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

To: SofaSpud who wrote (8470)	9/20/2001 3:44:38 PM
From: VisionsOfSugarplums	Respond to of 24910

Yup, all very good comments, SofaS. And there's a lot going on, not the least of which is inflation/deflation arguments. I'm thinking that the US dollar is living on borrowed time (money supply, service economy, slow down, need to raise funds to finance budget, etc). There are lots of vested interests and big money involved, though... And, simplistically, just as cheap oil allowed the US to prosper and stimulated consumption (along with the massive increases in money supply, etc.), cheaper oil will do the same for other nations if the US dollar cracks. A big question being, however, would cheaper oil facilitate the reallocation of capital (from savings and the US) to better investments that are not restricted by borders or will it exacerbate worldwide deflation. The other thought is that I'm not sure that the link between oil and gold is broken in Middle Eastern (and Asian) nations, so they may have a natural hedge available for their revenues against a US dollar drop. China has economic difficulties, however oil demand has remained relatively strong and their economy could provide huge swings in demand, depending on its evolution - note also the recent deal with Russia, big. Plus cash to Russia for oil benefits their economy (US less likely to use Regan era tactics given the "end" of the cold war and Middle East uncertainty)and stimulates investment and consumption in that country. In the meanwhile, Russia production also a swing factor, not part of OPEC. Arguments boths ways. Like you commented, the cycles in the oil industry tend to repeat themselves, so there is certainly a lot of risk in taking any positions during a period of such negative sentiment. Regards, t.