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

To: SliderOnTheBlack who wrote (92314)	7/15/2001 4:49:07 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 95453

<<The smartest thing OPEC could do here & now; is to take Oil down sharply to $15-$18. That would nip in the bud, the LT Cap Ex commitments from the Majors & non-OPEC producers>> Exactly. It's apparent that price volatility favors OPEC. By crushing prices every 2-3 years, they basically check non-OPEC cap-ex ramps and destabilize oil patch employment bases (ie, patch workers get fed up and retrain in other job opps). Therefore when the next boom comes, the domestic industry isn't nimble enough to fully exploit it. This sort of volatility also slows development of alternative energy resources. It's a win-win-win proposition for OPEC, despite their statements about wanting price stability. The U.S wants price stability NOT OPEC. Therefore oil will remain the most cyclical of commodities for the forseeable future, IMO.

To: SliderOnTheBlack who wrote (92314)	7/16/2001 3:17:56 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 95453

Slider, you've made some excellent points, however, I do not see OPEC particularly interested in gaining market share. I consider OPEC to be nothing more than a global version of the old Texas Railroad Commission, which is actually the model for OPEC, and whose purpose was to set production quotas to maintain domestic oil prices at certain levels thought to be reasonable for maximizing profit. I see little or no difference with OPEC. If they keep production down too much, prices get too high, and the world economy suffers to the point where overall profits for OPEC go down. If they boost production too much, profits per barrel drop to the point where they no longer maximize. I think a price range around US$22-26 seems to be the current target of OPEC, and I so no reason for OPEC to attempt to gain market share by lowering prices. Art