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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Think4Yourself who wrote (36387)	7/27/2005 1:24:15 PM
From: redfish	Respond to of 306849

Also the quality is declining as the Saudis have to resort to high sulfur to increase its output.

To: Think4Yourself who wrote (36387)	7/27/2005 1:55:28 PM
From: GraceZ	Respond to of 306849

I can show you a fairly compelling account of the disappearance of easy coal written in the 1800s. This fear lead to increasing efficiencies and production methods all of which looked more complicated but in real terms cost less than the "easier" methods of extraction. The fact that deep water wells are now common place is evidence that they have become cost effective even with historically cheap oil prices. Divide the price of oil by the CPI or wages and you can see that it has been falling in real terms since 1870. There was a short term reversal in the late 1970s which disappeared which a vengeance. We have another short lived reversal which will sow the seeds of the next leg down. The long term trend is that energy cost is falling relative to other prices as well as wages although in the short term clearly oil looks harder to find to the casual observer. Lifting cost in Saudia Arabia is what, $3 a barrel?....what was it in 1970 in constant dollars? Since the price of commodities is always a small amount over the cost and these trends are as old as energy use itself, one would have to have a fairly compelling reason to believe that longer trend will reverse. But it is good that people are getting more and more convinced that energy prices are rising, because it is this scarcity scare which ultimately lowers the price in the future. As energy prices fall relative to other costs, populations become wealthier.