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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Wally Mastroly who wrote (10208)	9/27/2000 5:36:48 PM
From: Wally Mastroly	Read Replies (2) \| Respond to of 42834

An article on oil that actually makes sense! With some charts & some history (& my emphasis); Some excerpts: "...Something will have to give sooner or latter, but a scenario in which elevated prices are sustained for some time looks increasingly likely. Crude oil inventories are well below their historic levels. The same goes for distillate and gasoline stocks as refineries are already producing at or near capacity. While oil prices measured in real terms are far below record highs, and the U.S. has seen extended periods in which energy was substantially more expensive, there is cause for concern if energy prices remain high. While our economy has become wealthier and less dependent on oil, we have patently ignored shoring-up supply. The United States is now as dependant on energy imports as it has ever been and at the same time is less capable of turning crude oil into usable products. Policies that encourage investments into exploration and refineries are needed, not stopgap measures that amount to only a few days of this nation's oil consumption. For example, if oil firms are expected to bear all the downside risk arising from low oil prices, they must also reap the benefits as oil prices rise or else there is next to no incentive for the exploration and development of new oilfields. Even if this problem is ignored, a low, stable price that benefits consumers cannot be assured by government meddling. A small release of SPR supplies only encourages speculation about larger, future releases, thereby increasing rather than decreasing the price swings that have been so disruptive to the long-term planning of oil companies. Furthermore, the reaction of OPEC could be one of retaliation where they cut their production in an effort to keep prices high. There is no better instrument than the market in encouraging the twin long-term solutions of energy conservation and oil exploration. Oil prices should reflect the interaction of sustainable supply and demand and therefore the real cost of energy usage. For now, Americans will blithely consume oil at a prodigious rate, because they can afford to do so, and the release of oil from the SPR may affect world prices in the short run, but the long-run problems will be with us for some time...." Full article: dismal.com