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

To: diana g who wrote (54447)	11/12/1999 12:48:00 PM
From: BigBull	Read Replies (2) \| Respond to of 95453

Diana, Do you remember the discussion the board had on the OPEC oil price "target range"? I believe you held that ~ $21 bbl would be the ceiling price where OPEC would begin to raise production. The reasoning behind this argument was sound BASED ON THE PAST. 1. Past this price, alternative energy sources would be sought. 2. Non OPEC production would increase. 3. The inflationary effects would stimulate rate hikes thus inducing recessions, which in turn would decrease demand. I believe THIS TIME IT'S DIFFERENT. <g> So then - extraordinary claims require extraordinary proof. 1. Adjusted for inflation, the price of oil is still very reasonable and will not induce the massive capital expenditures in reasearch and development required to substantially shift the industrialized world away from fossil fuels. I do not see this happening anywhere - do you? 2. The current price will eventually raise supplies from non OPEC sources. But "this time" those sources are largely to be found in deep water locations which require much more time and money to develop. The recent TX news is a case in point. It takes one brave Oil ceo to put the pedal to the metal on deep water. 3. Last but DEFINITELY not least, PRODUCTIVITY in world wide work forces. When work forces enter their 30's and 40's their productivity reaches it's peak. This is amply demonstrated by the following news: cbs.marketwatch.com This was absolutely NOT the case when OPEC crafted their "rules" in the late 70's and early 80's. The world wide work force was substantially younger and FAR less productive in that era. NOW, the situation is completely reversed. The WHOLE WORLDS WORK FORCE is now more productive by a whole order of magnitude, thus rendering irrelevant many assumptions made 2 decades ago. In short, $25 oil ain't the inflationary monster it once was, leading me to believe that such prices are sustainable for quite some time. I believe this is coming to be understood by OPEC. It will also come to be understood by OSX investors given time. Lastly, it will be understood by big oil execs, who are busy fighting the last war. <vbg> JMVVHO Bull