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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: dfloydr who wrote (47890)	7/13/1999 3:46:00 PM
From: upanddown	Read Replies (2) \| Respond to of 95453

"cartel ... one of the dirtiest words in our business vocabulary" I agree, Floyd, but every day on this thread, people are hoping that the OPEC cartel holds the line on production restraints using quotas established by collusive tactics illegal under U.S. law. That's the reality of investing in this sector..without producer discipline, we are DEAD ! John

To: dfloydr who wrote (47890)	7/13/1999 10:45:00 PM
From: Rob Shilling	Respond to of 95453

I am not sure that the cartel is really much worse than any other business with a few key big players. The only difference is that the collusion is obvious with OPEC. When an industry gets down to a few key big players, there is a certain amount of "tacit collusion" which usually involves following the leader in its actions. But, I wonder about how ethical and "business oriented" the IEA is when it comes to its analysis. I would almost swear that the IEA exists just to bad-mouth OPEC "compliance" in order to keep oil prices from getting too high. We all know that the IEA does not exist for its accurate forecasts !!! This makes me wonder if that between OPEC, the IEA, EIA, DOE, and the commodities exchange, the price of oil has been somewhat manipulated, with the average price being essentially lower than that necessary to get an adequate return on investment (Simmons thinks the return on investment for oil is too small for oil prices under $20 a barrel). This may be one of the reasons that worldwide capacity is dropping significantly. Excess capacity was something like 14 mbpd in 1990. If the "glut" is drawn down in September, and OPEC starts pumping to meet demand, OPEC will have to pump another 4-5 mbpd. That will leave around 2 mbpd of excess capacity in OPEC. Considering that non-OPEC has been severely damaged by 1998 and that demand seems to forever increase, things are going to get interesting very soon in the oil industry IMHO.