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

To: Dennis Roth who wrote (94393)	12/7/2007 7:47:38 AM
From: Ed Ajootian	Read Replies (3) \| Respond to of 206089

Dennis, hopefully our legislators here won't get wind of what they are doing in China. Tax producers, which ultimately reduces supply, and subsidize consumers, which artificially increases demand. Just what this world needs, with oil supplies so tight! BTW, I bought some Opti-Canada (OPC.TO) the other day, thanks for mentioning it. Its quite a story, being able to make oil as good or better quality than WTI, without needing a lot of natural gas. The costs of their project when first designed in '03 were expected to be $3 Billion, now their latest guess is that it will end up costing $6.1 billion. But they lucked out because oil prices have gone up even more than that.

To: Dennis Roth who wrote (94393)	12/10/2007 6:50:12 AM
From: Dennis Roth	Respond to of 206089

Too hot to touch Nov 29th 2007 \| DELHI From The Economist print edition The vexing question of subsidies economist.com AS DUSK falls, kerosene stoves ignite in the poorer kitchens of Delhi. Sengeni, who lives on an alley wedged between the Nizamuddin railway tracks and a tributary known as ganda nallah (or dirty ditch), is looking forward to a dish of rice. He is entitled to a quota of 11 litres of cheap kerosene every fortnight, which he buys for about nine rupees (23 cents) a litre, compared with a free-market rate of about 25 rupees. The price hasn't changed for months, he says, despite the surge in oil prices. In India, as in many countries, the government dares not allow the rising price of crude to be felt in the common man's pockets. Only a third of the 48 developing countries studied in an IMF review let the market set fuel prices. The governments of Yemen and Indonesia, for example, spent more holding down the price of fuel than they spent on health and education combined. Attempts to raise energy prices—as in Yemen in 2005, Nigeria in 2000 or Indonesia in 1998—have a sorry record of prompting riots and revolutions. China's decision to raise prices by 10% in November has also caused tempers to rise. India's government subsidises kerosene and liquefied petroleum gas (LPG) directly. It keeps other fuels, such as diesel, artificially cheap by the simple expedient of stopping state oil companies from raising their prices. These firms keep themselves afloat with “oil bonds”, which the government guarantees but does not enter on its books. In October, for example, the government announced it would issue bonds worth 235 billion rupees this fiscal year, which will compensate oil-market companies for about 43% of their losses. All told, India's fuel subsidies might cost as much as $17.5 billion this year, according to Lombard Street Research, a British firm of economists. That amounts to as much as 2% of the country's GDP. Cheap kerosene fires the poor man's stove in India's cities and lights his home in the country's villages. More prosperous city folk cook instead with more refined gases. Thus a kerosene subsidy can at least claim to be progressive as well as expensive. This is more than can be said for India's cheap LPG. According to Bharat Ramaswami of the Indian Statistical Institute, the richer half of India's urban population captures about three-quarters of this subsidy. Unfortunately, about half of India's subsidised kerosene never makes it to household stoves, he says. It is diverted to the black market, where it is either sold at a higher price or used to adulterate diesel, which sells for about 30 rupees per litre. This then poses an acute dilemma for the government. The subsidies are costly. Yet more expensive kerosene would hurt the poor (not to mention the government's own electoral prospects). And if it kept kerosene cheap while letting diesel rise in price, it would only increase the scope for arbitrage between the two. Not all fuel in India is subsidised. By the Nizamuddin rail tracks, a gaggle of children warm themselves on a chilly night by burning scraps of wood. One thick-skinned show-off waves his foot in the flames for a foolhardy second. India's fragile government, on the other hand, is in no mood to play with fire. ---- Keeping demand high and growing.