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

To: TobagoJack who wrote (61472)	4/2/2005 4:04:23 AM
From: energyplay	Read Replies (1) \| Respond to of 74559

Yes, the strategy is brilliant - first, help China with MFN status then join WTO, followed by massive FDI plus some tech transfer to help grow China's GDP at 8% per year for several years - then raise oil prices in strategic stroke ! Next, entire Chinese government falls down laughing at brilliant US strategy ! Then, US takes over with help of Taiwanese who teach senior officials how to have themselves shot.... ***************** AIG may still be a good short, puts might be pricey. I will look at it again Monday. In an uncertain world, taking advantage of corruption and greed is SO reassuring. That's why I hate Sabanes-Oxley...;-)

To: TobagoJack who wrote (61472)	4/2/2005 4:10:13 AM
From: energyplay	Respond to of 74559

I don't think J6P thinks cheap gasoline is a birthright - but they know enough to keep the poiliticians from pushing up the price with taxes, like the Europeans. That's one of the benefits of an aggreesive press and an active democracy - both of which are eroding. I don't see why the Europeans put up with $2.00 of taxes on gas that used to cost $1.00 a gallon... I'm paying $2.65 here in Siliocn Valley.

To: TobagoJack who wrote (61472)	4/2/2005 4:37:00 AM
From: energyplay	Read Replies (3) \| Respond to of 74559

Main energy price puzzle - >$45 / bbl. should produce additional production and conservation, and this price level should not last more than a year - we are at 6 months now, and futures are higher and the price shows little sign of comming down. I don't think most oil producers think the high prices will last, so they don't increase capex for production. If most every producer keeps capex about the same, then prices will stay high MUCH longer. There's a large first mover or rather ONLY mover advantage - much like the classic two person Prisoner's Dilemma. Except for oil company executives, if you overexpand and every one else does, you will lose your job or company. Not expanding is almost completely safe....until Wall Street or your stockholders (or You) decide you have grab these prices - or you see "everyone else moving" *** There's a similar logic for large expenditures on eneeergy conservation, with much milder consequences, however. * So we have an unstable situation, which is likely to resolve by going to extremes - a bi-modal outcome. Not the gaussian normal curve of outcomes. Also, the timming of these outcomes is very uncertain. So most of my risk management tools don't work. We get a 1 or 0, and we don't know when. Like a metastable flip flop.... Maybe a better historical example is the transistions to new generations of D-RAM memory. When these transistions involve building a new fab for xx micron, instead of just better steppers and process tweaks, there has been a similar timing uncertainty. Except in the D-RAM case you know the price direction long term... *** How low could oil prices go ? The US has a flat yield curve and currently high oil prices - both formulas for a recession. Iraq could stablize soon (another election and accelerated US withdrawal plus more "international" supervision), and get back to about 80% of prewar production in a few months. If much Asian growth goes near flat, then oil in the $30 range would be very possible - if only for about 6 months or so.