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

To: GREENLAW4-7 who wrote (102269)	6/7/2008 8:17:00 AM
From: Salt'n'Peppa	Read Replies (1) \| Respond to of 206110

Greenlaw, your numbers don't add up. "Here is where he is dead wrong, he say's 150-200 crude = 4 and 5.75 per gallon. We are at 120 crude and we have 4 per gallon, 140 crude is 4.75-5 pg, and 160 crude is 5.50 to 6.25, and 200 crude is easily $7 per gallon." Don't see how you can project those numbers. When we had $15 oil, we had a $1 gallon of gasoline. When we had $30 oil, we had a $2 gallon of gasoline. When we had $60 oil, we had a $3 gallon of gasoline. Now we have $120 oil with a $4 gallon of gasoline. The two have not risen in "lock-step". The trend has been a doubling in the price of a barrel of oil equates to a $1 increase in gasoline. My simple math tells me that $200 oil will carry a price under $5.75 (or call it $6 for simplicity) per gallon of gasoline. I say he is correct. Time will possibly tell. S&P

To: GREENLAW4-7 who wrote (102269)	6/7/2008 1:47:05 PM
From: KyrosL	Read Replies (1) \| Respond to of 206110

"200 crude is easily $7 per gallon" There are 42 gallons in a barrel. 200/42 = $4.76 per gallon in oil cost if all 42 gallons were made into gasoline. Add a dollar a gallon for refining, taxes, and for the fact that some of the 42 gallons are turned into slightly less valuable crack products on the average, and $5.75 per gasoline gallon sounds about right for $200 per gallon oil.

To: GREENLAW4-7 who wrote (102269)	6/7/2008 2:16:30 PM
From: Sam Citron	Read Replies (1) \| Respond to of 206110

Murti's analysis sounds quite sensible and conservative to me, exactly what I would have expected of a top notch Goldman analyst who has been right on the money to date with his forecasts. Not having been privy to his original $200 peak oil report a couple weeks ago, I wondered about his reasoning. [If anyone has a copy of that report, kindly PM it to me.] This interview explains the basis of his prediction -- mainly inelastic supply amid continued robust demand until the price spike destroys demand and eventually causes long-term oil price to decline to $75/bbl or less. And the peak price he sees which should bring about the demand destruction: $150-200/bbl. His forecast actually sounds somewhat optimistic to me. Suppose instead of a spike to $200, oil prices rise more gradually to this elevated level. Presumably that would cause much less demand destruction than he is predicting. Other factors which could become important that he doesn't mention are policy changes, such as reduction of petroleum subsidies in Asia, and technological change, such as the expected advent of EVs and PHEV around 2010. SC