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Cheaper Oil Impact

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Cheaper Oil Impact

Postby oldclaypaws » Sat Dec 13, 2014 10:50 am

One of the driving forces over the last few years which introduced many new owners to amenity woodlands was the attraction of free fuel. Faced with soaring energy prices that bit deep into the household budget, the idea of your own little plot providing sustainable free green carbon-neutral energy encouraged thousands to install wood burners, and many to take the plunge into woodland ownership.

With Oil falling 40% this year and set to fall further largely due to the USA's shale oil and fracking boom, it can be expected that overall domestic energy heating costs will finally start to fall, with gas, coal and renewables (including wood) having to compete with cheaper oil. Oil tends to be the driving force in the energy market.

Several newspapers have predicted falling Oil prices could be a disaster for the 'green revolution' of renewables, clean energy such as wind and PV has a high initial capital cost, as does buying a wood.

Of course there are many attractions to buying a wood, its not just about logs and energy, but it makes a good excuse. There's the connection with outdoors and nature, keeping fit, a sanctuary away from modern stress, and an alternative investment. Logs though, are one of the big attractions, often quoted by selling companies. If the cost of flicking on the central heating switch does plummet (.....eventually, strange how slowly the 'big six' lower their prices when costs fall), one of the previous benefits of owning a wood might become marginally less advantageous.

The Russians think its a US conspiracy to wreck their economy in revenge for Ukraine, its certainly set to severely damage the Oil-dependant Russian economy. However, its a really a long term consequence of the US's desire to wean off dependence on geopolitically risky imported oil, plus the prospect of a cooling global economy, with China and the Eurozone stalling. Not good news for Scotland & Aberdeen or exponents of a low carbon future, although it makes the Scottish 'No' vote to independence now look very fortunate, Salmond budgeted on oil at $110, not $60.
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Re: Cheaper Oil Impact

Postby Dave and Verity » Sun Dec 14, 2014 9:48 am

I might be naive, but I can't see it lasting. The woods is mine for hopefully the next 20 - 30 years.

Dave
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Re: Cheaper Oil Impact

Postby Landpikey » Sun Dec 14, 2014 10:55 am

oldclaypaws wrote:With Oil falling 40% this year and set to fall further largely due to the USA's shale oil and fracking boom, it can be expected that overall domestic energy heating costs will finally start to fall, with gas, coal and renewables (including wood) having to compete with cheaper oil. Oil tends to be the driving force in the energy market.


Lots of places need high oil prices to make their wells economical. The States will stop drilling their fracking wells now and you might get to here about the small towns getting upset that the Golden Egg laying Goose (fracking companies) that they were promised isn't providing. Russia will snuggle up even tighter to China.

I think this is just OPEC flexing it's muscles to show that even though they are only 30% of world supply they are still in control. Mind you, with the promises made to their population to keep them from rising up they too need a decent return per barrel. They also have shale so once their sand reservoirs run dry they will start to frack them too so I feel that they will be in control for a while.

The downside of this lack of exploration is that there will be a lag in the wells coming online to replace the ones that are finishing up so we will see high oil again - boom and bust is the nature of the business unfortunately. Even the Norwegians are stopping some of their drilling programs, but this is to cut the price of the rigs they have on hire.

Everyone should stockpile logs as normal and continue to reap the benefits.
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Re: Cheaper Oil Impact

Postby calvertwood » Sun Dec 14, 2014 10:44 pm

I agree with the sceptics - this is just a blip, and oil will resume its upward trajectory. Talking of blips, I note that sales of full-size 'sedans' are increasing in the States, as they always do every time there's even a tiny fall in the price of oil. Another year, and they'll suddenly rediscover sub-compact cars.

I have no qualms about the value of my wood being undermined by the falling oil price. But I wouldn't mind the weather turning a bit colder so I can start realising some of the economic benefits of a large log-pile!
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Re: Cheaper Oil Impact

Postby Meadowcopse » Mon Dec 15, 2014 12:32 am

Guardian media feed: UK energy firms go under as oil price tumbles http://gu.com/p/446p9

The production platform I used to work on was supposed to be profitable at below $20 barrel (159 litres) in the 1990s, but predominately produced sales quality gas and an oil condensate that attracts a price slightly higher than brent.

Interestingly some years ago, one international major divested a lot of it's north-sea assets, but retained it's sub-sea pipeline network (including spurs to other operators) and therefore has a revenue from the volume of fluids produced by others.

Taxation regime changes (and political policies) in the UK have a big influence on capital project expenditure.

If the price of oil stays low, it will be interesting to see what happens with fracking on land and its economic viability,
Usually exploration licences have a time period for exploration (and exploitation), or they potentially get clawed back by Government if no explanation of a potential operating date is given.
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Re: Cheaper Oil Impact

Postby vushtrri » Mon Dec 15, 2014 10:26 am

The way I look at it is that it will cost less to travel to my wood....the key to which I am expecting in the post today....hopefully, ready for a start in the new year!
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Re: Cheaper Oil Impact

Postby smojo » Wed Dec 17, 2014 10:35 am

it can be expected that overall domestic energy heating costs will finally start to fall


Are you kidding mate? You're old enough to know better. The utilities are motivated by greed and profits and will try to squeeze as much out of us as they can get away with their lame excuses of bulk buying for future energy supplies and development plans. My mum just had a letter from the Leccy board wanting to increase her monthly payments from £22 - to £34. That's a hike of approx. 50% despite being in credit by £130. When they finally agreed to talk to me they said it was based on projected usage which takes into account the Met Office's forecast for the next three months. What bullsh*t and naievety. The Met Office struggle to get the next three days forecast right.
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Re: Cheaper Oil Impact

Postby Binz » Wed Dec 17, 2014 12:59 pm

which energy Co? I'm with Ovo and if the account is in credit they pay me 3% interest :)
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Re: Cheaper Oil Impact

Postby oldclaypaws » Thu Dec 18, 2014 12:44 am

An interesting current price comparison here from Nottingham Energy Partnership, looking at cost of burning different fuels. Interesting that energy from burning bought wood is cheaper/Kw than an air sourced heat pump, better than kerosene, a third of 'leccy. On CO2 emissions, wood floors the competition, 1/10th of the emissions of fossil fuels or even heat pumps, and less than a 1/20th of the emissions of leccy heating. Even better if you source wood from your own woodland rather than buying it....

http://www.nottenergy.com/energy_cost_comparison
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Re: Cheaper Oil Impact

Postby smojo » Thu Dec 18, 2014 8:49 am

Binz wrote:which energy Co? I'm with Ovo and if the account is in credit they pay me 3% interest :)


British Gas. I'd switch for her but she's 93 and we have so much running around to do for her right now that I just can't be ar*ed.
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