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Gold/Mining/Energy : Oil & Gas Price Economics -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (328)	11/24/2000 12:11:24 AM
From: rajaggs	Respond to of 350

View of longer term energy pricing from the UK. From the Guardian in the UK. Special report: Petrol Special report: Global warming Charlotte Denny Monday November 20, 2000 For latter day new agers, the believers in the digital economy, oil is such an old fashioned commodity that it barely rates a mention. In their visions of the future, the economy will run on ideas and computer codes, and somehow escape one of the iron laws of economics: scarcity. But if the laws of supply and demand have apparently been suspended in the digital world, they are back with a vengeance in the world of energy, as Opec has demonstrated this year. The production cuts that the oil producers' cartel implemented last year have trebled the price of crude, and some economists believe the soaring price of energy will inevitably send the industrialised world into recession. "The modern world turns on energy; and the biggest provider of that is petroleum," says Professor Andrew Oswald, from the University of Warwick. "I am sceptical when people tell me that Bill Gates and computers have taken over so we don't need to worry about oil stocks any more." Rather than being the bad guys, though, it is possible that Opec has done the west a good turn this year by putting up the costs of its favourite fuel. We simply cannot afford to consume as much of the stuff as we have been doing. Burning oil is choking the world with carbon dioxide, an important cause of global warning. Second, even without the hand of Opec interfering, oil prices could be about to rise steeply because of dwindling supplies. The nightmare scenario is outlined by David Fleming in a recent article - After Oil Prospect, November 2000. "The steep decline in the discovery of oil since 1965 means that production, too, must decline, and the turning point is expected in 2005," he writes. Such gloomy prognoses have been dismissed in the past by analysts, who argue that there are further reserves out there waiting to be discovered. But Mr Fleming says that many of these new fields are of lower quality than great oil fields which have fuelled world industry since the war and will be more expensive and slower to extract. The turning point will come when demand outstrips supply, sending prices through the roof. Higher prices will prompt new exploration and make some marginal fields viable. This will only delay the inevitable, according to Mr Fleming. "Within the period 2001-3, the tension between demand and the reduced growth in supply can only be expected to raise the price of oil supplies even further," he says. Even the relatively conservative International Energy Agency agrees that world oil supply will peak, although it predicts a deadline of 2012. But its analysis is based on assuming demand grows in line with past trends. An even scarier possibility is raised by Prof Oswald. At present the US, with its 250m consumers, sucks up the largest proportion of world oil - 19m of the 74m barrels the world uses daily. Two-thirds is used for transportation. "Forget software taking over from steel mills," says Mr Oswald. "It is the rise and rise of the motor car and the lorry which is the issue." At the moment, the average American consumes 25 times the amount of oil used by the average Chinese citizen. China consumes just 4m barrels of oil a day for transport, despite having five times as many people as the US. But what happens when the growing Chinese middle classes trade in their bicycles for cars? The country is industrialising rapidly, and while there are only 15m cars in the country now - one for every 125 people - the numbers are rising rapidly. << Yet another voice saying that policies that encourage efficient use of these finite resources are essential, to prevent $60 oil or a depression, or both.

To: Ed Ajootian who wrote (328)	11/24/2000 4:18:05 PM
From: Rod Copeland	Read Replies (1) \| Respond to of 350

Ed, I am profoundly thankful for the current prices! Matt Simmons was a guest on one of the cable stock network shows yesterday... and you wouldn't believe his contentions. He says we are now at the mercy of Mother Nature to be able to get through this winter without hundreds of people in the Northeastern state freezing due to lack of heating oil. He believes that if we have a cold winter, that it is already too late to provide for the needs in those areas. He advocates that the government should call a national emergency, now, and that all thermostats be set at 50 degrees...NOW. He says that only if we have a mild winter, will we escape a tragedy. He says whoever is elected as president will inherit a nightmare for energy management. He is looking for substantially higher energy costs at all levels....oil, gas, and electricity. It was a very interesting interview. Hope you have had a great holiday. Rod.