Hello bid_buster, So, that that we see no particular flaming of any anti-oilsand poster on this gentle lounge of a thread regarding the pro and con oil sands and energy pricing, we can discuss more, not so much about the known knowns, the merit of expending water and drawing down natural gas, to get at the oil that is indubitably trapped within sands, but explore the potential of the human mind.
Point #1: If every time one makes a speculation one must base such on the soundness of fundamentals, we then must remove the last 8 years from financial/monetary/economic history;
Point #2: It matters not that water and natural gas are needed in copious quantities to extract oil from sand, just as it matters not that sometimes we actually have to spend 10 dollars to get 11 dollars back. It only matters that, at the margin, oil can be sold at an economic profit after taking account of the cost of water and natural gas;
Point #3: Now, it may well be the case that we want to also taken a position in natural gas and oil, and stretching the imagination a bit, uranium, concurrent to our holding of oil sand;
Point #4: Let us simply accept that we are in fact experiencing fiat money inflation, and as in all such episodes, either more fiat money will be needed and allowed, in order to forestall what we know to be depression kaboom of asset valuation; which, btw, is always fixed with fiat money inflation, after the fact. This is the sordid nature of fiat money;
Point #5: If so, meaning, if fiat money inflation is so, then one can well calculate that commodity prices in general, and oil and energy price in particular, have underperformed relative to just about all other objects of desire;
Point #6: If one can calculate above item #5, then one can imagine a day when the world goes into panic mode regarding oil, its availability, and its cost, more so than it pricing. At USD 70/barrel, oil is cheap, as indicated by the still healthy sale of all but the largest SUVs;
Point #7: One can easily imagine more, if one starts early, that one day THEY will announce peak oil for sure, or peak oil effectively (due to war), when oil price must rise to above its all time inflation adjusted peak, to encourage more exploration / extraction / work-arounds for same, and it is on that day we would wish to own a lot more of what lies underneath Alberta. Cannot figure that? Then just add on several more Chinese and India drivers of SUV. Still cannot, then add a few more, the Chinese and Indian drivers, and subtract a few more conventional oil wells. Still not? Then add on another 2 trillion of fiat money in USA, Japan, China, India, and Europe. Until when? Until you can imagine oil at USD 140/barrel, and heading up.
Point #8: Oh, and yes, gold is also a good idea, even though it is infused with less “Utils” than oil trapped in sand.
Chugs, J
P.S. You ought to know about manias, knowing folks in Texas, and I know about manias, knowing folks in HK. An observation, during the internet festival, HK folks speculated in all kinds of unique schemes and singular opportunities, all having to do with the Net. These early days, I do not know of any one in HK with an oil sand position. So, just a feel, that I can sell a lot of things, including gold even, but if I do so with oil sands, I would be giving up too much potential in exchange for very limited downside protection, as in, "not worth it".
P.P.S. It is early days for a speculation in commodities in general and energy in particular. The commodities in aggregate has underperformed the general stock market over the past so many years (3-4), according to Barrons, after a 20-year bear ravage, and accounts for nothing in terms of allocation by the fiat money enabled portfolios;
The energy equities are trading on "price to earnings" and not valued on embedded "option" value;
And certainly not on panic-stricken imagination worth.
Oil sands? whatsthat?
So, relax, should you wish to take a position, we the early birds Subject 55547 will not snicker, but instead, welcome you to the light.
And, if you feel uneasy about oil in sand, then get gold and grab silver, in vault or rocks. They are more rather than less the same trade as oil sand :0) |
