Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Rob Shilling who wrote (72618)	9/7/2000 7:36:31 PM
From: stsimon	Read Replies (2) of 95453

I doubt we will see much of a reduction in demand below $40 a barrel. Above $40 things like sugar cane in Brazil come into play on the margin. You'd have to see $40+ on a sustained basis to trigger serious investment in alternatives. Even then demand for energy may increase enough to offset the new sources of supply. Projects like syncrude in Canada have demonstrated that you don't easily scale up alternatives. My personal view is that the collapse of the Soviet Union has put in place a long cycle of world growth that has over the last decade absorbed nearly all the excess capacity for O&G. Going forward we will have to run faster and faster just to stay in the same place. There will be ups and downs along the way, but after 20 years of substandard returns, the industry is finally going to get well.

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