Oil might not climb back over $50 a Barrel…EVER!!!

Oil might not climb back over $50 a Barrel…EVER!!!… and Saudis know it very well… that’s why they are pumping every single drop of oil while people are willing to pay for it. All of you must be aware of the fact that what Sheikh Ahmed Zaki Yamani, former oil minister of Saudi Arabia, said in 2000 “The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.“… but this is only the last half which was publicized of what  he had said…the first half was almost unbelievable 15 yrs ago so it was left out… the full statement is Thirty years from now (2030) there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.”… he has 15 more years to reach the target date of 2030… probably he did not expect Shale Oil to be explored and to come to the market so soon. 

He was speaking with information that… …he had and which was not yet published to the world… of so much oil was being struck in 2000 as much as was existing at the time (2000). This fact itself sets the price down by 50% add to it shale oil plus increasing installation of clean renewable energy and the market is down by 75% which is exactly where the market is currently.

It is evident from the Sheikh Ahmed Zaki Yamani words that he sees no happy prospect for his country during the present King’s time. His daughter has written a book in which the epigraph is a quotation from King Faisal: “In one generation we went from riding camels to riding Cadillacs. The way we are wasting money, I fear the next generation will be riding camels again.”

The widely held conventional theory is that the Saudis want to shake the weak production out of the market.  This strategy would undermine the economic viability of a meaningful amount of global production.  The theory assumes that this can be done in some kind of orderly bring-down of prices where the Saudis can find an ideal price below the production cost of this marginal oil production but still high enough to maintain significant profits for the Kingdom while this market correction plays out. The assumption is that following the correction there will be a return to business as usual along with higher prices, but with Saudi Arabia commanding a relatively larger share of that market.   An alternative rationale is that Saudi Arabia is fighting an economic war with oil; a strategy designed to economically and in turn politically cripple rival producers Iran and Russia because the governments of these countries that depend on oil exports cannot withstand sustained low prices and will be significantly weakened.

While there may be some truth to both of these theories, the real motivation lies somewhere closer to Sheikh Yamani’s 2000 prediction.  Saudi Arabia has embarked on an absolute quest for dominant market share in the global oil market.  The near-term cost of grabbing that market share is immense, with the Saudis sacrificing potentially hundreds of billions of dollars if low prices persist.  In a world of endless consumption, this risk would be hard to justify merely in exchange for a temporary expansion of global market share – the current lost revenue would take years to recover with a marginally higher share of global supply.

But in a world where a producer sees the end of its market on the horizon, then every barrel sold at a profit is more valuable than a barrel that will never be sold.  Current Saudi oil minister Ali al-Naimi had this to say about production cuts in late December: “it is not in the interest of OPEC to cut their production whatever the price is,” adding that even if prices fell to $20 “it is irrelevant.”  Implied, if not explicitly stated, is that Saudi Arabia wants its oil out of the ground, regardless of how thin its profit margin per barrel becomes.

Saudi Arabia’s Oil Minister Mr Naimi has gone on the record to say that, even if prices fall as low as $20 per barrel, the kingdom will continue to keep its vast low-cost oil wells pumping at their current rate of about 9.5m bpd. Some Opec insiders worry that Saudi is more likely to quietly increase its production by a further 1m bpd, causing an even sharper fall in prices. At these levels, what might be seen as the kingdom’s “Berlin or Bust” strategy – with echoes of the final all-out push to defeat Germany in the First World War – risks crippling not just the kingdom’s economy but also those of its close Arab allies.

Sheikh Yamani, who was Saudi Arabia’s oil minister from 1962 to 1986 and is now in charge of an energy consultancy, became the public face of the revolutionary oil policy that altered the balance of world power in the early Seventies.

He predicts that a combination of recent oil discoveries, the advance of new technology, and heavy investment in exploration and production will all lead to a collapse in the price of crude. He says: “I have no illusion – I am positive there will be some time in the future a crash in the price of oil. I can tell you with a degree of confidence that after five years there will be a sharp drop in the price of oil.”

Crude Oil Price Stats

Crude Oil Price Stats – Sheikh Yamani almost like Nostradamus predicted prices to fall in 2005… “that after five years there will be a sharp drop in the price of oil”…”that prices will stay high temporarily because of demand in the US and parts of Asia. But he argues that this price obscures the likely long-term effect of “huge” recent discoveries…” This at a time when NOBODY in the world could have even foreseen such an outcome in OIL.

Fuel-cell motor technology – which can produce electricity by combining hydrogen from a variety of fuels with oxygen from the air – will have a dramatic impact on the oil market, he predicts. “This is coming before the end of the decade and will cut gasoline consumption by almost 100 per cent. Imagine a country like the United States, the largest consuming nation, where more than 50 per cent of their consumption is gasoline. If you eliminate that, what will happen?” Saudi Arabia, he says, “will have serious economic difficulties”.

His remarks follow last week’s agreement by the Organisation of Petroleum Exporting Countries – in which Saudi Arabia is the dominant force – to a marginal rise in production of 708,000 barrels a day in response to mounting concern in the US and other major consuming countries over the high price of oil. Prices per barrel have been hovering at around $30, compared with $10 at the beginning of last year. But industry experts have given warning that Opec’s latest production increase will not be enough to ease the price.

In the interview, Sheikh Yamani forecasts that prices will stay high temporarily because of demand in the US and parts of Asia. But he argues that this price obscures the likely long-term effect of “huge” recent discoveries in regions such as the Caspian Sea, Yemen, Egypt and Africa. He also predicts that Iraq, which is capable of producing 6.5 million barrels a day, will become a bigger supplier before long.

He says: “On the supply side it is easy to find oil and produce it, and on the demand side there are so many new technologies, especially when it comes to automobiles.” Yamani believes that automobile engine technologies including fuel cells – which can produce electricity by combining hydrogen from a variety of fuels with oxygen from the air – will drastically reduce oil consumption and that, in the longer term, no one will need oil.

Its amazing to note that he could visualize all this in the year 2000… when Tesla was not even incorporated as a company.

As this plays out in the background Apple and Google have gone ahead and thrown their vast resources into the race for plug-in vehicles, and Tesla’s Model 3s will be on the market by 2017 for around $35,000.

Ford has just announced that it will invest $4.5bn in electric and hybrid cars, with 13 models for sale by 2020. Volkswagen is to unveil its “completely new concept car” next month, promising a new era of “affordable long-distance electromobility.

It’s well known that the German prestige brands-Audi, BMW, Mercedes-Benz, and Porsche–will all offer at least one battery-electric luxury sedan or crossover utility vehicle sometime between 2017 and 2021.

GM & LG are working on an Electric car.

SONY too has an eye on the electric Car market.

Samsung has more than a finger in the Pie.

Finland’s Open Source Car which According to Räsänen, the group initially will engineer the conversion, that will come in two options: a 150 km (93 mi) range model with the lithium ion battery pack mounted in the front; and a 300 km (180 mi) range model in which a second pack is installed in the trunk. At the present time, no decisions have been made with respect to the motor and controller they will use, or whose battery they will install. The group will also develop the battery management system. The target top speed of the vehicle is 130-140 km/hr (80-85 mph) with accelerating faster than the stock Corolla.

Once the first vehicle has been engineered, the job of producing them in numbers again follows a model pioneered in Mexico City where selected auto maintenance shops will be responsible to completing the conversion. The Open Source group sees its job then as a logistics manager, making sure the conversion shops have the parts they need for the conversions they are slated to do. The group will not be involved in the movement of money, Räsänen stressed. he target price for the complete conversion, including the vehicle, is € 25,000 (US$39,500).

But the most promising of them all is the Mahindra E2O which is the only sensible and affordable 4-seater Electric car created by the great Chetan Maini. Unfortunately Mahindra is not too keen to advertise the car and generate public interest as it fears that electric cars could adversely affect the sale of its Diesel and Petrol Cars & SUVs.

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