John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (4195)	6/28/2001 1:26:33 PM
From: MulhollandDrive	Read Replies (1) of 33421

Hi John, Thanks for posting the Barron's article on crude oil. This jumped out at me in light of the current price decline.... >>The economics of this business are such that the least efficient oil companies can more than earn their cost of capital at $16 or $17 oil. From an economic standpoint, $28-$29 oil creates a return on capital employed in exploration and production from major oil companies of about 30%. Over the last 10 years that has averaged 15%. Ultimately, if the price of oil stays too high, it will encourage overinvestment.<< Just pondering if the secret energy talks that are being held with Cheney are having any impact. One would naturally assume that the talks may be focusing exploration and investment with prices at the higher end of the scale. That certainly would not benefit the Saudi's in the long run.

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