network not under wires and increasing the use of nuclear power in the UK would be a start.

    The development of electric cars is possibly reaching the point where these could be on the market within the next 3 years or so.

    The Americans are developing bio fuel for aircraft,initially for use by their air force.
  8. Trans-sane

    Trans-sane LE Book Reviewer

    While the alternatives to oil would be good, the only truly viable approach would be nuclear. Nearly all of the alternatives acuatly use oil products at some point in the chain with the exception of bio fuels that can never meet 21st century demand for energy. One statistic I read abck in 2004ish was that if every square metre of farmland in the world was turned over to producing vegetable oil for bio diesel then you would be able to run half the cars in the USA. And nothing else.

    At present electric cars are recharged by oil and gas fired power stations, and hydrogen is produced by electrolosis of water- using electricity from oil and gas fired power stations (catch 22 anyone?)

    The use of large scale off shore wind farms will likely cause massive damage to sea bed ecosystems (this is REALY bad). Land based wind and solar plants in the UK will never be able to power industry although they may well keep pace with domestic power useage.

    When I was peparing a project for my students about 18 months ago I was suprised to discover that energy useage of a typical house in the UK had not increased since the 1950s despite now having more electric devices in my bathroom than were found in a typical 1950s house. This was down to better insulation of new homes. Less energy was used for space heating, with the slack now being used for modern consumer products.
  9. I forgot to mention that UK has the second highest price per litre of diesel in Europe,because of Bruin's voracious appetite for taxes.I doubt that he cares how this hits the consumer.It also causes complete instability in the UK logistics supply chain.My farming friends tell me that the price of red diesel per litre,which the railways also use,has risen from £0.16 4 years ago to £0.70 now
  10. Why's that? After the construction phase, the in-sea portion of the turbines are just gurt big bits of concrete, no? The concrete would be quickly repopulated with seaweed / barnacles etc and the turbine base becomes an artificial reef - probably something of a shelter from seabed trawlers...

    Tidal turbines might cause marine eco-damage, but then, the amount of potential energy in the tides off various scottish islands is huge, so those concerns might get ignored.
  11. Nuclear power would be a better route to go. Liquified coal is a good alternative to oil.The UK has plenty of coal correct ?

  12. What about coal, we have plenty of that, I know about the Carbon, Co2 problems but I did see something about pushing the steam/smoke back under ground/water. is there not a way we can filter this out, or is this more expensive than its worth?
  13. Indeed we do - about 45 billion tonnes. We don't do deep mining anymore and import most of our coal. However, we did do successful trials on Underground Coal Gasification - which would (to me at anycase) be a great way of producing hydrogen for fuel cells or Methane.
  14. Trans-sane

    Trans-sane LE Book Reviewer

    In the US some of the oil companies have built coal fired power stations not to produces electricity (that is a useful bonus though) but to produced CO2. They are trialling pumping pressurised carbon dioxide into oil wells. The article I read suggested that it can extend the life of some of the remaining Texas and Alaska oil fields by 10-15 years. The steam aspect frankly is a non-issue. Steam is water when all is said and done. But with modern condensing boiler systems the ammount of heat wasted in steam would be minimal.

    The trouble with coal and the reason oil is so popular is that it is easy to distribute, sotre short term and then use to produce power. Oil also has a very high energy output for its size and weight. This is why it is used as vehicle fuel funnily enough. Don't know anything about liquid coal so don't know how viable using it in a vehicle would be. Using gas or hydrogen in cars was always tricky in terms of tanking it safely and practically. This has been mostly solved however in recent years.