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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: jim_p who wrote (40791)	3/25/2005 9:04:25 AM
From: XoFruitCake	Read Replies (4) \| Respond to of 206222

Jim, Frank and other. It is very interesting to read the board in the last few weeks. It seems like everyone know that oil and energy is a cyclical business, but the debate is when will it end. Some think this cycle is difference and will run much longer and other think this cycle is the same and will end soon. My question is that what objective indicator do you use to make this call? I look at the HO, gasoline and diesel inventory in US. The assumption is that since US is the biggest consumer in the world, if there are excessive production, we will be the first one to see it. What I understand is that the absolute gasoline inventory is higher that 5 year average. But if you look at day of gasoline supply we have in storage, we are very close to 5 year average. And diesel and HO inventory are all down compare to 5 year average. So it seems to me that we still have a way to go on the oil cycle. Any thoughts? The China story that KB posted in interesting. I read Chinese newspaper daily and every events discussed in the article is reported in Chinese newspaper in the last couple year (the bank corruption etc.). Obviously no one else has drawn the same conclusion as the author. But it certainly enlightening to read his theory.

To: jim_p who wrote (40791)	3/27/2005 6:54:25 PM
From: Big Dog	Read Replies (3) \| Respond to of 206222

Jim, You are exactly right. The "sanctity" of a high day rate contract is valid only as long as oil/gas pricing (therefore day rates) remain high. Low day rates emerge, and the oil company says....contract? what contract? Yes, RDC sued the pants off BP and won big time for breach of contract. But RDC is the only company that would have the nerve to do such a thing. Frank...let me gently remind you of the low cost of entry to the land drilling business. While it may cost $130 million to build a jackup these days, the cost to build a BRAND NEW land drilling rig is less than ten percent of that number, maybe considerably less. Own the companies that sell the rig equipment, 'cause we are fixin' to see a rash of newbuilds come to market. ...and if anyone here would like to form a little bidness venture, we can order a few too! It's really not that difficult, huh Jim? The business is a cycle...ride it, don't fight it. Other than some Canadian trusts, I have zero energy exposure right now. big