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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: smolejv@gmx.net who wrote (30895)	4/6/2003 7:06:32 PM
From: energyplay	Read Replies (1) \| Respond to of 74559

Can cheap oil lead to a recovery ? Yes, it helps enormously. US GDP increases 30-50 Billion for each dollar he price of oil drops (with delay of one year roughly). World wide GDP effect may be 3 -5 times that, or more. If oil goes under $20 and stays there for about 3-4 months, Jay will need to get off the beach and go back to work. Prices under about $16 mean another boom-bust cycle in the oil patch.

To: smolejv@gmx.net who wrote (30895)	4/6/2003 8:12:08 PM
From: Moominoid	Read Replies (1) \| Respond to of 74559

Oil was in 1998 at those levels so it can go down there..... marginal cost in Saudi Arabia/Kuwait etc. is very low and so their oil industry can survive (others may have a hard time). Rapid population growth in both countries has reduced the per capita contribution of oil in $ of GDP anyway. A lower oil price will be good for "recovery" in the West. Longer term the oil price will eventually rise. Expect a year or two to really ramp up Iraqi production. A lot will depend on the security situation down the road in Iraq and the Gulf... Longer term the oil price will eventually rise of course. I expect oil scarcity to kick in before environmental concerns and technological change put any serious dampener on demand...