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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Frank Pembleton who wrote (92391)7/17/2001 10:19:43 AM
From: Art Bechhoefer  Read Replies (1) of 95453
 
Frank, The Economist is not always right. In fact, in some areas like telecommunications, they are woefully biased and self serving (pro-European, anti-American). Oil supply and demand (by which I mean the demand for crude oil and natural gas) is dependent on more than the economically extractable resources in the ground. Getting the stuff to the destination that requires it, and being able to service the customers that want it now, not two weeks or two months from now, involves details not addressed by "The Economist" in the articles you referenced.

To explain the shortages that occurred in California, both in terms of electrical generating capacity and the availability of reformulated gasoline, requires at least some knowledge of operations research models. Queueing theory, for example, explains most of the price fluctuations that occurred in California and surrounding states over the past couple of years. Why? Because one of the conclusions that can be drawn from those models is that sudden changes in peak demand and peak period pricing causes longer term changes in average prices (but not necessarily any changes in average demand). The oil companies are not stupid. They know all about this, but they would prefer the rest of us would shut up.

Art
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