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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: GREENLAW4-7 who wrote (39494)2/25/2005 8:15:52 AM
From: jim_p  Read Replies (2) of 206220
 
Greenie,

The SOR has nothing to do with oil being at $50.00 today. It's because of increased demand from places like China and India along with geopolitical risks we didn't have in past cycles.

We need the SOR more than ever in today's unstable environment and it would be imprudent to try to use it to make a short term difference in oil prices. In the long term the market will set the price, not the SOR.

Let the markets do their work, we all know the cure for high prices are high prices and oil and NG prices will fall as supplies build and demand falls from prices getting to high. Supply is nothing more than a function of price.

As the finding costs rise, the price at which the oil companies stop drilling also rises which places a higher price on the lower end of the cycle. Finding costs have increased dramatically in the last few years so the next down cycle will most likely end with prices higher than the last cycle.

I do agree with you that the economy will slow and that in itself along with increased supply will cause the price of oil and NG to drop.

It's all about risk and reward and it never pays to try to predict the very top or bottom of a cycle. You buy when no one wants to buy and you sell when everyone wants in.

Jim
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