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

To: Raymond Duray who wrote (56586)	11/27/2004 11:48:15 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

Ray, <//At $40 there are still all sorts of altervatives which are economic. // Start naming them. > Okay, some altervatives: Wear a pullover/sweater/jumper/jacket/singlet. Buy a little car/bicycle/running shoes. Move closer to work. Use the CDMA cyberphone instead of the SUV. Insulate things. Dig more coal. Dig more geothermal steam. Dig more Orinoco emulsion. Dig more gas. And of course, dig more oil [production can be boosted by more holes in the existing reservoirs and more reservoirs can be found]. Windpower. Photovoltaics. Sugar beet/cellulose to ethanol or other stuff. Noocular power. Population reduction [I'm not recommending that as an economic alternative, just that it's going to happen either voluntarily because women don't seem to want to have 10 of my babies or many of other blokes' or because H5N1 cuts us down to size]. Holiday nearby [instead of an aircraft ride away]. < //Saudi Arabia, Iran, Iraq and Russia won't stand for it. They'll boost production, open the spigots and regain market share.// I told you that the world is at 99% of available capacity> Okay, it's true that I was being sloppy and spigots aren't wound closed [not many anyway]. My point is that at $40 a barrel, they can make a LOT of money. They can increase production by drilling more wells, building more pipelines, securing Iraqi pipelines against Islamic Jihad. My comment on spigots reflects the fact that Saudi Arabia and others do artificially reduce supply because they have an idea on what price will maximize their long run returns. That price is more like $30 a barrel than $50. I think they overestimate the long-run price they can get because so many alternatives are available at even $30 a barrel, let alone $40 and $50 a barrel. OPEC doesn't want to lose market share. Once a noocular reactor is turned on, it doesn't turn off again just because oil prices are cut to $10 a barrel. The big cost in noocular is in the construction and decommissioning bonds. Buying the uranium is relatively cheap. It's not like a thermal power station where the oil cost is the big cost and the power station is relatively cheap. OPEC needs to avoid too many alternatives being built. Once a photovoltaic source is installed, it has zero operating cost, so it won't be shut down either. Crop fuels can be shut down because they have high ongoing production costs. Mqurice

To: Raymond Duray who wrote (56586)	11/28/2004 12:03:02 AM
From: Maurice Winn	Respond to of 74559

<It would be idiotic for the Iranians to bother to go through the stages of nuclear enrichment and weapon production when they can simply buy an off-the-shelf unit from the Pakistanis or the North Koreans.> Pakistan and North Korea might not be selling. Or, they've already sold and the attempt to get a reactor is a cover/red herring for what has already been done. In preparing for a nuclear war with India and the USA/South Korea, Pakistan and North Korea might have already decided where best to apply their explosions. <Re: //Orinoco crude oil emulsions are economic at $40 a barrel for oil. So is coal.// So what? You can't refine either one of those economically into gasoline, the most important fraction of the distillation process. And you naively disregard the fact that there is no surplus refinery capacity for bitumens, tars and oil sands. > There's a common misconception that gasoline is the most important fraction of the distillation process. It's not inherently so. It is because that's the one which gets the highest price because of supply/demand balances. If cars run on methanol from crops, via fuel cells, or just ethanol [as elM thinks Brazil will do] then gasoline is going to drop in value. Diesel and jet fuel might become more valuable than gasoline, which would mean turning off some crackers and hydrogenation processes. It's not just distillation that happens in a refinery. Long chains are smashed into shorter ones and hydrogenated, depending on whether the process is rewarding enough. Coal, gas or heavy crudes can all be hacked into lighter ends with some processing cost. China is investigating coal to gasoline now. It's not new technology. It just has a cost. At $50 a barrel for oil, it's worth doing. The Syngas plant in New Zealand used to produce gasoline from methanol from methane, but the gasoline step became uneconomic so it was turned off long ago. But at $50 a barrel, if the gas wasn't running out, it would perhaps be economic again [and no doubt is in gas-rich places]. Hydrocarbons are fairly fungible and can be morphed into all sorts of forms. It's just a matter of dollars. If Arabian oil is too expensive, Orinoco heavy crude isn't and neither is coal [or the other options I listed]. At $50 a barrel, the alternatives will be kicking in. [Even though the $50 is in depreciated dollars] <you naively disregard the fact that there is no surplus refinery capacity for bitumens, tars and oil sands.> I'm sure some engineering companies would love some orders for new plant or to fire up old ones. Mqurice

To: Raymond Duray who wrote (56586)	11/28/2004 12:27:09 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

<You feel remorse about that idiotic escapade now, but in the heat of passion in late 2002, you were spouting some equally ludicrous poppycock about Hussein's threat to the world as you are today about the Iranians.> Ray, you have obviously confused me with somebody else. I was and am still happy that the USA invaded Iraq and defeated Saddam's gang. I wouldn't have wanted to incur the costs, but I don't object if they want to. I didn't think the post-invasion period would be so easy as driving in with tanks and accepting marriage invitations from the women and flowers from all and sundry. I thought the war would be 110 minutes long [one Globalstar orbit], which I admit didn't allow for the long drive from Kuwait to Baghdad and Tikrit and was more in the nature of poetic license. I thought USA tanks would be driving around Baghdad looking for somebody to shoot at - you will recall that I was right on that as the Iraqis sensibly abandoned their uniforms and ran away in their undies. However, I thought that post-invasion door to door guerilla war would be more problematic. I thought the USA would lose more troops than they have done. I also thought they would kill more Iraqis than they have done. It's an almost gentlemanly conflict [compared with what went on in Stalingrad for example]. I thought the USA was off on a wild goose chase and still do. I've been constantly [ad nauseum] advocating a New United Nations approach to such matters, but the USA isn't much interested and neither do other countries seem to be. I think the USA will regret the approach they're taking in the long run. Just as they must be regretting supporting Osama's team against Gorby in the 1980s. Not at all did I think that Saddam threatened the world. I laughed all along at the notion that he had weapons of mass destruction. It was obvious that he didn't and that the real reason for the USA attack was more along the lines that King George II was going to avenge the attack on Laura, Mum and Dad and stop Saddam providing a base and funding for some relatively minor attacks against Israel and others, and keep the price of oil up, and get control of some strategic land with some strategic oil for some strategic buddies in Halliburton et al as well as keeping the USA military tuned up and in practise. But I don't lament Saddam's demise, or Uday's. Good riddance. I did wonder in 1990 whether Saddam had managed to get hold of a nuke and thereby got King George I to back off. The invasion of Kuwait I think was okayed by King George I's crew [April Glaspie being mouthpiece] because that would provide an excuse to whack sanctions on Iraq after giving the USA military some more practise and suppliers more business. Sanctions on Iraqi oil for a decade meant buddies could sell heaps more oil at much higher prices without competition. Profits since then have been enormous for the oil industry [and other energy suppliers]. Saddam at the time realized what the game was. I wondered then why he was worried that sanctions might be maintained if he withdrew - silly me, of course they were. Keeping competitors off the market is a time-honoured way of improving sales. I'll do a separate rant about Iran if you like. So you see, you completely misunderstood my position. Mqurice

To: Raymond Duray who wrote (56586)	11/28/2004 12:46:32 AM
From: Maurice Winn	Respond to of 74559

<//buying a CDMA cyberphone instead of an airline ticket.// At least we are in agreement about this. What percentage of the 500,000 human beings suspended above this planet at any one time are really doing anything worthwhile? It's a damn small percentage, but we really do blow through a few million tons of 'jet A' every year for the sake of folly, vacations and out-of-season fruit.> People love flying [other than security, queues and officials and hassles]. It makes people feel important and gets them away from their humdrum lives. But, if it's economic in their value system, and they pay their own ticket, so what? Airlines for decades have become dramatically more efficient in costs including fuel consumption. It really has been a spectacular change and that process is continuing with the 500 passenger aircraft soon to be flying. buying a CDMA cyberphone instead of an airline ticket. airbus.com Mqurice