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

To: jim_p who wrote (74660)	9/26/2000 2:34:41 PM
From: Meridian	Read Replies (1) \| Respond to of 95453

#48) That the cost of finding/developing oil and gas falls as technology gets better and better, and moreover, that it will keep falling. I've seen numerous charts and graphs of F&D costs, all falling from $15.00/bbl in 1980 to $6.00/bbl currently. The Bears use this to bolster their argument that oil falls to the marginal cost of production. However, when oil was $30-$35/bbl in the late''70's and everyone in the industry "knew" that it would rise to $100.00./bbl. they all spent wildly on finding the stuff. If you weren't spending $15.00/bbl then you weren't taking advantage of the economics. It looks, to the untrained eye, as if technology is bringing the cost down, when in fact F&D costs were/are a function of prices.