Oil -- Honest Lies, Outright Lies and Political Lies
Cyberspace (Sept. 27) -- They’ve had a belly full and aren’t going to take it any more! That’s the consensus of opinion from the internet’s leading oil patch message board.
Talk of oil and oil prices are burning up media airtime around the world these days. Experts, pundits, politicians and most anyone else that has a presentable face has been drafted into oil commentary duty. The result has been a steady stream of honest lies (they just didn’t know any better), outright lies (they know better but lie anyway) and political lies (they just want to get elected).
The message board where an eclectic collection of oil investors hang out every day and educate, inform, argue and generally have a grand ‘oil’ time is known as “Strictly Drilling” and is hosted at the Silicon Investor web site.
“The participants of the board, who have collectively posted more than 74,000 messages on the topic of oil and oil services, compiled a list of 30 misconceptions about the oil patch, oil prices and oil policies. They want to contribute to the current public dialogue on oil by trying to set the record straight on a few issues,” said Mike Simmons, an offshore drilling industry consultant and regular Strictly Drilling contributor known as “Big Dog”.
A short list of common misconceptions was first posted on the site by “JimL”, and grew rapidly as other contributors made their own suggestions.
Common Misconceptions About Oil and Oil Prices
1. Creating a heating oil stockpile during a heating oil shortage will solve the shortage problem.
2. The United States has an energy policy.
3. Oil companies make more money from oil and gas than do governments.
4. Refineries can always process additional crude oil. Capacity utilization, maintenance and repair factors exist only in the real world.
5. The best way to keep oil cheap and prevent oil price spikes is to prevent oil companies from making a profit.
6. Oil finding cost is the only cost. Labor, infrastructure and capital costs and risks of capital are irrelevant. Since the finding cost for domestic oil is only $6-7, long-term oil prices will eventually go to $10-12.
7. Finding and bringing new reserves to market takes about 2-4 weeks.
8. Oil markets reflect current data. The data itself is excellent, reported accurately and not subject to scrutiny.
9. Guest "oil analysts" on various TV programs actually study the oil markets before making any statements or predictions.
10. Oil should not trade like any other commodity on earth. There is a fundamental right to cheap oil and oil products - regardless of the real costs.
11. Oil and gas reserve depletion and production decline does not exist.
12. There is one price for oil. Blends do not exist. Time has no meaning in oil markets.
13. Our "high-tech" economy is no longer dependent on energy.
14. The U.S. can control OPEC.
15. Energy prices should always be removed from inflation statistics since energy is not needed by our high-tech economy or bought by consumers. As long as gold prices remain stable there is no inflation.
16. The media is fully informed and not biased when it comes to reporting on energy matters.
17. All oil tankers are always full and headed to the U.S. And there is an infinite supply of oil tankers. Storing oil on tankers for an indefinite amount of time is not only free, but also commonly practiced.
18. Oil price is the sole factor that determines oil supply.
19. The best way to encourage a domestic oil supply is to tax oil companies heavily in good years and ignore their pleas when they are on the verge of bankruptcy during bad years.
20. There is a giant "tap" somewhere that is turned up and down on a daily basis to regulate the flow of oil.
21. The power generation trend towards use of natural gas in no way requires more natural gas – it only requires new turbines.
22. Gasoline prices in the U.S. are "too high". After all gasoline tastes terrible. Therefore, it should be cheaper than milk, water and cola.
23. In energy markets, supply and demand are unrelated. Prices are determined solely by supply.
24. Even though OPEC production comprises less than half the world's oil production, any shortages are solely OPEC's problem and they alone should get blamed. When OPEC doesn't produce at 100 percent it is called market manipulation. When the U.S. removes oil producing lands from exploration and production it is called benefiting the environment.
25. Government intervention is the best method of dealing with high energy costs. Market forces should be dealt with only in theory and scientific papers.
26. U.S. oil companies have kept heating oil expensive by devoting too few rigs to finding it (source: US congressman).
27. Since technology is always improving, oil has become easy and inexpensive to find. There are plenty of giant oil fields left to find.
28. High energy taxes have helped Europe become less dependent upon OPEC.
29. Oil executives are good at hedging oil prices since they deal with oil on a daily basis.
30. Experts, oil companies and/or sheiks can predict the future price of oil. Maybe Al Gore can invent a system to do so. (Al Gore can solve all our energy problems by shutting down ‘big’ oil. No oil, no problem. Maybe he could trim big government while he’s at it.)
Everyone is welcome to drop by the free message board for a visit (see the link below) and to learn the truth behind these common misconceptions. A special invitation is extended to the media, politicians, talking heads and others who communicate with the public. It is the hope of the gang at the Strictly Drilling message board that this list of misconceptions will help ‘set the record straight’, and that future discussions about oil can occur in an environment of truth and informed judgment.
Subject 12099
Companies routinely discussed on the Strictly Drilling message board include Transocean Sedco Forex (RIG), Key Energy (KEG), Diamond Offshore (DO), Nabors Industries (NBR), Noble Drilling (NE), Parker Drilling (PKD), Friede Goldman Halter (FGH), Global Industries (GLBL), Global Marine (GLM), Halliburton (HAL), BJ Services (BJS), Chevron (CHV), Phillips Petroleum (P), ExxonMobil (XOM), Basin Exploration (BSNX), Tidewater (TDW), Schlumberger (SLB) and many other oil and gas exploration and service companies.
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Contact Information:
Mike Simmons
mike@simmons.net |
