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To: pitbull_1_us who wrote (78887)	5/8/2008 1:45:19 AM
From: Elroy Jetson	Respond to of 116555

I understood exactly what he said. He simply isn't thinking clearly perhaps because he's emotionally attached to a house and not to an oil reservoir. You can only sell 100% of an asset exactly once. Let's say you sell your house on an installment sale over 25 years, but maintaining a right to tenancy. That's exactly like selling an oil reservoir. At the end of 25 years you have no house and no oil reservoir, but you collected an income stream over the 25 years. Now Benwood claims he doesn't need a house at the end of the 25 year period. But that's only true if he's dead, and in any event it doesn't help his heirs. In both cases, you sold an appreciating asset on an installment basis. So it's very likely that your cumulative sales proceeds, plus interest earned on the money, will be insufficient to buy a replacement house or oil reservoir! When you do the math it all becomes very clear. Selling a home or an oil reservoir today to get the "time value of money" is all very well and good. But if the asset is appreciating, your time value of money could likely be less than the appreciation on the asset after you sold it. So by selling now you short-changed yourself on a later windfall, leaving you without enough money to buy a replacement house or replacement oil reservoir. The bottom line that started this is most oil reservoir owners are not producing as much oil as they can. They're producing as much oil as they prefer to according to project analysts like myself. Oil reservoir owners produce the "economic" amount of oil as they define that according to their preferences. If there were the mythic "national emergency" within a few years oil production could rise significantly through additional wells, as well as producing reserves that are not currently produced at all. .