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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Perspective who wrote (7159)5/27/2004 11:59:39 AM
From: mishedlo  Read Replies (3) of 116555
 
Also, I'm skeptical of your $12-15/bbl number; they'd be jammin' that stuff out of the ground like fiends right now if that were true, and they would have been in business and profitable for most every energy price scenario of recent history. Their absence tells me something.

BC

BC what you are missing is a couple of things
1) disposal of waste
2) enormous startup costs
3) Opecs ability to under cut in price
4) Because of #3 no one wants to start a serious operation in size because it might not be profitable when they are done
5) oil out of the ground only costs $5 or whatever in extraction costs. Little incentive for the big guys to get behind this.

I assume costs are really more on the order of $25-28 to produce oil from tar sands. Can they make a profit on their investment on that? Perhaps only if oil stays above 30.

What I think we need to do is subsidize production and guarantee paying a floor of $30. Oil subsidies is about the only subsidy I am in favor of. It's high time we become energy independent.

Bush has a policy of trying to produce more oil from wells rather than conserve and look at other sourses.

We need to make use of oil sands and we need to mandate higher gas milelage as well. Our current plan (if you call it that) is to drill in the artic reserve. Quit stupid if you ask me.

M
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