Analyst sees oil prices between $75, $85 a barrel:

Crude-oil prices aren’t fundamentally sustainable at $90 a barrel, said Thomas Petrie, vice chairman of Merrill Lynch & Co.

Petrie, in an interview Wednesday, responded to comments made earlier by Saudi Arabian Oil Minister Ali al-Naimi, who said there is “no relationship” between today’s price and fundamental supply and demand.

“Is there enough oil produced to meet demand today, and I think the answer is fundamentally yes,” Petrie said. “It is fair to say on a pure supply-and-demand calculation, it would not be unreasonable to expect prices to reach equilibrium at a lower price.”

Petrie said oil prices are at better equilibrium between $75 and $85 a barrel.

OK, I’ll ask: What leads this analyst to a price of “between $75 and $85 a barrel”? Aside from, you know, a gut feeling, or perhaps a fear of what $100, $150, or more could lead to?

In all seriousness, I hate these kinds of pronouncements. First, there is virtually always someone priced out of a market. At $100/barrel, there is some conservation. Drop the price to $80/barrel, and there’s less, the difference being the consumption squeezed out by that extra $20/barrel. Supply and demand doesn’t get much simpler than that, even for a commodity with a highly inelastic demand, like oil.

And as for the related issue we hear so often, that there’s this “security premium” of $X/barrel on oil in addition to “fundamentals”, that’s splitting another hair. There is always an uncertainty factor in the price of goods. When the good is a critical one, like oil, and there’s reason to believe that we might have a new war in the Persian Gulf region (as in the US attacking Iran), or a pipeline that brings oil from Canada to the US blowing up, the uncertainty factor and the price jump.

More on the Coal Campaign in Kansas:

In true journalistic fashion, Andy Revkin of the New York Times dug deeper into the controversial coal campaign run in Kansas after the state rejected a new coal-plant. Curiously, he surfaced with some interesting investment numbers with regards to Venezuelan coal.

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In more recent news, Revkin has posted his correspondence with Peabody Energy, the world’s biggest private coal company. Ends up, they’ve a 25.5 stake in a Venezuelan coal mine.

Honestly, do some companies have teams of people working around the clock to try to find as many ways as possible to spend money to make themselves look dumber than a sack of rocks?

‘Averting Our Eyes’: James Hansen’s New Call for Climate Action:

James E. Hansen of NASA, brushing off coal-industry criticisms but acknowledging the need to be sensitive to people still haunted by the Holocaust, has elaborated on what he meant when he recently described continued coal burning as akin to sending untold species to their destruction in “death trains” and crematoria.

He posted a long note on the matter, titled “Averting Our Eyes,” on his Columbia University home page tonight.

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Dr. Hansen, like many who commented on Dot Earth after I wrote about his statements, insists that the parallels hold between the denial and passivity that allowed a human cataclysm to sweep Europe in plain sight and the denial and inaction now as the world prepares to build hundreds of conventional coal-burning power plants. In his recent statements and the new one, he warns that the tens of billions of tons of resulting emissions of carbon dioxide, if not captured and stored, will disrupt climate patterns, ecosystems and sea levels that have been remarkably stable through most of modern human history. The result will be an end to “creation” as we have grown to love it, he says.

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A related alternative metaphor, perhaps less objectionable while still making the most basic point, comes to mind in connection with an image of crashing of massive ice sheets fronts into the sea — an image of relevance to both climate tipping points and consequences (sea level rise). Can these crashing glaciers serve as a Krystal Nacht, and wake us up to the inhumane consequences of averting our eyes?

Alas, that metaphor probably would be greeted with the same reaction from the people who objected to the first. That reaction may have been spurred by the clever mischaracterization of the CEO, aiming to achieve just such a reaction. So far that seems to have been the story: the special interests have been cleverer than us, preventing the public from seeing the crisis that should be in view. It is hard for me to think of a different equally poignant example of the foreseeable consequence faced by fellow creatures on the planet. Suggestions are welcome.

I don’t want to waste a lot of time and energy (no pun intended) by wading too far into this issue. As best I can tell as this has unfolded, Hansen screwed up with a wildly bad piece of imagery, but is guilty of nothing more than having a tin ear. On the facts of global warming and how serious it could be, as well as how we’re still, incredibly, not taking that issue (or peak oil, I would add) nearly as seriously as warranted, he’s right.

And yes, if I come up with a better metaphor, I will send it directly to him and post it here.

Bite of high oil prices only beginning:

Think oil prices are high now? According to geologist Kenneth Deffeyes, we should be thankful for low oil prices. The really high prices are yet to come.

Deffeyes, author of “Hubbert’s Peak,” predicted that Thanksgiving Day 2005 would mark the peak in world oil production. When he made the prediction, in January the year before, his tongue was only slightly in his cheek. And he wasn’t far off. Current data put the peak (so far, at least) 6 months earlier or 8 months later, depending on how you measure it.

A peak in world oil production means that about half the recoverable oil has been used, and the rest will be harder (and more expensive) to extract. Oil fields don’t run out of oil the way a car runs out of gas, chugging along at 55 mph one moment, coasting to a stop with a stalled engine the next. Oil production in fields or sets of fields reaches a peak, often when about half the recoverable oil has been pumped up, and then declines.

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In the end, though, it’s our oil bills that matter to us, not how much oil costs. We cannot control oil supply, but we can control how much each of us demands. If you want to lower your gasoline bill, drive a more efficient car and drive less (carpool, walk, take the bus, consolidate trips, etc.). If you want to lower your heating bill, put on a sweater, keep the thermostat down, and get your house better insulated.

Not much new here for readers of this site (see how much I think of youse guys?), but it nicely addresses the supply/demand interaction in ways seldom seen (except for this site; see how much I think of myself?). Still, a good item to forward to your willfully ignorant brother-in-law.