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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: SliderOnTheBlack who wrote (41532)4/2/1999 2:59:00 PM
From: still learning  Read Replies (1) of 95453
 
Two points you left out:

1. Re risk to OS cos. -- the consolidation of E&Ps may well also pose a risk to drilling efforts. Fewer players = less rig utilization, most likely and more pressure on contract prices.

2. Re demand. In CA today gas is above $1.61 gallon. We can say this is due to temp. refinery shortages, but that is the reality. I think there is a risk of small demand reduction right now due to price. I'm sure there may be a similar drop in demand elshwhere this Spring as gas price-shock sets in. Longer term, as supply comes back on line $1.35-$1.40 will seem affordable and the "shock" of higher gas prices will lose some of its sting. So higher prices this Summer and beyond (compared to about $1.09 earlier in the year) will not seem so bad psychologically.
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