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To: TobagoJack who wrote (60627)	2/28/2005 12:04:08 AM
From: Maurice Winn	Read Replies (2) \| Respond to of 74559

<On XYZ <<... is too expensive [meaning higher-priced that the long run marginal cost of production of ... or competing products]>> ... Substitute any of "Housing", "Platinum", "QCOM", ... for XYZ, read sentence, and reflect on its meaning.> Hmmm. Good point Jay [apart from the typo of that instead of than]. That must be why I'm parked with a Tonka truckload of USD waiting for something to do with it. I did advise you to short QCOM at $42 and $44. It then dropped 25%. I have still not backed up my Tonka truck and swapped the USD for more QCOM so I obviously don't think it's such a great bargain and is more expensive than the long run marginal blah blah blah. Re the use of production, it's oil industry jargon. Exploration is finding and production is a lot of hard work involving a LOT of expense. Of course the manufacturing process is done by tectonic subduction and cooking of marine biomass deposits, but there's more to production than the collection and cooking processes. I don't recall saying oil will be USD 2/barrel, though the production cost for Saudi oil is about there, even with the inflationary pixelation process run by Uncle Al KBE. These days, in financial relativity shrunken dollars, I guess something like US$20 is a more likely bottom, subject of course to the outcome of Year of the Feather Duster manoeuvres, H5N1 and any bonus events such as a bolide splash down over the Pacific ocean and other fractal extremes, which do happen. Not forgetting the possibility of a derivatives-powered financial implosion which would create a LOT of fun for everyone. There are swarms of energy sources at much cheaper than 4 - 7 times the current price of oil. Heck, even ElM's Brazilian ethanol is selling like hot cakes at current prices. Coal production is booming. Noocular reactors are getting a new lease on life. Wind farms are fun. Insulation de rigeur. And, of course, phragmented photon cyberspace replaces nearly everything. The oil age will not end for lack of oil. People will just move on. Mqurice

To: TobagoJack who wrote (60627)	2/28/2005 5:23:24 AM
From: BubbaFred	Read Replies (2) \| Respond to of 74559

Jay - Here is an article commenting on energy and particularly coal demand, supply, production capacity, and transportation capacity in China. And how it will impact the cost of energy worldwide. The demand exceeds supply, and transportation cannot handle the increasing demand for shipments. No wonder there is a big push for new railways, not only for increased traffic but also for the shorter and more efficient distances. Some existing lines may get abandoned. I was told the new Shanghai to Wuhan line will cut the travel time by 25% by combination of faster speed and shortening the travel distance. It looks like a strong likelihood for a $65 oil in 2005? And then to $75 level in 2006? I also read that in several SI posts that the underlying base of China's economy is much stronger than the published reports. The cash economy is very strong in China. US and particularly California, there is a cash economy that's hard to detect by the IRS taxman radar screen. By the way, is it true that insurance industry in China is not doing very well. After its initial introduction several years ago, the demand for business and personal safety insurance has dropped significantly. Likewise with health insurance. Them folks in China are hardy bunch. They don't go to the doctor everytime they sneeze. And they don't get paranoid every time they get a bruise and get fear of contusion. Can you confirm this insurance industry is still lagging or falling off? --------------------------------------- World market could be hurt as severe coal shortage worsens in China Sun Feb 27, 1:47 AM ET Business - AFP BEIJING (AFP) - China's breakneck economic growth is causing a dangerous shortage of its most important energy source coal, with potential consequences for the entire world, state media warned. Scarcity is so severe officials even worry aloud that it could cause social instability among the 1.3 billion Chinese, the China Business Weekly reported. "The imbalance between coal demand and supply will become more acute this year," the National Development and Reform Commission said, according to the paper. "Easing the tightened coal supply will be the first priority for us," said the commission, the nation's top planning agency. China is the world's largest consumer and producer of coal, which accounts for about two thirds of its energy needs. The impact of the coal shortage could be global since soaring domestic demand could force the government to cut off export quotas and push up global prices, the paper said. Last year, when China's economy expanded by 9.5 percent, its voracious demand was a key factor in causing international prices of coal to double. One of the first sectors to be affected when coal supplies are under pressure is the power industry, which consumes about half of China's coal output. The paper said the government was concerned a disruption in the power supply during the Lunar New Year earlier this month could have sparked social instability. To prevent this from happening, it ordered state-owned coal mines to operate throughout the week-long festival, while railroads were told to use the extra holiday runs to transport more coal. The nation's coal consumption this year is expected to rise by 120 million tonnes, or six percent, to 2.1 billion tonnes, according to estimates by the China Coal Industry Association. The problem is that the opening of new mines is likely to result in no more than an additional 100 million tonnes of coal in the course of 2005, the paper said. "New coal mines cannot meet the faster demand. There is little room for additional production," the National Development and Reform Commission said. "All kinds of coal mines are almost operating at full capacity, or beyond capacity, and the pressure on safety is huge," it said. The safety issue was highlighted most recently in the Sunjiawan coal mine in northeastern Liaoning province, which was among the operations that carried on extraction throughout the Lunar New Year festival. The mine's workers only had one day off and towards the end of the festival it was struck by tragedy when a gas explosion erupted, killing up to 215 in China's worst recorded coal industry disaster for over 60 years. Even if overtaxed mines can produce the amount of coal needed to keep fueling the economy, there is not guarantee that it will reach the power plants and factories that need it. Rail is the preferred method of transporting it from the mines in the north to the industrial centers in the east and south. But the railway system is also overburdened by the hyperactive economy and last year more than 65 percent of all transportation requests had to be turned down, the paper said. news.yahoo.com